Organization design as a discipline refers to the systematic approach to aligning structures, processes, people, leadership, practices, culture, and metrics to ensure that organizations achieve their mission and strategy.

What is organizational design?

Organizational design is a vital factor determining an organization’s performance; therefore, it is essential to know how a specific organization should be designed.

The organizational theory provides theoretical foundations for organizational design. However, organizational theory is a positivistic science that explains the structure, behavior, and effectiveness of an organization.

In contrast, organizational design is a normative science that seeks to prescribe what might be a desirable design to achieve increased effectiveness and efficiency. In other words, the organizational theory describes our understanding of how the world works, while organization design expands on this to explain how the world could possibly work, read more detailed information and professional solutions for organizational design definition.

Organization design as a discipline refers to the systematic approach to aligning structures, processes, people, leadership, practices, culture, and metrics to ensure that organizations achieve their mission and strategy.

Organizational design shapes structure and coordination

An organization is a social system that is structured and managed to pursue collective goals. All organizations have a structure and coordination as fundamental components of their organizational design.

The structure involves things such as the assignment of tasks to individuals or units, the allocation of resources to these units, the designation of markets to units, etc.

Coordination refers to bringing the units together through communication, culture, leadership, routines, procedures, incentives, IT, and what we generally call the management (Burton et al. 2015). Although the structure is an analytical problem, while coordination is a design problem, there is no doubt that they are interdependent.

Organizational design has always been a strategic management practice since the strategy is concerned with transforming a current state of an organization into a desirable future one by reorganizing and reallocating resources to increase business and financial performance (Auernhammer & Leifer, 2019).

What are the different approaches to designing organizations?

The practice and process of designing organizations are essentially strategy making. First we define strategy, and then we develop the organizational design – the structure, and the coordination – to implement the strategy and achieve the declared goals. Hence, different approaches to organizational design are inevitably linked to different approaches to strategy making.

Mintzberg (1987, 2007) proposed the so-called five Ps in strategy making: plan, ploy, pattern, position, and perspective. The first three are relevant for designing organizations; therefore, these aspects will be covered in the text that follows, while ploy and position are more concerned with strategic moves than design considerations (Mintzberg, 1987, 2007) and will be left for some later potential account.

Planning approach to organizational design

Here strategy making is a planning exercise that involves the design and development of a comprehensive plan that leads towards the achievement of the core business objectives of the organization (Mintzberg, 2007). This approach can be linked to the structural approach in organizational theory.

A pattern approach to organizational design

From the pattern-approach, strategy making emerges from the patterns of actions and behavior that make part of existing organizational routines, which are the foundations of organizational capabilities. Organizational design practice requires making sense of everyday events that occur in an organization, and organizational design becomes a daily activity. The organizational design in this context can be linked to the behavioral approach in organizational theory.