What is Organization Design?

“Organization design” involves the creation of roles, processes and structures to ensure that the organization’s goals can be realized.

Some people associate organization design with the mechanical arrangement of positions and reporting lines on the organization chart.

It is certainly true that organizational designers also need to define the vertical structure, including reporting lines.

However, organization design is much more than “boxology”.

Organization design problems are often some of the hardest problems that leaders face. Finding the right design often requires inventing a new solution to resolve a dilemma. And decisions made with regard to formal structure, roles and processes directly impact the jobs and careers of employees – and the ability of the firm to realize its strategic objectives.

In an organization re-design process one may consider elements at different levels:  

  • The overall organizational “architecture” (e.g., the corporate level, the role of the headquarters versus business areas in a large firm, etc.)
  • The design of business areas and business units within a larger firm
  • The design of departments and other sub-units within a business unit
  • The design of individual roles

The field of organization design sits at the intersection of strategy, operations, law and HR.

1. An important driver for organization design is the organization’s strategy – but the design of the organization may also to a great extent determine which strategies we may be able to form in the first place.

2.  We should, in general, attempt to align the organization with the work processes – so there is a close link between operations and organization design.

3. The design of the organization is also influenced by laws, regulations, and governance principles adopted by the industry sector.

4. Last but not least, organization design is fundamentally about people. People inhabit the roles that are defined in the organization design proces. People participate in design processes and also influence designs in many direct and indirect ways.