Key Concepts of Organizational Design
Marques Barnes
MMPBL/550
2/3/11
Kenneth Hadzinski
Key Concepts of Organizational Design Organizational design in comparison is similar to a blueprint to a construction worker. A blueprint to a construction worker includes the layout of a project, the materials needs, and instruction on how to build and where to build. Organizational design provides a blueprint for an organization just as a blueprint provides a guide for a construction worker. Organizational design provides a blueprint or process for integration the people, information and technology of an organization. Organizational design is extremely important to any organization. An organizational design must be able to function alongside the organization’s goals and strategy. Many business and organizations have changed their organizational design over the years to adjust to their respective industries and meet consumer needs. When companies go through restructuring and downsizing they are general altering the organizational design. Organizational design is important because it determines the specific roles, job functions, and job duties. The organizational design of a company represents its efforts to respond to changes, implement new ideas, ensure collaboration, and allow flexibility.
Importance of Organizational Design Choices It is very difficult to choose an organizational design that meets the need of the organization. Every choice has a response or an action that follows and choices that effect organizational design are no different. When choosing an organizational design, managers “must decide how to control and coordinate the activities that are required for the organization to create value” (Jones , 2004, pg 95). One of the key importances of an organizational design is establishing and controlling the division of labor by allocating people and resources to organizational tasks and establishing the task to allow the organization to achieve its organizational goal (Jones , 2004). Organizational goal are achieved by those who fill organizational roles which are behaviors designed to a specific position under a specific division. Another organizational design choice is to decide how to coordinate the various functions and roles into the division of labor so that they work together. “Integration is the process of coordinating various tasks, functions, and divisions so they work together” (Jones , 2004, pg 103). Organization integrates various tasks, function and divisions in several ways such as hierarchy of authority, direct contact, liaison roles, task forces, and teams. The most common ways of integration is Hierarchy of authority, “a ranking of employees integrate by specifying who reports to whom” (Jones , 2004, 104). Another common way of integration is direct contact, where managers meet face to face to coordinate activities (Jones , 2004). Once an organization determines how to integrate every function into a working formula, the next big task is for them to decide who to empower with authority. “When authority to make important decisions is retained by managers at the top of the hierarchy, authority is said to be highly centralized” (Jones , 2004, pg 105). On the other hand, when authority to make important decisions is spread out through all levels in the hierarchy is called decentralized (Jones , 2004 , pg 105). Centralization keeps the organization focus on the goals however the top managers become overload with decision. Decentralized allows everyone to make decision and allows lower level managers to make decisions.

The final organizational design choice to make after establishing the division is to establish standard opera rating procedures, unwritten values and norms, and written rules to help control behavior in organizations (Jones , 2004). When an organizational design chooses his rules and regulations it determines how an employee is to perform their organizational role and set forth the task and responsibilities associated with that role (Jones , 2004). Organizational design choices have a tremendous effect on the type of organizational structure.
Organizational Structures Organizations can be regarded as people management systems. They range from simple hierarchies along traditional lines to complex networks dependent on computer systems and telecommunications. Human resource managers can encourage organizations to adopt strategies (for their structures) which foster both cost-effectiveness and employee commitment. Organizational structures can be classified into functional structure divisional structure, and matrix structure. Functional structure is a “design that groups people on the basis of their common skills and expertise” (Jones , 2004, p 161). . Companies such as Johnson & Johnson and Amazon.com come use functional structure. Organizations group task into to function to achieve organizational goals effectively and efficiently (Jones , 2004). The functions give the organization a competitive advantage once they are specialized. Some of the advantages of a functional structure it “provides people with the opportunity to learn from one another” (Jones , 2004, p 161). Another advantage of a functional structure is it allows employees to impose a check and balance on each other since they are grouped with employees of similar skills. On the other hand as the organizational grows the functional structure becomes more and more difficult to control. The organizational starts to produce the better products and services and causes a strain on productions (Jones , 2004).. Also cost start to rise as products and services becomes better. Another disadvantage with functional structure is when the organization grows it tends to create communications problems because employees become distant due to company growth (Jones , 2004).. On the other hand grouping employees by specific function and common skills isn’t the only way to structure an organization (Jones , 2004). Organizations can group functions according “to the specific demands of products, markets, or customers” which is called divisional structure. The primary focus of a divisional structure is to create smaller more manageable subunits within an organization (Jones , 2004). However a divisional structure can be divided into subcategories depending on the specific control problems to be solved (Jones , 2004). The product structure “is a divisional structure in which products are grouped into separate divisions, according to their similarities or differences, to increase control” (Jones , 2004 p 164). The second type of divisional structure is called geographic divisional structure. geographic divisional structure is when an organization is divided up according to the requirements of different locations where the organization operates. The third divisional structure is called market structure which “aligns functional skills and activities with the needs of different customer groups” (Jones , 2004 p 169). Although the market structure is tailored to meeting the needs of the customers however the most efficient way to respond to customer needs is for companies to use the matrix structure the matrix structure group’s people and resources by function and product at the same time (Jones , 2004).. The matrix structure uses team structure similar to the product team structure. One of the primary advantages of the matrix structure is it uses cross functional teams to “reduce functional barriers and overcome the problem of subunit orientation” (Jones , 2004, p.171). The matrix system is “designed to make the organization flexible and able to respond quickly to changing product and customer needs” (Jones , 2004, p 172). Another advantage to the matrix structure is that it opens up communication between employees with different functions ().
Strategy, Structure, and Process in Organizations There are other things that help organizations on their day to day operation other than organizational design. According to Galbraith (2002) “strategy is the company’s formula for wining” (pg. 34) . Strategies specifies the goals and objectives to be achieved as the values and missions to be pursued it sets out the basic direction of the company” (Galbraith , 2002). To achieve the goals and objectives organization, the organization must place power and authority through the structure (Galbraith , 2002). Structure determines the placement of power and authority within the organization. . Once the authority and power is in place decisions can be made through a formal process. Processes within an organization can include new product development, allocating resources and labor (Galbraith , 2002).
Organizational Design and Decision-Making Processes Organizations use decision making procedures to assert control and reduce uncertainties (Lin, 2005).. Decision making is the heart of organizational operation and shows what procedure to use and how the procedures are used often can make a difference.“One type of decision procedure emphasizes following institutionalized and sometimes even difficult rules” (Lin, 2005, p.438). For this type of decision making procedure, individual members past experience is not of concern. “Each member is required to memorize a set of routine procedures and strictly follow the rule book, which is usually the programmed organizational knowledge and is sometimes regarded by the organization as standard operating procedures” (Lin, 2005, p.439).. According to Zhiang Lin (2005), organizational with a simple organization structure will tend to have a higher decision making performance (p. 440)The organizational design has a relationship with the decision making process depending on how management decided to distribute the power and authority among employees. If the power is centralized decision will me bad by those that are at the top of the hierarchy. Also organizational roles, functions, and standard operating procedures all can affect the decision making process.

Conclusion Although the decision making process is directly influenced by the organizational design, decision making is not the only factor influenced by organizational design or structure. It is important to note that the organizational design and structure must support the organizations vision and goals or else they will encounter major problems. Organizational design choices impacts the past present and future of an organization.

References
Jones , G. R. (2004). Organizational Theorym Design and Change (4th ed.). : Prentice-Hall.
Galbraith , J. R. (2002). Desiging Organizations: An Excecutive Guiide to Strategy, Stucture, and Process. : Wiley Company.
Zin, Z. (2005). Environmental determination or organizational design: An exploration of organizational decision making under environmental uncertainty. Simulation Modelling Practice and Theory, 14(), 438-453.