Organizational Design

Conceptual Overview

Although structured organizations have existed for thousands of years (examples being Roman legions and the medieval church), the systematic study of organizational design began in 18th-century Europe and focused at first on political and military organizations. Today, [Page 1045]the design of new organizations and the redesign of existing ones have become a widespread practice within business, government, and civil society.

Work study and the alignment of organizations with their dominant technology were approaches to organizational design initiated in the business sector early in the 20th century, notably by Frederick Taylor and Henry Ford. Around that time, Max Weber studied the structure and operation of government, church, and, to a lesser extent, business organizations and elaborated the concept of bureaucracy.

Weber's model for organizational design is remarkably systematic and prescriptive, and it was highly influential for 30 years or so after World War II. It depends on hierarchy, on the separation of line and staff functions, on established rules, and on clear lines of authority. Members of the bureaucracy are to be selected impersonally, on professional merit, and are generally meant to have lifetime careers with one organization. Bureaucracy was a great advance on earlier organizational designs dependent on the whim of the patron at the top and the fawning of clients below. Large bureaucratic organizations often have scaleinvariant features, meaning that the structure of an organization is replicated within its subunits. For example, an army division has a certain pattern of line and staff elements, and the division's subunits, brigades, have a similar pattern on a smaller scale.

In the middle of the 20th century, business corporations, initially in the United States, started to adopt the multidivisional form of organization (M-form), often to replace the functionally organized form (U-form), with its departments for finance, marketing, manufacturing, and so on. The M-form creates quasi-independent businesses within the corporation. Since the M-form and the U-form each have disadvantages, organizational designers have tried to get the best of both through the matrix form, in which organizational units are responsible to different authorities for different aspects of their work; for example, to a regional authority for day-today actions and to a functional authority for professional standards. But this design produced another disadvantage: that of having two bosses.

In the early 1960s, Alfred Chandler theorized that organizational strategy sets the goals of the organization, allocates the resources necessary to achieve the goals, and indicates the best organizational structure for achieving them. Hence Chandler's dictum that structure follows strategy.

Also in the early 1960s, Burns and Stalker identified two organizational designs, mechanistic and organic. Mechanistic design gives people specialized tasks and has formalized procedures and centralized decision making. Organic design is flexible and decentralized and gives people wider responsibilities. For repetitive tasks, the mechanistic style was claimed to be best. For variable tasks, the organic style was best. Examples are the automobile production line (mechanistic) and the research laboratory (organic).

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