Steps in designing organizational structure


Organizations are economic and social entities in which a number of persons perform multifarious takes in order to attain common goals. Organizations are effective instruments in that they help individuals accomplish personal objectives that they (persons) cannot achieve alone. According to argyris, organizations are usually formed to satisfy objectives, “that can best be met collectively.�

The first step in organization design is analysis of present and future circumstances and environmental factors. The next stage deals with detailed planning and implementation. Organization analysis is the basis for organization design and is the process of defining aims, objectives, activities and structure of an enterprise. Organization analysis includes an analysis of the following aspects :

1. External environment—economic, political, legal etc.
2. Overall aims and purpose of the enterprise –survival, growth, profit maximization, wealth maximization etc.
3. Objectives –specific aims or targets to be achieved.
4. Activities –assessment of work being done and what needs to be done if the company is to achieve its objectives.
5. Decisions to be taken across horizontal and vertical dimensions.
6. Relationships- from the view point of communications.
7. Organization structure—includes grouping of activities, span of management, management levels etc.
8. Job structure — job design, job analysis, job description, job specification etc.
9. Organization climate — working atmosphere of the enterprise. It includes team work and co-operation, commitment, communications, creativity, conflict resolution, participation, confidence and trust.
10. Management style — includes laissez-faire, democratic, benevolent-autocratic.
11. Human resource—includes availability of human resources marked by skill, knowledge, commitment, aptitude etc.

Every manager is responsible for organizing subordinates into a well-knit team so as to facilitate accomplishment of departmental / unit goals. Organizational structure can be designed on the basis of departmentalization and relationships. Departmentalization is the process of dividing work of an Organization into various units or departments.

The important bases of departmentalization are :

(i) Functions.
(ii) Product / Service.
(iii) Territory.
(iv) Relationships
(v) Matrix Organization.

The other important basis of organization design is relationship. The responsibility of a Chief Executive is overall design of the total organizational relationship—with a view to developing organizational structure on the basis of relationships.


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