Module V·Article I·~1 min read
Principles of Organizational Design
Organizational Design
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What is Organizational Design
Organizational design is the deliberate engineering of structures, processes, systems, and culture to achieve strategic goals. Good design creates an “architecture” where the right things happen automatically; bad design forces people to constantly struggle against the structure.
Elements of Organizational Design (Star Model)
Jay Galbraith (Star Model): five interrelated elements:
Strategy — sets requirements for all other elements.
Structure — who reports to whom, how authority is divided.
Processes — how information moves within the organization, how different units are coordinated.
Reward systems — how desired behaviors and results are incentivized.
People (People Practices) — recruitment, training, development, promotion.
Key principle: all five elements must be aligned with each other. Misalignment is a source of organizational dysfunction.
Design Principles
Structure follows strategy (Chandler). If the strategy changes, the structure must change.
Minimum specification: design only the necessary rules and restrictions. The rest is at people’s discretion.
Balance of centralization and decentralization: what is important to standardize (risks, financial reporting), and what is not.
Integration mechanisms: how units are coordinated without formal hierarchy (committees, matrix roles, culture).
Practical Assignment
Draw the “Star Model” for your organization. Determine: (1) Are there any misalignments between the elements? (2) Does the structure fit the strategy? (3) Do reward systems incentivize desired behaviors? (4) What should be changed first?
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