My purpose here is to examine organizational structures from the point of view of a designer of such structures. It is, of course, very worthwhile to study organizations in the spirit of positive (as distinct from normative) science, taking the existing structure as given; thus in economics a great deal of attention is paid to oligopolistic market phenomena, not because one favors oligopoly but simply because it is believed to exist. But economists are not always willing to confine themselves to the analysis of what exists, because they regard the economic structure as subject to conscious modification, by legislation as well as other techniques. I f one is willing to consider such modifications, one must study their feasibility, and it becomes natural to develop a set of criteria by which to judge their desirability. In what follows we shall discuss such criteria. Although much of our analysis is inspired by problems arising in connection with economic organizations, our formulation is intended to be of sufficient generality to apply in other fields as well.