ABSTRACT
Organizational design is the way managers structure their organization to reach the organization’s goals. This chapter assumes modern organizations are open systems that interact with their environments. Organizational charts show an organization’s formal design. They show the organization’s current configuration or a future configuration that the organization’s managers want. Organizational charts are incomplete pictures of an organization’s division of labor. They do not show all communication links, integrating mechanisms, behavioral processes, and informal arrangements within the organization. Managers often assess four contingency factors before deciding to design or redesign an organization. The factors are the external environment, the organization’s strategy, its technical process, and its size. An organization’s strategy is the organization’s long-term goals and the way it plans to reach those goals. Strategy also specifies how managers should allocate resources to reach long-term goals. An organization’s strategy might need to change as its external environment changes.
