Organisational design refers to the roles and formal reporting relationships that exist within an organisation. According to French et al (2008), it is selecting and implementing a structure for an organisation. The structure of an organisation is the assigned interrelationships and networks that exist among organizational resources (Schermerhorn, Hunt and Osborn, 2005). Organisational structure can be flat or hierarchical, bureaucratic, organic or hybrid. There are arguments that organisations are now less hierarchical in structure (Molinsky et al, 2012).
In contrast, there are several who claim that the modern organisational structures are still very controlling with top-down power (Diefenbach and Sillince, 2011). The purpose of the organisational design is to prepare a layout for which the objectives of the organisation are achieved as it is to align with the organisation’s core competencies. Organisational design has to flexible and must be in alignment with the organisation’s strategy (Goold and Campbell, 2002). When the organisational strategy changes, components of organisation design such as structures roles and functions should be realigned to cater for this change (Corkindale, 2011).
If there is a misalignment of organisation design with the organisation’s strategy, the result will be frustrating as employee performance will not drive organisational goals. Every organisation has both formal and informal structures. The formal structure represents the different types of design (i. e. hierarchical, matrix, flat etc. ) where the positions are clearly distinguished while the informal structure is built on individual associations and social processes (Mullins, 2011). This informal order cuts across the formal structure and is needed to keep the formal structure in order.
An organisational structure that emphasises the formal structure over the informal structure will lead to bureaucratic and rigid organisation. Also, organisation design dictates the communication and decision loop within an organisation. Huber and McDaniel (1986) argue that organisations design should be carried with the objective of facilitating organisational decisions. Poor organisation design might lead to top management totally detached from the base operation of the business, missing out crucial details on every day realities of the business.
A good organisation design should provide us with an insight into the organisational strategy, its communication and decision making loop and if it takes advantage of its formal and informal structures. Where the organisation design cannot provide these insights, it is most likely ineffective. Therefore Managers should always therefore strive to get feedback from the employees about the organisation structure and if it affects the ways they relate with one another and if it helps to fulfil their achievement needs (French et al, 2008).