Designing Organizational Structure
A short distance south of McAlester, Oklahoma, employees in a vast factory complex make
products that must be perfect. These people “are so good at what they do and have been
doing it for so long that they have a 100 percent market share.”2 They make bombs for the
U.S. military and doing so requires a work environment that’s an interesting mix of the mun-
dane, structured, and disciplined, coupled with high levels of risk and emotion. The work gets
done efficiently and effectively here. Work also gets done efficiently and effectively at Cisco
Systems although not in such a structured and formal way. At Cisco, some 70 percent of the
employees work from home at least 20 percent of the time.3 Both of these organizations get
needed work done although each does so using a different structure.
Few topics in management have undergone as much change in the past few years as that
of organizing and organizational structure. Managers are reevaluating traditional approaches
to find new structural designs that best support and facilitate employees’ doing the organi-
zation’s work—designs that can achieve efficiency but are also flexible.
The basic concepts of organization design formulated by early management writers,
such as Henri Fayol and Max Weber, offered structural principles for managers to follow.
(Those principles are described on pp. 31–32.) Over 90 years have passed since many of
those principles were originally proposed. Given that length of time and all the changes that
have taken place, you’d think that those principles would be pretty worthless today. Surpris-
ingly, they’re not. For the most part, they still provide valuable insights into designing ef-
fective and efficient organizations. Of course, we’ve also gained a great deal of knowledge
over the years as to their limitations.