MGMT90010 Chap.5 Organisation Design Choices
Organisation Design Choices
Organisation design allocates roles, relationships, authority and coordination. This chapter compares functional, divisional and matrix structures through the problems they solve and the weaknesses they create.
It separates structural levers such as authority, specialisation, span and boundary spanning, then shows how to preserve reliability where risk is high while decentralising choices that benefit from local information and speed. No form is treated as a universal upgrade. Functional depth can weaken end-to-end accountability, divisional focus can duplicate expertise and matrix integration can overload negotiation.
The analyst begins with the dominant coordination problem, evaluates alternatives against common criteria and names the predictable weakness of the chosen form. The closing step connects structure to careers, evaluation, development and leadership so that a chart becomes an operating design.
What this chapter covers
- 01
Functional expertise and scale
- 02
Divisional market accountability
- 03
Matrix dual authority
- 04
Decision rights and span
- 05
Reliability and adaptability trade-offs
Worked example · free
Design regional intake authority
- 1Centralise screening standards, specialist escalation and audit for reliability.
- 1Recognise that fully centralised daily decisions can hide local demand and slow access.
- 2Delegate staffing and flow within enterprise safety boundaries.
- 1Review quality, escalation delay, access time and variation across regions.
Key terms
- Functional Structure
- A functional structure groups employees by specialist discipline to deepen expertise and scale.
- Divisional Structure
- A divisional structure groups work around a product, customer or region to improve market focus.
- Matrix Structure
- A matrix structure combines two authority dimensions, commonly function and product or project.
- Boundary Spanning
- Boundary spanning is work that connects units or the organisation with external parties and information.
Organisation Design Choices FAQ
When does a functional structure fit?
It fits when deep expertise, consistency and scale dominate. Managers must still create boundary mechanisms because functional strength can slow end-to-end coordination and weaken customer or product accountability.
Why is a matrix difficult to manage?
Dual authority creates negotiation, role ambiguity and competing priorities. A matrix needs explicit decision rights, conflict resolution and evaluation that recognises both functional expertise and project or product contribution.
Can some decisions be centralised and others decentralised?
Yes. Separate the decisions. Centralise where risk, consistency or scarce expertise dominates, and decentralise where local information and speed create value, while managing the interface between them.
Which structural lever should a case recommendation change first?
Choose the lever most directly connected to the diagnosed coordination failure, such as grouping, decision rights, information flow or an integrating role. Changing an organisation chart without naming the blocked decision usually leaves the underlying problem untouched.
How can two organisation designs be compared fairly?
Use the same criteria for both options: expertise, responsiveness, accountability, duplication, coordination load and strategic fit. Then state which trade-off matters most in the case instead of declaring one structure universally more modern or effective.
Why must HR systems change after a structural redesign?
New reporting lines alter whose contribution matters, where information comes from and how careers develop. Performance review, selection, reward and learning should support those relationships, or the previous structure will persist through incentives and informal expectations.
When is an integrating role preferable to restructuring?
Add an integrator when the basic grouping still fits but recurring boundary decisions lack ownership. This targeted mechanism may improve coordination with less disruption than moving every role into a new formal unit.
Exam move
Compare structures against the same criteria: expertise, market focus, speed, duplication, role clarity and integration. Practise breaking a broad design into structural levers, especially authority and span. For every recommendation, state the predictable weakness and one supporting HR practice. Use hybrid cases to decide which choices remain central and which move closer to local work.
Create a four-column table for functional, divisional, matrix and agile arrangements, but fill it with problems solved rather than memorised adjectives. Then take one case and change only its dominant interdependence to see whether your structural recommendation changes. Practise decomposing centralisation by decision: standards, staffing, customer exceptions, resource allocation and escalation may belong at different levels.
Add a boundary-spanning role or routine to every design and explain the information it carries. For matrix cases, specify who decides when the two authority dimensions conflict and how performance evidence hears both perspectives. End each comparison with a career or reward implication because structural change alters status, mobility and accountability even when the formal chart looks simple.
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