Organisation Design Summary
Table of Content
Lecture 1 - Introduction .....................................................................................................2
Lecture 2: Bureaucracy......................................................................................................8
Lecture 3 – Sociotechnical Theory I ..................................................................................21
Lecture 4 - Sociotechnical Theory II..................................................................................29
Lecture 6 – Sociotechnical Theory III ................................................................................34
Lecture 7 - Networks .......................................................................................................43
Lecture 8 - Lean Management, Part 1 ..............................................................................55
Lecture 9 - Lean Management, Part 2 ..............................................................................60
Lecture 10 - Motivation & (Work) Design ........................................................................66
Lecture 11 - Work Design Part 2 ......................................................................................75
Lecture 12 – Work Design (Part 3) ...................................................................................81
Lecture 13 – Organizational Change ................................................................................94
,Lecture 1 - Introduction
Definition of Organisation Design
- Organisation design is about how a company or institution divides and groups its work
among people, teams, departments, and units.
- It’s basically about who does what, how work is shared, and how everything fits together so
that the organisation runs smoothly.
- So, when a company designs its organisation, it decides things like:
• Which tasks go to which departments (e.g., HR handles recruitment, Marketing
handles promotions)
• Who reports to whom (e.g., employees → supervisors → managers)
• How teams work together and coordinate tasks
→ So organisation design = creating a structure that helps people work together efficiently
and effectively.
The “socio-technical theory”
- Organisation design is not only about people — it also involves technology.
- According to the socio-technical theory, companies should design both:
• their social system (people, roles, and teamwork), and
• their technical system (IT systems, machines, workflow processes)
→ Why? Because these two things influence each other.
- For example, if a hospital installs a new IT system for patient records, it also changes how
doctors and nurses work together. So, technical design and social design must be coordinated.
Questions in Organisation Design
- Designing an organisation raises questions like:
• “What will be the consequences of this design?”
• “How will this affect our stakeholders - like our employees, clients, or customers?”
- So when you design an organisation, you’re making choices about:
• Function: what each part does
• Form: how it looks or is arranged
• Structure: how it’s organised and who reports to whom
- These choices aim to create an intended effect - the outcome you want.
- But that effect can be:
• Desired or unwanted (some results may surprise you)
• Known or unknown (some you can predict, others not)
, • And it can be measured in technical (efficiency, performance) or fundamental (values,
ethics, satisfaction) ways.
Principles of Design
Two main principles shape most organisations:
1. Hierarchy and Centralisation
- This means the organisation has many layers (like an upside-down pyramid).
- At the top are executives and top management — they make most of the decisions.
- Those decisions move downward through supervisors and managers until they reach regular
employees.
→ Centralised = decisions come from the top.
- But this structure can be slow and inflexible.
- If every small decision has to go through the boss, employees can’t respond quickly to
changes or customer needs.
- That’s why modern organisations are trying to become flatter - meaning fewer layers, and
more autonomy (independence) for employees.
- When employees are trusted to make some decisions, things become faster and more
flexible.
2. Specialisation
- This means dividing work so that each department focuses on one specific task.
- For example:
• Marketing only handles advertising
• HR only handles recruitment
• Finance only handles money
- This helps people become experts in their area - but it can also cause problems, like poor
communication between departments or a lack of understanding of the overall process.
Relevance to the Healthcare Sector
- The healthcare sector faces serious challenges, such as:
• Long waiting times for patients
• Rising costs (especially because the population is getting older)
• High stress and burnout among doctors, nurses, and other workers
,- Many of these issues come from structural problems — meaning how the organisation is
designed.
- For instance, poor coordination between departments or unclear responsibilities can cause
delays and stress.
→ So, by redesigning the organisation structure, healthcare institutions can help fix these
problems.
Changing Organisational Environment
- The world around organisations keeps changing.
- This environment can change in three ways:
1. Demographic (related to people and population)
2. Economic (related to markets and money)
3. Societal (related to society’s values and expectations)
→ When environments become unstable, organisations need to reinvent themselves to
survive - this idea is called organisational ecology (like how species evolve to survive in
nature).
1. Demographic Pressures
Examples:
• Fewer working-age employees (people are aging, fewer young people)
• Higher demand for skilled workers
• Competition between sectors for the same talented people
- So, companies need retention management — keeping the good employees longer than their
competitors can.
→ That means making the organisation a place where people want to stay.
- Retention management (Johnsson, 2000) = “The ability to hold onto those employees you
want to keep for longer than your competitors.”
- To achieve this, organisations must:
• Retain experienced employees
• Attract new employees
• Convince people from similar organisations to come work for them
- This relates to the quality of working life — how good the job feels for employees in terms
of satisfaction, growth, and work environment.
2. Economic Pressures (VUCA)
- The economy today is described as VUCA, meaning:
• Volatile: Things change fast and unpredictably. Example: sudden changes in energy
prices.
, • Uncertain: You have to act without knowing what will happen. Example: new
technology enters the market, and you don’t know how people will react.
• Complex: Many factors interact. Example: companies working across countries with
different laws.
• Ambiguous: The situation is unclear, and you don’t know what something means.
Example: launching a completely new kind of product.
- Each of these pressures makes it harder for organisations to plan — they must become
flexible and quick in decision-making.
3. Societal Pressures (Cumulative Demands)
- Society has changed over time and expects different things from organisations.
- Here’s how it evolved:
• 1960–1970: Supply-driven → Companies focused on producing as much as possible.
• 1970–1980: Product-driven → Focus on improving products.
• 1980–1990: Demand-driven → Focus on market demand.
• 1990–2000: Customer-driven → Focus on customer satisfaction.
• 2000–2010: Employee-driven → Focus on employees’ well-being and engagement.
- So now, good organisational design must consider both customers and employees — not
just profit.
Types of Organisation Structures
1. Functional Organisation
- This type is based on specialisation — each department does one job.
- Example: finance, HR, marketing, etc.
• Work is short-cycle (repetitive tasks)
• Inspired by Ford’s production line idea (mass production)
• Everything is designed for efficiency
- But problems appear:
• Work orders go back and forth between departments — slow communication
• Little cooperation between employees
• Not customer-focused
• Nobody oversees the entire process, so errors happen easily
→ In short: functional organisations can be efficient in theory, but inefficient in practice due
to poor coordination.
2. Structural Organisation
- This moves away from the functional model.
Table of Content
Lecture 1 - Introduction .....................................................................................................2
Lecture 2: Bureaucracy......................................................................................................8
Lecture 3 – Sociotechnical Theory I ..................................................................................21
Lecture 4 - Sociotechnical Theory II..................................................................................29
Lecture 6 – Sociotechnical Theory III ................................................................................34
Lecture 7 - Networks .......................................................................................................43
Lecture 8 - Lean Management, Part 1 ..............................................................................55
Lecture 9 - Lean Management, Part 2 ..............................................................................60
Lecture 10 - Motivation & (Work) Design ........................................................................66
Lecture 11 - Work Design Part 2 ......................................................................................75
Lecture 12 – Work Design (Part 3) ...................................................................................81
Lecture 13 – Organizational Change ................................................................................94
,Lecture 1 - Introduction
Definition of Organisation Design
- Organisation design is about how a company or institution divides and groups its work
among people, teams, departments, and units.
- It’s basically about who does what, how work is shared, and how everything fits together so
that the organisation runs smoothly.
- So, when a company designs its organisation, it decides things like:
• Which tasks go to which departments (e.g., HR handles recruitment, Marketing
handles promotions)
• Who reports to whom (e.g., employees → supervisors → managers)
• How teams work together and coordinate tasks
→ So organisation design = creating a structure that helps people work together efficiently
and effectively.
The “socio-technical theory”
- Organisation design is not only about people — it also involves technology.
- According to the socio-technical theory, companies should design both:
• their social system (people, roles, and teamwork), and
• their technical system (IT systems, machines, workflow processes)
→ Why? Because these two things influence each other.
- For example, if a hospital installs a new IT system for patient records, it also changes how
doctors and nurses work together. So, technical design and social design must be coordinated.
Questions in Organisation Design
- Designing an organisation raises questions like:
• “What will be the consequences of this design?”
• “How will this affect our stakeholders - like our employees, clients, or customers?”
- So when you design an organisation, you’re making choices about:
• Function: what each part does
• Form: how it looks or is arranged
• Structure: how it’s organised and who reports to whom
- These choices aim to create an intended effect - the outcome you want.
- But that effect can be:
• Desired or unwanted (some results may surprise you)
• Known or unknown (some you can predict, others not)
, • And it can be measured in technical (efficiency, performance) or fundamental (values,
ethics, satisfaction) ways.
Principles of Design
Two main principles shape most organisations:
1. Hierarchy and Centralisation
- This means the organisation has many layers (like an upside-down pyramid).
- At the top are executives and top management — they make most of the decisions.
- Those decisions move downward through supervisors and managers until they reach regular
employees.
→ Centralised = decisions come from the top.
- But this structure can be slow and inflexible.
- If every small decision has to go through the boss, employees can’t respond quickly to
changes or customer needs.
- That’s why modern organisations are trying to become flatter - meaning fewer layers, and
more autonomy (independence) for employees.
- When employees are trusted to make some decisions, things become faster and more
flexible.
2. Specialisation
- This means dividing work so that each department focuses on one specific task.
- For example:
• Marketing only handles advertising
• HR only handles recruitment
• Finance only handles money
- This helps people become experts in their area - but it can also cause problems, like poor
communication between departments or a lack of understanding of the overall process.
Relevance to the Healthcare Sector
- The healthcare sector faces serious challenges, such as:
• Long waiting times for patients
• Rising costs (especially because the population is getting older)
• High stress and burnout among doctors, nurses, and other workers
,- Many of these issues come from structural problems — meaning how the organisation is
designed.
- For instance, poor coordination between departments or unclear responsibilities can cause
delays and stress.
→ So, by redesigning the organisation structure, healthcare institutions can help fix these
problems.
Changing Organisational Environment
- The world around organisations keeps changing.
- This environment can change in three ways:
1. Demographic (related to people and population)
2. Economic (related to markets and money)
3. Societal (related to society’s values and expectations)
→ When environments become unstable, organisations need to reinvent themselves to
survive - this idea is called organisational ecology (like how species evolve to survive in
nature).
1. Demographic Pressures
Examples:
• Fewer working-age employees (people are aging, fewer young people)
• Higher demand for skilled workers
• Competition between sectors for the same talented people
- So, companies need retention management — keeping the good employees longer than their
competitors can.
→ That means making the organisation a place where people want to stay.
- Retention management (Johnsson, 2000) = “The ability to hold onto those employees you
want to keep for longer than your competitors.”
- To achieve this, organisations must:
• Retain experienced employees
• Attract new employees
• Convince people from similar organisations to come work for them
- This relates to the quality of working life — how good the job feels for employees in terms
of satisfaction, growth, and work environment.
2. Economic Pressures (VUCA)
- The economy today is described as VUCA, meaning:
• Volatile: Things change fast and unpredictably. Example: sudden changes in energy
prices.
, • Uncertain: You have to act without knowing what will happen. Example: new
technology enters the market, and you don’t know how people will react.
• Complex: Many factors interact. Example: companies working across countries with
different laws.
• Ambiguous: The situation is unclear, and you don’t know what something means.
Example: launching a completely new kind of product.
- Each of these pressures makes it harder for organisations to plan — they must become
flexible and quick in decision-making.
3. Societal Pressures (Cumulative Demands)
- Society has changed over time and expects different things from organisations.
- Here’s how it evolved:
• 1960–1970: Supply-driven → Companies focused on producing as much as possible.
• 1970–1980: Product-driven → Focus on improving products.
• 1980–1990: Demand-driven → Focus on market demand.
• 1990–2000: Customer-driven → Focus on customer satisfaction.
• 2000–2010: Employee-driven → Focus on employees’ well-being and engagement.
- So now, good organisational design must consider both customers and employees — not
just profit.
Types of Organisation Structures
1. Functional Organisation
- This type is based on specialisation — each department does one job.
- Example: finance, HR, marketing, etc.
• Work is short-cycle (repetitive tasks)
• Inspired by Ford’s production line idea (mass production)
• Everything is designed for efficiency
- But problems appear:
• Work orders go back and forth between departments — slow communication
• Little cooperation between employees
• Not customer-focused
• Nobody oversees the entire process, so errors happen easily
→ In short: functional organisations can be efficient in theory, but inefficient in practice due
to poor coordination.
2. Structural Organisation
- This moves away from the functional model.
