The following outline summarizes the essential steps in designing a sound organisation structure:-

Step 1. Clarify, in writing, the over-all objectives desired for the organisation as a whole asking yourself - Why was the organisation established and what is it now trying to accomplish ?
Step 2. Determine what major activities are necessary in order to achieve desired objectives and results ?
Step 3. Group these activities into closely related major functions (design, distribution, finance). This grouping must be simple, tailor-made for each organisation.
Accepted by those who will be affected.
Step 4. Systematically unite the major functions into a sound, simple framework which constitutes the skeleton of the organisation structure.
The organisation structure as a whole and each part there of should
be designed so as to facilitate the accomplishment of definitely established
objectives and also encourage:
(a) Direct, clear-cut lines of authority, accountability and responsibility.
(b) Optimum performance by each of the functional groups, with clean cut-off lines of accountability.
Avoid overlaps and gaps of responsibility.
(c) Ease of co-ordination and communications - up, down and across all levels of the organisation.
(d) The completion of periodic performance appraisals of the work of each functional group.
(e) High morale and job satisfaction on the part of every person in the organisation.
Step 5. Complete the basic organisation structure and get the necessary approvals, in principle,
before attempting to complete any detail breakdowns by departments, sections and units.
Step 6. Observe the following techniques before attempting to put any organisation
structure into effect:-
(a) Develop an "ideal structure" that is the best structure that can be designed for this organisation.
(b) Identify the difference between the "ideal structure" and the "current structure"
Ask yourself how will the ideal structure facilitate improved performance ?
(c) Review the potential utilization of the present staff in the proposed structure.
In priority of importance, what steps would need to be taken in order to fit the
present staff into the proposed "ideal structure" ?
(d) Ascertain what personnel problems are involved with respect to viewpoints
vested interests and objections to the changes that may be required by the
proposed structure and what are the solutions to these problems ?
(e) Develop a revised chart which can be recommended for approval and a tentative
schedule of changes that are required in order to bring about needed
improvements. What is the best sequence of changes to be made ?
When should these changes be made and who should do what ?
(f) Move the revised organisation plan, as approved, forward as rapidly as
changes can be made, with the least possible disturbance of morale and
productivity and the best interests of the over-all organisation.
Determine who should be accountable for following through all phases of
the plan as approved.


The effecting of changes in a large organisation is a complex process.
Time is a central consideration.

It takes time, considerable time, for adults to change their habits of working.
Most adults resist any changes in their environment, responsibilities and authority.

Some of the steps that take time in effecting organisational changes are as follows:-
  1. Recognition of organisational defects
  2. Determination to take corrective action
  3. Making a thorough study and an accurate analysis of the total organisational situation
  4. Development of the proposed plan of organisation and securing understanding through employee participation.
    Securing necessary clearances, recommendations and approval of the proposed plan
  5. Announcement of the New Plan Of Organisation
  6. Detailing revised assignments of new functions, responsibilities, authority and accountability
  7. Re-alignment of various operating procedures, relationships and incentives in conformity with the revised plan
  8. Monitoring the plan and effecting remedial action wherever indicated without delay
  9. Adjusting and revising the plan in the light of experience
  10. Establishing effective management controls.
    Establishing criteria for measuring management performance.
    Conducting periodic performance appraisals as required and maintaining minimum management reports.
The problem of how to alter changes in human behaviour is much more complex than
the problem of designing a sound organisation plan.
Finally, the revised plan of organisation, and the performance of the management
team affected, should be measured by its effectiveness in:
  1. achieving an increased "share of the market"
  2. Improving its "net earnings on invested capital"
  3. Other criteria as agreed upon prior to the approval of the plan.