The Relationship Between Organizational Design & Decision-Making Processes

by Jagg Xaxx

The efficiency and effectiveness with which an organization makes decisions may make the difference between success and failure. The most appropriate decision-making structure will depend on the nature of the organization and its goals. For example, a military organization is most likely to function hierarchically because it must operate in high-stress situations that require immediate decisions.


Hierarchical organizations consist of higher echelons that make all decisions and lower echelons of functionaries who carry out orders. A hierarchical organization is appropriate for situations where there is no time or liberty for democratic consideration of alternatives. In the days of sailing ships, captains gave orders with the expectation of immediate obedience. Any other organizational arrangement could have resulted in a shipwreck. Individuals at the lower levels in a hierarchical organization have little say in how the organization is run. They also have little blame when problems arise or the organization fails.


Consensus organizations follow a model that is the opposite of a hierarchy. In a consensus group, the input and opinions of each individual are valued, and consultation continues until a decision is reached that is acceptable to all. The advantages of a consensus-based group include a high level of investment in the eventual decision by everyone, because they were a part of it. Disadvantages include the potential for interpersonal conflict and a time-consuming and sometimes inefficient decision-making process. Most consensus-based groups rely on discussion and agreement rather than voting and majority rule.


Many businesses and organizations structure their operations in the form of autonomous teams that are built around tasks and goals. These teams may be accountable to executive power, or they may be invested with the authority to make their own decisions. The advantage of this structure is that executives and higher-ups are not burdened with the duty of making every little decision. Organizations can maximize efficiency by delegating instrumental tasks to independent teams, thus distributing the workload evenly.


Publicly owned corporations are run by boards of directors who make decisions about the running of the company. The directors represent the interests of the shareholders, who can number in the thousands in large companies. Shareholders have a say in how the company is run, but because there are often so many of them, direct personal input is impractical. Boards of directors represent shareholders in the same way that elected officials represent voters. When their decisions turn out to be faulty and lead to damage to the company and loss of profit, boards of directors usually face the wrath of their shareholders for their bad decisions.

About the Author


Photo Credits

  • Images
bibliography-icon icon for annotation tool Cite this Article