Organizations are everywhere and central to our lives. We are part of many organizations: where we live, where we work or where we shop.

An organization is a social entity. It exists for, and is made up of individuals. An organization has goals and it exists for a purpose. This purpose is shared, for the most part, by its members. Organizations carry on activities of different kinds. Organizations have  boundaries : some individuals and activities are inside, and others are outside. The outside is called the environment; it is an important consideration for the design of the inside. An organization is constructed deliberately; it is an artificial entity; it is designed.

Organizations are designed to do something: undertake activities to accomplish goals. A fundamental issue in designing an organization is to group small activities together so that goals are realized or conversely, to take a large task and break it into smaller tasks.

The organizational design problem is how to take a large task and break it down into appropriate smaller task. These smaller tasks must be coordinated to accomplish the larger task and to realize the organization’s goal. Coordination is putting the pieces together. Without coordination, we do not have an organization, but only a collection of separate activities.

Three criteria are paramount in organizational design: effectiveness, efficiency, and viability. An organization should be designed to meet these criteria:

• Effectiveness: An organization is effective if it realizes its purpose and accomplishes its goals
• Efficiency: An organization is efficient if it utilizes the fewest resources necessary to obtain its products or services
• Viability: An organization is viable if it exists over a long period of time

These criteria represent different concepts that are desirable and provide general guidance in selecting appropriate organizational configurations and organization concepts.