University of Zagreb, Faculty of economics and business
Working paper series, Paper No. 08-06

Abstract
The complexity of today's business world is translated into complexity of the company's organization design (Galbraith, 2002). Organizations are forced to quickly adapt to emerging complexity if they want to survive. The change is addressing all areas of business, especially questioning organizational effectiveness and trying to find optimal solutions for doing business.
   In accordance with requirements, competitive trends are pushing executives to rethink traditional design configurations. Factors such as increased competition in cost, quality and service, and technical change have forced companies not only to seek out new ways of doing old tasks, but also new ways of  organizing either old or new tasks (Cross, 1990). Such focus on the flow of work within organizations, but as well as between them, is emphasizing process orientation as a new management paradigm. Inefficiencies of the two most commonly present structures – functional and divisional, in addition to emerging business trends, place the emphasis on a process-based organization as one of the possible solutions. The process-based organization is lead by the process paradigm, which is focused on the horizontal view of business activities and alignment of organizational systems towards business processes.
   Regardless of a large interest on business processes, existing organization design theory offers only general guidelines for process-based organizations or more precisely, a process-based organization design model. Consequently, the purpose of the paper is to demystify process-based organization design model. By clearly distinguishing between different levels of process orientation, and by addressing characteristics of the chosen model the paper will lead to better understanding of this way of organizing. Eventually, an operationalized
model of process-based organization is developed. Furthermore, the paper elaborates on differences between process-based and other organizational structures and philosophies (e.g. functional, product, matrix, project,
team-based).
   Besides structural elements, which will be in the primary focus, the paper will discuss the alignment of all other important organization design elements for process environment (e.g., management style, reward systems, performance metrics, people practices, organizational culture, etc.). There would be proposed necessary adjustments of organizational elements which should be aligned with the process-based structural solution. In such way, some of the blind spots of process-based organization design model would be revealed, providing practical implications for its implementation and ultimately, offering solution for rising business complexity.