ORGANIZATION
AL DESIGN
What is the difference between
Organization Design &
Organization Structure?
Organization design is the
process of constructing and
adjusting an organization's
structure to achieve its goals.
Organization structure is the
linking of departments and jobs
within an organization.
KEY ORGANIZATIONAL DESIGN
PROCESSES
Differentiation is the process of deciding how to
divide the work in an organization. Differentiation
is a check to ensure that all aspects of the tasks
are assigned and will be accomplished. One of
the earlier studies found four dimensions (1)
manager's goal orientation, (2) time orientation,
(3) interpersonal orientation, and (4) formality of
structure.
Integration is the process of coordinating the
different parts of an organization.
BASIC DESIGN DIMENSIONS
Formalization is the degree to which the organization has official rules,
regulations, and procedures. An organization may have a formal
structure, but may operate informally.
Centralization is the degree to which decisions are made at the top of
the organization. The quality movement and programs that stress
delegating responsibility and decision making to lower levels result in
decentralization. At the same time, reductions in organizations have
altered the middle management tier of the organization by eliminating
part of the central reporting structure. Typically, the larger and longer the
organization has been in existence, the more centralized will be its
structure.
Specialization is the degree to which jobs are narrowly defined and
depend on unique expertise.
Standardization is the extent to which work activities are described and
performed routinely in the same way.
Complexity refers to the number of different types of activities that
occur in the organization.
Hierarchy of
Authority
The hierarchy of authority is the degree of
vertical differentiation across levels of
management.
Organizations that are highly specialized,
formalized, and centralized, typically have a tall
hierarchy of authority, and are highly
bureaucratic. The term bureaucracy has not
always had the negative connotation that it
carries today. Max Weber coined the expression
to mean a complex organization, based on
hierarchy of authority and adherence to rules.
MINTZBERG STRUCTURAL CONFIGURATIONS
Simple Structure
Machine Bureaucracy
Professional
Bureaucracy
Adhocracy
Divisionalized Form
FIVE STRUCTURAL
CONFIGURATIONS
The simple structure is a centralized form of organization that emphasizes
the upper echelon and direct supervision. Most organizations pass through the
simple structure in their formative years. It is the riskiest structure because
success is often based on whims.
The machine bureaucracy is a moderately decentralized form of organization
that emphasizes the technical staff and standardization of work processes.
The professional bureaucracy is a decentralized form of organization that
emphasizes the operating level and standardization of skills. One of the
difficulties that hospitals face is the professional bureaucracy. Physicians
typically are loyal to their profession rather than to the hospitals in which they
practice.
The divisionalized form is a moderately decentralized form of organization
that emphasizes the middle level and standardization of outputs.
The adhocracy is a selectively decentralized form of organization that
emphasizes the support staff and mutual adjustment among people.
CONTEXTUAL
VARIABLES
Size
The larger the organization, the more likely the basic design dimension will be formalized,
central, specialized, standardized, and complex. Additionally, the hierarchy of authority is
typically a tall structure. Large organizations also reap the efficiency advantages of
economies of scale.
Technology
Joan Woodward classified technologies by their complexity. Others considered the rate of
change of the technology to determine the best organizational structure. Technological
interdependence is the degree of interrelatedness of the organizations various
technological elements.
Environment
The organizational environment is considered anything outside the boundaries of an
organization. The task environment includes elements that are specifically related to the
attainment of the organization's goals. Burns and Stalker compared the rate of change and
determined that organizations with stable technologies typically have an organic or flexible
structure. Those with low rates of change were mechanistic structures. The perception of
environmental uncertainty or the perception of the lack of environmental uncertainty is
how the contextual variable of environment most influences organizational design.
FORCES RESHAPING
ORGANIZATIONS
Life Cycles in Organizations
The organizational life cycle is comprised of differing stages of an organization's
development from birth to death. The initial stages of the life cycle exhibit aspects of
organic structures. As organizations progress through the stages they become more
mechanistic.
Globalization
As organizations develop globally, they often change their structures to accommodate
the decentralization necessary because of geographic boundaries. As companies become
transnational in perspective they are likely to have two or more headquarters.
Changes in Information-Processing Technologies
Technology serves to share resources and can enhance either a structure of
centralization or decentralization.
Demands on Organizational Processes
Organizations must adapt quickly to changes at a pace unprecedented in organizational
history.
Emerging Organizational Structures
Emerging structures will necessarily consider the dynamics and issues surrounding total
quality management.
COMMON
ORGANIZATIONAL
DESIGNS
SIMPLE STRUCTURE
An organizational form in which the owner-manager makes most of
the decisions and controls activities, and the staff serve as an extension of
the top executive.
Advantages
o
o
o
Highly informal
Centralized decision
making
Little specialization
Disadvantages
o
Employees may not
understand their
responsibilities
May take advantage
of lack of regulation
FUNCTIONAL
STRUCTURE
An organizational form in which the major functions of the firm,
such as production, marketing,R&D, and accounting, are grouped
internally.
Disadvantages
Advantages
Enhanced coordination and control
Centralized decision making
Enhanced organizational-level perspective
More efficient use of managerial and
technical talent
Facilitated career paths and development
in specialized areas
Impeded communication and coordination
due to differences in values and orientations
May lead to short-term thinking (functions
vs. organization as a whole)
Difficult to establish uniform performance
standards
DIVISIONAL
STRUCTURE
An organizational form in which products, projects, or product markets are
grouped internally.
Also called multidivisional structure or M-Form
Advantages
Separation of strategic and
operating control
Quick response to important
changes in external environment
Minimal problems of sharing
resources across functional
departments
Development of general
management talent is enhanced
Disadvantages
Can be very expensive
Can be dysfunctional
competition among divisions
Differences in image and quality
may occur across divisions
Can focus on short-term
performance
MATRIX
STRUCTURE
an organizational form in which there are multiple lines of authority
and some individuals report to at least two managers.
Advantages
o
o
Facilitates the use of specialized
personnel, equipment and facilities
Provides professionals with a broader
range of responsibility and
experience
Disadvantages
o
o
o
Can cause uncertainty and lead to
intense power struggles
Working relationships become more
complicated
Decisions may take longer
Contemporary Organizational Designs
o Team structures
The entire organization is made up of work groups or self-managed teams
of empowered employees.
o Matrix and project structures
Specialists for different functional departments are assigned to work on
projects led by project managers.
Matrix participants have two managers.
o Project structures
Employees work continuously on projects; moving on to another project
as each project is completed.
o Boundaryless Organization
An flexible and unstructured organizational design that is intended to
break down external barriers between the organization and its customers
and suppliers.
Removes internal (horizontal) boundaries
Eliminates the chain of command
Has limitless spans of control
Uses empowered teams rather than departments
Eliminates external boundaries
Uses virtual, network, and modular organizational structures to get closer to
Every organization
needs a structure in order to
operate systematically.
The organizational structures can
be used by any organization if the
structure fits into the nature and
the maturity of the organization.
~END~
Thank you
and Good Day!
