Chapter 15: Organizational design
Differentiation and integration are the keys to successful organizational design to achieve organization’s goals.
Differentiation involves the division of tasks in the organization and is categorized into three.
Horizontal differentiation involves a departmentalized structure where specialization is very common depending of the departments.
Vertical differentiation is based on the chain of command and the roles played in an organization.
Spatial differentiation is achieved through geographical location of operations.
The three differentiation types are used to assess the organization’s structure needs.
Integration on the other hand involves coordination of tasks in the organization.
Approaches called basic design dimensions i.e., formulation, centralization, specialization, standardization, complexity and hierarchy of authority exist to establish the most appropriate combination of differentiation and integration to meet organization’s goals.
Mintzberg proposed the five structural configurations all intended to meet organizational goals with each affecting the organization in its own way.
Simple structure; Coordination is achieved through direct supervision as vertical differentiation and formalization are limited.
Machine bureaucracy; Standardization of the work process helps achieve coordination, has limited horizontal differentiation and high formalization.
Professional bureaucracy; Employs both vertical and horizontal differentiation and emphasis on professionals’ expertise helps achieve coordination.
Divisionalized form is selectively decentralized and its level of horizontal specialization on the basis of expertise and training is high.
Adhocracy structural configuration is composite in nature such that each of its division may have its own configuration.
Four contextual variables are relied on in deciding what ought to be the best organizational design but do not however determine the structure.
Size is a variable which uses employee numbers to define organizational structures considering that other measures are correlated with the employee numbers.
Organizational structure is also highly dependent on technology which is vital to obtain output from the inputs.
The other contextual variable is environment and which is anything with the ability to affect the organization.
Task environment is of direct relevance to the organization and consists of the organization’s interest groups.
Environmental uncertainty explains the degree of changes in the environment which can be static or highly dynamic such that it is difficult to predict what may happen in future.
Strategy and goals is the last variable which is relied on by organization in order to adapt to its environment, ensure legitimacy, guide decision making and direct employees.
Forces reshaping organizations; Organizations must respond to the changes occurring within their operative environments in order to ensure their continued existence.
Life cycles in an organization is explained by stages which it may undergo throughout its existence.
Globalization is the other force which is a good example of special differentiation exposing organizations to conflicting and diverse environments.
Changes in information–processing technologies have had a very huge impact on every organization and have helped firms networks grow worldwide.
Demands on organizational processes; Managers must streamline processes to maximize efficiency in the organization.
The changes experienced are responsible for the three emerging organizational structures which are network, virtual and circle organizations.
Two factors can adversely affect organizational structure.
Poor alignment of structure and contextual variables contribute to a weak structure which has poor decision making, poor environmental forces’ response and conflicts.
Dysfunctional personalities borne by managers such as biasness, paranoia, political ideologies and others also affect the structure through poor decision making.
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