7/31/2019 Basic Challenges of Organizational Design

1/3

Basic Challenges of Organizational Design

(Lecture notes)

Mechanistic and organic structures

Mechanistic structure high complexity (great deal of horizontal differentiation), highformalization, limited info. Network (mostly top down), little input by low-level members indecision making. The rigid pyramid-shaped organization.Opposite is the organic structure (transparency Robbins 204)

Why do structures differ?

Major causes:

1. Strategy Alfred Chandlers strategy-structure thesis changes in corporate strategy precedeand lead to changes in org. structure. Orgs begin with single product or service. Simple,therefore only simple structure necessary. Low complexity and formalization in org.structure. Companies expand, need more specialized units. Product diversification leads toindependent divisions.More contemporary research now focuses on three strategy dimensions innovation, costminimization and imitation and structural design that works best with each.Innovation strategy concentration on innovative products

Cost-minimization strategy basic product, little innovation, e.g. the discount storeImitation strategy combination of the two above. Mass-marketed clothes followingdesigner styles. Companies that follow smaller innovative companies with perhapssuperior products.(transparency p. 206)

2. Organization size

Large organizations generally contain a great deal of vertical and horizontal differentiation.More likely to require decentralized decision making.More theoretical approach when an organization hires more employees it will attempt to

take advantage of the economic advantages of specialization. Result is increasedhorizontal differentiation. Control by management requires more formal rules andregulations. Even greater vertical differentiation new units created to co-ordinate extraactivities of organization members.

3. TechnologyTechnology how does an organization transfer its input into output? How does anorganization convert financial, human and physical resources into products or services?Automobile company uses assembly line universities use lectures, case studies etc.

7/31/2019 Basic Challenges of Organizational Design

2/3

Woodwards thesis specific structures associated with 3 technology classifications unit production, e.g. custom-built articles, mass production, e.g. automobiles and processproduction, e.g. oil refineries.(Transparency 208/ + Jones 273)

Per rows thesis Woodwards thesis only applied to manufacturing industries. Perrowdirected his attention to knowledge technology. He proposed that technology be viewed intwo terms:- the number of exceptions individuals encountered in their work (task variability)- the type of search procedures followed to find successful solutions to these exceptions(problem analyzability)

Task variability routine jobs (worker on assembly line) vs. consultant. Basically thenumber of exceptional solutions there are in a job. The difference between a cook at aMcDonalds restaurant and a top management position.

Problem analyzability - Some problems easily defined and logical to solve. Others ill-defined and cannot be solved by logic. - they require experience, intuition, and judgment.

Perrow used these two dimensions to construct a 2x2 matrix (Ex. 13-4) showing 4 types oftechnology.Routine technologies have few exceptions + easy-to-analyze problems steelproduction/oil refining.Engineering tech. have many exceptions but can be handled in systematized manner construction of bridges.Craft tech. deal with difficult problems, but few exceptions. Shoemaking and furniturerestoration.Non-routine tech. have many exceptions + difficult-to-analyze problems, e.g. aerospaceoperations.Perrow argued that cells 1 and 2 fit with mechanistic structures cells 3 and 4 with organicstructures.

Thompsons thesis Thompson argued that 3 techn. categories could be used toclassify organizations long-linked, mediating, intensive.Long-linked tech. is characterized by a number of sequential and repetitive steps, such asassembly-line technology. The success of the operation depends on co-ordination anerror at the beginning affects the whole process. Input, conversion and output must be

performed in series.Mediating tech. based on pooled task interdependence. Each part of the organization(individual, dept) contributes independently to organizations performance. .Activities canbe controlled by standardization, e.g. chain of supermarkets. Mediating because theorganization links clients on both the input and the output side of the organization manufacturers and customers in the case of supermarkets.Intensive tech. a customised response to a diverse set of contingencies. Reciprocal taskinterdependence activities of individuals and departments are fully dependant on oneanother. The order etc. of the tasks depends on the feedback from the problem itself. Agood example of this is a hospital the patient is the client. Thompson argued thatorganizations need to protect themselves from uncertainty. Structure depends on this

long-linked tech. orgs could integrate vertically to ensure availability of inputs, e.g. raw

7/31/2019 Basic Challenges of Organizational Design

3/3

materials, and the ability to dispose of outputs. It would seem logical to say that long-linked+ mediating technologies tend to fit best with mechanistic structures intensive tech. withorganic structures. .

4 Environment

The environment is the organizations e.g. suppliers, customers, govt. agencies basicallyanything that is outside the control of the org. itself.Recent research has shown that there are 3 key dimensions to any organizationsenvironment capacity, volatility and complexity.Capacity refers to the extent to which an environment can support growth, e.g. are thereenough raw materials, customers.Volatility refers to the amount of change in the environment, e.g. political change.Complexity are there e.g. many new competitors.

These factors combined suggest different structural arrangements. The more scarce,dynamic and complex the environment, the more organic a structure should be. The moreabundant, stable and simple the environment, the more mechanistic it should be.