Challenges in organizational design Flashcards
Balancing differentiation and integration
organizational differentiation
- reduces complexity
- separation of task in (sub-) processes
organizational integration
- combination of (sub-) processes for efficient input-output transformation
- -> Level of differentiation determines level of integration
Types of differentiation
- Function differentiation
- Objects differentiation
- Decision process differentiation
- functional can be seen in single product firms or main product with side product
- divisional can be found in firms with related diversification
Function differentiation
- devide labor based on function
- integration of similar functions in departments
+ higher productivity due to specialization
- coordinate difficulties due to many interfaces
Objects differentiation
- goal is to exploit specialization advantages
- labor devision regarding to customer, products, regions + markets and good + services
- Manager act as superior –> highest level of hierarchy
- division on objects. integrates all necessary tasks –> second highest level of hierarchy is divisional organization
- –> alternative: devisions as departments (departments depend on headquarter); managing department as legal independent organizations (from multi corporate enterprise)
Objects differentiation (Vor- und Nachteile)
+ oriented toward relevant markets & competitive strategy
+ small units higher flexibility & reaction
+ transparency
- higher administrative effort
- rivalry between departments
- decrease in efficiency
Decision process differentiation
- devide labor based on decision making
- staff and line position is often conflictual –> well educated
- staff may challenge line position
- staff position may manipulate line position
- -> solution: job rotation, targeted candidate selection
Types of integration
- Hierarchy
- Programs
- Mutual adjustment
- Latent structures
- Non-organizational coordination
Hierarchy
- lower hierarchies report to higher hierarchies which give instructions
characteristics
1. Structure of hierarchy (Single-line hierarchy, Multiple-line hierarchy)
2. Number of hierarchical levels (Configuration Index (CI))
3. Producing vs. Supporting /Managerial employees (Managing Intensity (MI)) - can be regarded as incentive providing mechanisms and controlling instruments
Programs
- clearly defined and authorized guidelines (general rules) which are integrated automatically
- triggering situations must appear on regular basis
- this routine work exculpates instances from coordination tasks
- Problems arise from unexpected situations (are not considerate in program)
- Interdependencies are problems
Mutual adjustment
- horizontal agreement, so power is equal
- self-organization = interface formal regulation and informal practices –> no rules (difference to programs)
- Problems: self-organization may undermine hierarchical structures (people make own rules) –> research propose an industrialization of self-organizing process
Industrialization: commission (task forces); leadership team meetings; coordinator/teams of coordinators; Matrix organization
Latent structures
- Implementation of hierarchical independent teams which operate problem specific
- principle of multiple overlap
- multiple teams in hierarchical organizations to solve integration problems
- -> vertical overlap (every team is connected to next hierarchical level)
- horizontal overlap (cross-functional teams on some hierarchal levels)
- lateral overlap (cross-linked/independent from hierarchy –> network structure
Non-organizational coordination
- doesn’t specify who is responsible for which task
- norms, values and internal markets substitute the formal integration
Balancing centralization and decentralization
- centralization: decisive power only at (top-) management, organizational functions are integrated in the headquarter
- decentralization: organizational functions are serrated in different business divisions, every member is equipped with decisive power & bears responsibility
–> optimal balancing of centralization/decentralization is to equip department managers on low/middle level of hierarchy with some decisive power
Balancing standardization and flexibility (organizing decision making)
- standardization: is associated with centralization, general rules
- Flexibility: enriches autonomy of employees; members make own assessments of problems and coordinate themselves; considered as decentralized
–> mutual adjustments are often applied at high hierarchical levels or for uncertain complex tasks
Balancing mechanic and organic structure
- mechanic structure: should promote predictable behavior –> hierarchy, top-down management, centralized decision making; high level of standardization, communication between departments is up to manager
- -> mechanic: optimal for stable predictable environment
- -> organic: optimal for fast changing and complex environment
