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
Managing Intensity (MI)
Ratio between supporting and managing employees to employees directly concerned with the production
MI = # of supporting and managing employees / # of employees directly concerned with production
–> The increasing size of organizations may lead to an overproportional increase in the number of supporting and managing employees (“Big Head organizations”).
Configuration Index (CI)
Key figure describing the configuration of hierarchies
CI = #of hierarchical levels (Wurzel aus #of employees)
Number of employees who are subordinated to one instance
