MaOB

Dimensions of Organisation Structure

• Structural Dimensions
– Complexity
– Formalisation
– Centralisation
• Contextual Dimensions
– Strategy
– Organisation Size
– Technology
– Environment
– Power-Control
 Structural Dimensions
• Complexity
– Horizontal
• Specialisation
– Functional specialisation
» When jobs are broken down into simple and repetitive tasks
– Social specialisation
» When individuals are specialized rather than their work
– Vertical
• Span of control
– Spatial
• Formalisation
– On job / Externalised (unskilled employees)
– Off job / internalised (for skilled employees)
• Centralisation
 Horizontal Differentiation
• Most visible evidence in organizations of horizontal
differentiation is Specialization and Departmentalization
• Specialization
– Functional Specialization – in which jobs are broken down
into simple and repetitive tasks, also known as division of
labour. This creates high substitutability among employees
and facilitates their easy replacement by management.
– Social Specialization – where individuals are specialized
rather than their work. Social specialization is achieved by
hiring professionals who holds skills that cannot be readily
reutilized, for example, nuclear physicist, civil engineer etc.
 Classification of Formalization
• There are on job formalization and off job
formalization. When the formalization is done on job
through written rule, procedures and regulations of
the unskilled worker then it is called Externalized.
• Another type i.e. off job is called Professionalization,
where the incumbents are socialized before entering
the organization, and then the formalization is called
Internalized. For example, engineers doctors etc. in
this case of internalized formalization the written
rules will be less in number even though the rules
observed will be of high order.
Relationship between structural dimensions

• Formalisation Complexity
ᴕ
• Centralisation 1/Complexity
ᴕ
• Formalisation 1/ Centralisation (Could not
ᴕ
be clearly established)
 Environmental Uncertainty
• Simple + Stable =
• Low Uncertainty
1. Small number of external elements
and elements are similar
2. Elements remain the same of change
slowly
• Examples: soft drink bottlers, beer
STABLE
distributors, container
manufacturers, food processors
Un
ENVIRONMENTAL
• Simple + Unstable =
CHANGE
• High-Moderate Uncertainty
1. Small number of external elements
and elements are similar
UNSTABLE 2. Elements change frequently and
unpredictably
• Examples: E-commerce, fashion
clothing, music industry, toy
manufacturers
SIMPLE
ENVIRONMENTAL COMPLEXITY
• Complex + Stable =
• Low-Moderate Uncertainty
1. Large number of external elements
and elements are dissimilar
2. Elements remain the same or change
slowly
• Examples: Universities, appliance
manufacturers, chemical cos,
insurance cos
ce
rta • Complex + Unstable =
int
y • High Uncertainty
1. Large number of external elements
and elements are dissimilar
2. Elements change frequently and
unpredictably
• Examples: Computer firms, aerospace
firms, telecommunications, airlines
COMPLEX
 Types of Knowledge Technology

P
R
O L Craft
B. O Non-Routine

A W
N
A H
L I Engineering
Routine
Y G
S H
Low High
Task Variability
 Dimensions of Knowledge Technology

• Task Variety: number of exceptions in the work. Frequency

of unexpected and novel events that occur in the conversion
process.

• Problem Analyzability: degree to which work activities

and problem solving activities are analyzable. Analyzable
problems can be solved with procedures and standardized
technical knowledge. Non-analyzable problems must be dealt
with by wisdom, experience and intuition.
Relationship of Department Technology to
Structural and Management Characteristics

Mostly Organic Structure Organic Structure

1. Moderate formalization 1. Low formalization
2. Moderate centralization 2. Low centralization
3. Work experience 3. Training plus experience
4. Moderate to wide span 4. Moderate to narrow span
5. Horizontal, verbal 5. Horizontal communications
communications meetings

CRAFT NONROUTINE

Mechanistic Structure Mostly Mechanistic Structure

1. High formalization 1. Moderate formalization
2. High centralization 2. Moderate centralization
3. Little training or experience 3. Formal training
4. Wide span 4. Moderate span
5. Vertical, written 5. Written and verbal
communications communications

ROUTINE ENGINEERING
 Five Organizational Structure
• Simple Structure
• Machine Bureaucracy
• Professional Bureacracy
• Divisionalized Form
• Adhocracy
 Simple Structure
• Strategic Apex, direct supervision, vertical
and horizontal centralization
• simple and dynamic, sometimes hostile
• Entrepreneurial firm
 Machine Bureaucracy
• Technostructure, standardization of
work process, limited horizontal
decentralization
• simple and stable
• Mass-production firms, service firms
with simple, repetitive works
 Professional Bureaucracy
• Operating core, standardization of skills,
vertical and horizontal decentralization
• complex and stable.
• School systems, social-work agencies,
accounting firms
 Divisionalized Form
• Middle line, limited vertical
decentralization, standardization of
outputs
• Relatively simple and stable; market
diversity
• Large corporations, government
 Adhocracy
• Support staff, mutual adjustment, selective
vertical and horizontal decentralization
• complex and dynamic.
• Consulting firms, advertising agencies,
chemical firms, space agencies
Matrix Structure
 Five Basic Parts
• Strategic apex
– The home of top management
• Techostructure
– The staff analysts who design the systems by which work processes and
outputs are standardized in the organization.
• Operating core
– The basic work of producing the organization’s products and services gets
done.
• Middle line
– Managers who stand in a direct line relationship between the strategic apex
and the operating core.
• Support staff
– The specialists who provide support to the organization outside of its
operating workflow.
 Ways to effect Coordination
• Direct supervision
– One person gives direct orders to others
• Standardization of work processes
– One person designs the general work procedures of others to ensure that
these are all coordinated.
• Standardization of skills
– A person is trained in a certain way so that he or she coordinates
automatically with others.
• Standardization of output
– One person specifies the general outputs of the work of another.
• Mutual adjustment
– Two or more people communicate informally among themselves to
coordinate their work. – Informal communication
 Five types of decentralization
• Vertical and horizontal centralization
– All power rests at the strategic apex.
• Limited horizontal decentralization
– The strategic apex shares some power with the technostructure
that standardize everybody else’s work
• Vertical and horizontal decentralization
– Most of the power rests in the operating core, at the bottom of the
structure.
• Limited vertical decentralization
– Managers of market-based units are delegated the power to
control most of the decisions concerning their line units.
• Selective vertical and horizontal decentralization
– The power over different decisions is dispersed widely in the
organization.
Organisational life cycle
 Five-Stage Model
• Entrepreneurial stage –
– Organisation is in its infancy
– Goals ambiguous
– Creativity is high
– Steady supply of resources is required
– Leadership crisis
• Collectivity stage –
– Mission is clarified
– Leadership is established
– Members show high commitment
 Cont…
• Formalisation and control stage –
– Structure stabilises
– Formal rules and procedures are imposed
– Efficiency is emphasised while innovation is de-
emphasised
– Stable structure
• Elaboration of structure stage –
– Organisation diversifies its product and services
– Structure becomes more complex and elaborate
– Decision making decentralised
 Cont…
• Decline stage
– As a result of competition, a shrinking market or
similar forces, the organisation in the decline stage
finds the demand shrinking
– Employees turnover increases
– Decision making is centralised
– Needs small group thinking
Organization Characteristics During Four
Stages of Life Cycle