Organization Structure and Design

• SITUATIONAL INFLUENCES ON ORGANIZATION DESIGN Cont’d

• BASIC FORMS OF ORGANIZATION DESIGN
• EMERGING ISSUES IN ORGANIZATION DESIGN
Learning objectives:
• To identify and explain key situational
influences on organization design.
• Describe the basic forms of
organization that characterizes many
organizations.
• Identify and describe emerging issues
in organization design.
 Situational Influences on
Organization Design
Four basic situational factors:
• Technology
• Environment
• Size
• organizational life cycle
CORE TECHNOLOGY
• Consists of the conversion processes used to transform inputs (such as
materials or information) into outputs such as (products or services).
• Most organizations use multiple technologies, but an organization’s most
important one is called its core technologies.

• The link between technology and organization design was first

recognized by Joan Woodward.
• Three basic forms of technology were identified by Woodward.

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Basic Forms of Technology
1.) Unit or small-batch technology 2.) Large batch or mass-production technology

• The product is custom-made to customer • The product is manufactured in assembly-line

specifications or produced in small quantities. fashion by combining component parts into
• Example: another part of finished product.
• Example:

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Basic Forms of Technology
3.) Continuous-process technology

• Raw materials are transformed to a finished

product by a series of machine or process
transformations.
• Example:

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 Click icon to add picture

• Woodward found that the two

extremes(unit or small batch and
continuous process) tended to
have very little bureaucracy,
whereas the middle-range
organizations(large-batch or
mass-production) were much
more bureaucratic.
• She found that organizational
success was related to which
organizations followed the typical
patterm.

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ENVIRONMENT
• The first widely recognized analysis of environment –organization design linkages was
provided by Tom Burns and G.M Stalker.
• Two extreme forms of organizational environment: stable (one that remains relatively
constant over time) and unstable (subject to uncertainty and rapid change)

1.) Mechanistic Organization

• Most frequently found in stable
environments
• Free from uncertainty, organizations
structured their activities in rather
predictable ways by means of rules,
specialized jobs, and centralized
authority .

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ENVIRONMENT
• The first widely recognized analysis of environment –organization design linkages was
provided by Tom Burns and G.M Stalker.
• Two extreme forms of organizational environment: stable (one that remains relatively
constant over time) and unstable (subject to uncertainty and rapid change)

2.) Organic Organization

• Most often found in unstable and
unpredictable environments, in which
constant change and uncertainty
usually dictate a much higher level of
fluidity and flexibility.

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• These ideas were extended in the United States by Paul R. Lawrence and Jay W.
Lorsch.
• Lawrence and Lorsch suggested that organizations could be characterized along two
primary dimensions.

1.) Differentation 2.) Integration

• Is the extent to which the • Is the degree to which the various
organization is broken down into subunits must work together in a
subunits coordinated fashion.
• A firm with many subunits is highly
differentiated; one with few subunits
has a low level of differentiation.

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ORGANIZATION SIZE AND LIFE CYCLE
• Organizational size is defined as the total number of full-time or full-time–equivalent
employees
• A team of researchers at the University of Aston in Birmingham, England decided to
undertake a study of a wider array of organizations to determine how size and
technology both individually and jointly affect an organization’s design.
• When compared to small organizations, large organizations tend to be characterized
by higher levels of job specialization, more standard operating procedures, more
rules, more regulations, and a greater degree of decentralization.

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ORGANIZATION SIZE AND LIFE CYCLE
• Progression through which organizations evolve as they grow and mature
• The first stage is the birth of the organization.
• The second stage, youth, is characterized by growth and the expansion of organizational resources.
• Midlife is a period of gradual growth evolving eventually into stability.
• Finally, maturity is a period of stability, perhaps eventually evolving into decline.

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 Question:
What are your thoughts about starting out too
large to maintain stability, as oppose to
starting small and then growing?
Basic Forms of Organization
Design
• Functional Design
• Conglomerate Design
• Divisional Design
• Matrix Design
• Hybrid Design
FUNCTIONAL Click icon to add picture
(U-FORM)
DESIGN
• The functional design is an
arrangement based on the
functional approach to
departmentalization.
• This design has been termed the
U-form (for unitary) approach.
• Under the U-form arrangement,
the members and units in the
organization are grouped into
functional departments such as
marketing and production.

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It allows the organization to staff all important position with functional experts. It also promotes centralization.
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CONGLOMERATE
(H-FORM)
DESIGN
• H-form (for holding, as in
holding company),
approach.
• The conglomerate design is
used by an organization
made up of a set of
unrelated businesses.
• Thus, the H-form design is
essentially a holding
company that results from
unrelated diversification.

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The basic shortcoming of this design is the complexity associated with holding diverse and unrelated businesses. TREY 18
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DIVISIONAL Click icon to add picture
(M-FORM)
DESIGN
• Contrast to the H-form
approach
• M-form (for multidivisional)
approach, is based on
multiple businesses in
related areas operating
within a larger
organizational framework

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The opportunities for coordination and shared resources represent biggest advantages. TREY 20
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 Click icon to add picture
MATRIX
DESIGN
• Based on two overlapping bases
of departmentalization
• The foundation of a matrix is a set
of functional departments.
• A set of product groups, or
temporary departments, is then
superimposed across the
functional departments.
• Employees in a matrix are
simultaneously members of a
functional department (such as
engineering) and of a project
team.

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The matrix form is most often used in one of these three situations:
• First, a matrix may work when there is strong pressure from the environment.
• Second, a matrix may be appropriate when large amounts of information need to be processed.
• Third, the matrix design may work when there is pressure for shared resources.

Advantages Disadvantages
• First, they enhance flexibility. • Employees may be uncertain about reporting
• Second, team members are likely to be highly relationships.
motivated and committed to the organization. • some managers see the matrix as a form of
• Third, employees in a matrix organization have anarchy in which they have unlimited freedom
considerable opportunity to learn new skills. • dynamics of group behavior
• Fourth, an efficient way for the organization to
take full advantage of its human resources.
• Fifth, enhancing cooperation.
• Sixth, the matrix design gives top management
a useful vehicle for decentralization

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 Click icon to add picture
HYBRID
DESIGN
• Some organizations use a design
that represents a hybrid of two or
more of the common forms of
organization design.
• For example, an organization
may have five related divisions
and one unrelated division,
making its design a cross
between an M form and an H
form. I

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 Question:
What basic factors did you
consider in choosing a design?
 EMERGING ISSUES IN
ORGANIZATION DESIGN
• The Team Organization
• The Virtual Organization
• The Learning Organization
THE TEAM ORGANIZATION
• An approach to organization design that relies almost exclusively on
project-type teams, with little or no underlying functional hierarchy.

• Within such an organization, people float from project to project as

necessitated by their skills and the demands of those projects.

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THE VIRTUAL ORGANIZATION
• Closely related to the team organization is the virtual organization that has little or no
formal structure.

• Such an organization typically has only a handful of permanent employees and a very
small staff and administrative headquarters facility.

• As the needs of the organization change, its managers bring in temporary workers,
lease facilities, and outsource basic support services to meet the demands of each
unique situation.

• Virtual organization are conducting most- if not all-of their businesses online.

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THE LEARNING ORGANIZATION
• One that works to facilitate the lifelong learning and personal development of all its
employees while continually transforming itself to respond to changing demands and
needs.

• The idea is that the most consistent and logical strategy for achieving continuous
improvement is by constantly upgrading employee talent, skill, and knowledge.

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Thank You
Jenny S. Ortiz
21-55290

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