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Management
, Ninth Edition
Robert Kreitner, Arizona State University
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| | Chapter Summaries
Chapter 10:
Organizing in the Twenty-First Century
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Contingency organization design has grown in popularity as environmental complexity has increased. The idea behind contingency design is structuring the organization to fit situational demands. Consequently, contingency advocates contend that there is no one best organizational setup for all situations. Diagnosing the degree of environmental uncertainty is an important first step in contingency design. Field studies have validated the assumption that organization structure should vary according to the situation.
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Burns and Stalker discovered that mechanistic (rigid) organizations are effective when the environment is relatively stable and that organic (flexible) organizations are best when unstable conditions prevail.
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Lawrence and Lorsch found that differentiation (division of labor) and integration (cooperation among specialists) increased in successful organizations as environmental complexity increased. Todays organizations tend to suffer from excessive differentiation and inadequate integration.
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There are five basic departmentalization formats, each with its own combination of advantages and disadvantages. Functional departmentalization is the most common approach. The others are product-service, geographic location, customer classification, and work flow process departmentalization. In actual practice, these pure types of departmentalization are usually combined in various ways.
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Design variables available to organizers are span of control, decentralization, line and staff, and matrix. As organizers have come to realize that situational factors dictate how many people a manager can directly supervise, the notion of an ideal span of control has become obsolete. Decentralization, the delegation of decision authority to lower-level managers, has been praised as being democratic and criticized for reducing top managements control. Strategic business units foster a high degree of decentralization. Line and staff organization helps balance specialization and unity of command. Functional authority serves to make line and staff organizations more organic by giving staff specialists temporary and limited line authority. Matrix organizations are highly organic because they combine vertical and horizontal lines of authority to achieve coordinated control over complex projects.
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Delegation of authority, although generally resisted for a variety of reasons, is crucial to decentralization. Effective delegation permits managers to tackle higher-priority duties while helping train and develop lower-level managers. Although delegation varies in degree, it never means abdicating primary responsibility. Successful delegation requires plenty of initiative from lower-level managers.
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Many factors, with global competition leading the way, are forcing management to reshape the traditional pyramid bureaucracy. These new organizations are characterized by fewer layers, extensive use of teams, and manageably small subunits. Three emerging organizational configurations are the hourglass organization, the cluster organization, and virtual organizations. Each has its own potentials and pitfalls.
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