| Chapter Summaries
Chapter 17 Organization Design
Universal approaches to organization design attempt to specify the one best way to structure organizations for effectiveness. Contingency approaches, on the other hand, propose that the best way to design organization structure depends on a variety of factors. Important contingency approaches to organization design center on the organizational strategy, the determinants of structure, and strategic choice.
Initially, strategy was seen as the determinant of structure: the structure of the organization was designed to implement its purpose, goals, and strategies. Taking managerial choice into account in determining organization structure is a modification of this view. The manager designs the structure to accomplish organizational goals, guided by an analysis of the contextual factors, the strategies of the organization, and personal preferences.
The structural imperatives are size, technology, and environment. In general, large organizations have more complex structures and usually more than one technology. The structures of small organizations, on the other hand, may be dominated by one core operations technology. The structure of the organization is also established to fit with the environmental demands and buffer the core operating technology from environmental changes and uncertainties.
Organization designs can take many forms. A mechanistic structure relies on the administrative hierarchy for communication and directing activities. An organic design is structured like a network; communications and interactions are horizontal and diagonal across groups and teams throughout the organization.
In the sociotechnical systems view, the organization is an open system structured to integrate two important subsystems: the technical (task) subsystem and the social subsystem. According to this approach, organizations should structure the task, authority, and reporting relationships around the work group, delegating to the group decisions on job assignments, training, inspection, rewards, and punishments. The task of management is to monitor the environment and coordinate the structures, rules, and procedures.
Mintzberg's ideal types of organization design were derived from a framework of coordinating mechanisms. The five types are simple structure, machine bureaucracy, professional bureaucracy, divisionalized form, and adhocracy. Most organizations have some characteristics of each type, but one is likely to predominate. Mintzberg believed that the most important consideration in designing an organization is the fit among parts of the organization.
The matrix design combines two types of structure (usually functional and project departmentalization) to gain the benefits of each. It usually results in a multiple command and authority system. Benefits of the matrix form include increased flexibility, cooperation, and communication and better use of skilled personnel. Typical problems are associated with the dual reporting system and the complex management system needed to coordinate work.
Virtual organizations are temporary alliances between several organizations that agree to work together on a specific venture. Reaction time to business opportunities can be very fast with these types of alliances. In effect, organizations create a network of other organizations to enable them to respond to changes in the environment.
Contemporary organization design is contingency oriented. Currently popular design strategies are reengineering the organization and rethinking the organization. Four factors influencing design decisions are the changing technological environment, concern for people as valued resources, the need to keep in touch with customers, and global impacts on organizations.