KEY CONCEPTS OF ORGANIZATIONAL DESIGN

Key Concepts of Organizational Design

Key Concepts of Organizational Design

Introduction

Organizational designs are presented through organization charts also known as hierarchy of an organization. The block highlighted for the definition of organizational design (the way strategists of an organization structure the hierarchy of the organization to meet the organization's objectives and goals and use the organization chart is quite articulate. Organization charts have become a common part in all business organizations. They deliver the formal authority and expected communication channels of the organization--and also provide a representation graphically depicting the level or degree and other important indicators that the organization is undergoing. The author confirms that the communication and authority relationships are not shown in a compete manner. The informal channels within the specific part of the department is rarely depicted.

The background concepts you have seen before. Remember Appendix A? I am still amazed at how the work of Henri Fayol has persisted. We still use much of the terminology he coined. Some distinction is made about the differences between line and staff personnel. The concept of line vs. staff authority is not really addressed. Line authority is clear positional authority to make decisions relating to the work of the firm. Classically this means the manager on the line producing the product. Line authority is real, legitimate authority--within the legitimate realm of the manager. Staff authority is advisory--staff experts make recommendations that line managers may use or not. Causes some frustration for staff people.

Organization Design And Decision-Making Processes

Made up of the analysis of four factors that will will affect the organization--strategy, external environment, technical process, and size. These factors can affect each other in different ways.

1. The external environment--obvious. No business can function unless it has a firm grasp on the environment it "lives" in. You must forsee changes in the environment that will affect the firm. may include competitors, regulators, the economy, social change, etc.

"The information perspective--asks managers to assess the uncertainty in the external environment. Two possible strategies: design structures in the organization that increase information gathering about the environment. Or, design flexibility into the organization.

Environmental uncertainty is affected by the complexity of the external environment and whether that environment is stable or rapidly changing. Higher complexity and rapid change creates the most uncertainty. This harkens back to the idea that mechanistic organizations tend to be possible in very stable environments and organic organizations tend to be successful in complex, unstable ones--like the microcomputer industry. The figure 17-6 provides more detail about this idea. Note the characteristics included in each of the quadrants of the box. A simple static environment might be an electric utility. A complex dynamic environment is the telecommunications industry now. Complex static might be the auto industry. Simple dynamic might be represented by the music industry

The concepts of differentiation and integration are central to this discussion. Differentiation is much like differentiation in marketing--variations in the structure and normal behavior of members. The idea is that within an organization you may have ...