8-dimensions of organization structure

7/29/2019 8-Dimensions of Organization Structure

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Module IV

Chapter:8

Organizing-i)

Dimensions of OrganizationStructure


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1. What is Organization Structure?

Divergent labels and definitions are given tothe term Organization Structure by the

theorists.2. Dimensions of Organization Structure:

There is general agreement amongst

theorists on dimensions of theOrganization structure as brought outbelow:


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There are three dimensions of Organization

Structure:

1. Complexity.

2. Formalization.

3. Centralization.


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1. Complexity:

-Definition: Complexity refers to degree of

differentiation that exists within

organization.

-Nature of Differentiation:

1.Horizontal differentiation2.Vertical differentiation

3.Spatial differentiation


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1. Horizontal differentiation?

Horizontal differentiation refers to the degree ofdifferentiation between units based on

orientation of members, the nature of tasksthey perform, and their education and training.

- Features of Horizontal differentiation:

1. Specialization

2. Departmentation


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These two terms are interrelated.

-Specialization is bifurcated into two categories:

1.Functional Specialization: in which jobs are

broken into simple and repetitive tasks. This isalso known as division of labor.

Functional specialization creates high

substitutability among employees and facilitatestheir easy replacement by management.


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2. Social Specialization: is achieved by

hiring professionals who hold skills that

cannot be readily routinized.

Most organizations heavily rely on

Functional Specialization or Division of

Labor as following advantages accrue to

the Organizations from Division of Labor.


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1. In highly sophisticated and complex jobs,

no one can perform all the tasks owing to

physical limitations

2. Another element in favor of division of

labor is efficiency.

3. Division of labor creates a group of

specialists. This group of specialists is

called departmentation.


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Departmentation is therefore the way in

which organizations typically coordinate

activities that have been horizontally

differentiated.

Departments can be created on the basis of

simple numbers, function, product or

service, client, geography or process.


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How Horizontal differentiation leads to complexity?

Large number of different occupations within

organization that require specialized knowledge

and skills, the more complex the organization is.This is because diverse orientations make it more

difficult for management to communicate and

more difficult for management to coordinate their

activities.


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2. Vertical differentiation: refers to the

depth in the structure.

Organizations with the same number of

employees need not have same degree of

vertical differentiation.

Organizations can be tall, with many layers

of hierarchy, or flat with few levels. The

determining factor is span of control.


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The span of control defines number of

subordinates that a manager can direct

effectively. If this span is wide, managers will

have a number of subordinates reporting tothem. If it is narrow, managers will have few

underlings. All things being equal, the smaller

the span, the taller the organization.


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The size of the Organization, type of job,and individual characteristics of the jobholder will moderate the span-

organizational effectiveness relationship.The choice of organizational model depends

on factors stated above.

The research as to tall or flat organizationalstructure is better for the Organization isinconclusive.


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How Vertical differentiation leads tocomplexity?

The more the levels that exit between top

management and operatives, the greaterthe potential of communication distortion,the more difficult it is to coordinate thedecisions of managerial personnel, andthe more difficult it is for top managementto oversee actions of operatives.


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Inter-relationship of Horizontal differentiation and

Vertical differentiation:

Vertical and horizontal differentiation should not

be construed as independent of each other.Vertical differentiation may be understood best

as a response to an increase in horizontal

differentiation. As an organization expands, it

becomes increasingly necessary to coordinatetasks.


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3. Spatial differentiation: refers to the

degree to which location of an

organizations offices, plants, and

personnel are dispersed geographically.

Spatial differentiation can be thought as

extended dimension to horizontal and

vertical differentiation.

Several examples may make this clear.


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Do these three differentiations come as

package?

The answer is No.

A closer look at the organizations tell us that

various elements may differ significantly

within given organization. This is more

evident with horizontal organization.


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Why complexity is important to managers?

Because it creates different demands to

managers. The higher the complexity, the

greater amount of attention they may pay

to dealing with problems of

communication, coordination and control.

This has been described as a paradox in the

analysis of organizations.


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2.Formalization: refers to the degree to

which jobs within organization are

standardized. If a job is highly formalized,

the job incumbent has a minimum amountof discretion over what is to be done, when

it is to be done, and how he or she should

do it.


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There is high formalization where explicit jobdescriptions, lot of organizational rules andclearly defined procedures covering work

processes in organization are found.Where formalization is low, employees

behavior would be relatively nonprogrammed.

So formalization is a measure ofstandardization.


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- Range of Formalization:

1.The degree of formalization can vary

widely among and within organization.

2.Formalization differs not only with whether

the jobs are unskilled or professional but

also by level in the organization and by

functional department.


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- Why is Formalization important?

1.Standardizing behavior reduces variability.

2.Standardization also promotes coordination.

3. The economies of standardization should not be

overlooked.

- The make or buy Decision : This is with regard to

propensity to formalize jobs. Differentyardsticks for unskilled and professional

employees.


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Formalization Techniques:

1. Selection:

2. Role Requirements:

3. Rules: are explicit statements that tell anemployee what he or she ought or oughtnot to do.

4. Procedures: are a series of interrelatedsequential steps that employees follow inthe accomplishment of their job tasks.


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5.Policies: are guidelines that set constraints

on decisions that employees make.

6. Training: on the job and off the job.

- Relationship between Formalization and

Complexity:

1.It is strong.

2.High complexity with low formalization and

vice versa.


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3. Centralization: can be described more

specifically as the degree to which formal

authority to make discretionary choices is

concentrated in an individual unit, or levelusually high in the organization thus

permitting employees usually low in the

organization minimum input into theirwork.


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A high concentration implies high

centralization whereas low concentration

indicates decentralization.

The following important issues need to be

answered before we discuss

Centralization.

1. Do we look only at formal authority?

2. Can policies override decentralization?


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3. What does concentration at a single pointmean?

4. Does an information-processing system

that closely monitors decentralizeddecisions maintain centralized control?

5. Does the control of information by lower-

level members result in thedecentralization of what appears to becentralized decisions?


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- Decision making and Centralization:

Steps in Decision making:

1.Information.

2. Interpretation and advice.

3. Choice.

4. Authorization.

5. Execution

6. Action


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Decision making is most centralized when

the decision maker controls all the steps.

- Why is Centralization important?

There are advantages of centralization as

well as decentralization. None of the

methods of decision making is good for all

the organizations at all points of time.


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-Relationship between Centralization and

Complexity: There is strong evidence of

inverse relationship between

Centralization and Complexity.

- Relationship between Centralization and

Formalization: It is highly ambiguous.


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Any Questions

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8-dimensions of organization structure

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