G R O U P 8 ( S E C T I O N D )

ORGANIZATION DESIGN: FASHION OR FIT

ROADMAP

1. Why organizations fail?2. Components of an organization3. Context of an organization4. Five basic Configurations 5. OD – a diagnosis tool?6. Fashion Vs fit

MAIN PROBLEM IN ORGANIZATIONAL DESIGN

• Assumption that all organizations are alike• Ex: A hospital or an University has a totally organizational

design when compared to a factory floor

• Assumption that effectiveness drives design and coherence amongst the components when it’s other way round

COMPONENTS OF ORGANIZATION

• Take Strategic Decisions w.r.t. organizationTop management

• Basic work of an organizationOperating core

• Intermediate managementMiddle line

• Operational Design of core activity of organizationTechnostructure

• Every other service other required for an organizationSupport Staff

ILLUSTRATION OF COMPONENTS IN A RESTAURANT

Cooks, Waiters – Operating core

Watchman, Cashier,

sweeper – Support Staff

Head Chef - Technostructure

Manager – middle

management

Owner- Top Management

Note: Not all organizations need all these parts.

CONFIGURATION AND CONTEXT

Organization Structure

Organization Context

Organization Effectiveness

coherence

PARAMETERS OF CONTEXT

• Size & Age• Technological Dependence• Environmental factors• Simple/Complex• Stable/Unstable

• Power• External• Internal

PARAMETERS OF STRUCTURE

• Standardization• Formalization

• Hierarchy

5 CONTEXTS – 5 STRUCTURES

Structure

Simple Structure - CEO

Machine bureaucracy -

technostructure

Professional bureaucracy – operating core

Divisionalized form – middle line managers

Adhocracy - no distinctions

ContextDirect

Supervision ex: Small grocery

store

Standardization of work ex:

assembly line

Standardization of skills ex:

hospital, school

Standardization of outputs ex: Car company

Mutual Adjustment ex:

an airplane manufacturer

FEW EXAMPLES

Simple Structure – Sharmaji canteen

Machine bureaucracy – Mc Donald’s

Professional bureaucracy – MDI

Divisionalized form – Godrej

Adhocracy – Intel

EXAMPLES FROM CASE STUDIES

Simple Structure – Celestial Seasonings,

Machine bureaucracy – Acme

Professional bureaucracy – Omega

Divisionalized form - ABB

Adhocracy – W.L.Gore and associates

SIMPLE STRUCTURE

• Characteristics• Less standardization, formalization• Minimal planning, training or liaison• Very less middle management• They buy than make

• Advantages• Lean and flexible• Operates in dynamic and complex environment

• Highly centralized – rapid innovation in simple kind happens

• Not suitable for complex innovation• Generally young and small• They often die young because of heavy obsession of its

leaders• Under severe pressure organizations revert back to this

structure

MACHINE BUREAUCRACY

• Off spring of industrialization• High standardization – low skilled, highly

specialized jobs• Elaborate administration with many analysts

which in turn leads to horizontal decentralization• Conflicts out of rigid departmentalization and

hierarchy is required to oversee it

• Stable environment or stabilize the environment around by vertical integration• Size drives organization to bureaucratize and vice

versa• Mass production• External controls encourage bureaucratization

and centralization• Ex govt agencies

• Dull and repetitive work, alienated employees, obsession with control, massive size and inadaptability

CONCLUSION

A configuration according to the context of the organization should be chosen but competency that contrasts its configuration should not be expected