BA 5201 Organization and Management Perspectives on Organizations Instructor: Çağrı Topal

Organizational design The specific way the organization structurally or consistently operates in and responds to environmental contingencies or inconsistencies Structural dimensions or internal characteristics including differentiation and coordination Contingency dimensions or external boundaries including size, technology, environment, culture, and goals

Formal organization The official design explicitly formulated in organizational documents and defining the way the organization is supposed to operate President Vice president Department head

Informal organization The unofficial design implicitly codified into the norms and behaviors of organizational members and indicating the way the organization actually operates President Vice president Department head

Structure Differentiation Division of labor into tasks Specialization Integration Coordination of specialized tasks Cohesiveness

Differentiation/complexity: horizontal Division of work to be done into tasks and subtasks at the same organizational level The number of different individuals or units at the same level of an organization CEO Marketing Manufacturing HRM Finance

Differentiation/complexity: vertical Division of work by level of authority, hierarchy, or chain of command The number of different levels in an organization President Executive HRM Executive Finance V. P. HRM V. P. Finance Asst. V. P. Asst. V. P.

Differentiation/complexity: spatial Geographical location of different organizational activities Typical in multinational companies Geographical location of different organizational activities CEO North American Operations Asian Operations European Operations African Operations

Differentiation or complexity High horizontal differentiation High vertical differentiation High spatial differentiation Trend towards less complexity and more integration

Integration: formalization Based on rules, policies, and procedures Reliance on the written documents Employees assumed to be not well-informed, no so knowledgeable, less skilled, and possess no good judgment Related closely to spatial dispersion Not the answer to high uncertainty

Integration: hierarchy of authority or span of control The number of immediate subordinate positions a superior controls or coordinates Related closely to the number of hierarchical levels: flat or tall Depending on the ability and experience of the supervisor the ability and experience of subordinates the nature of the task being performed the spatial differentiation the amount and type of interaction

Integration: centralization Referring to the locus of decision making Decision-making authority vested in top management Lower-level employees assumed to lack awareness of general organizational goals and focus on localized concerns Lower-level employees not having necessary skills and information to make decisions Providing consistency operations and actions Time-consuming

Integration: standardization Setting consistent input, process, and output requirements to reduce uncertainty and unpredictability Input standardization: standardizing material and human resources Process standardization: standardizing the way a task is performed Output standardization: standardizing products or services

Structure: additional dimensions Professionalism: the ratio of employees with formal education and training Personnel ratios: the number of employees in different functions and departments as compared to the total number in an organization

Contingency or environment Internal environment Size Technology Goals and strategies Organizational culture External environment

Mechanistic vs. organic design-1 Design type Structural characteristic Mechanistic Organic Complexity High Low Formalization Centralization Span of control Narrow Broad Standardization

Mechanistic vs. organic design-2 Design type Contingency characteristic Mechanistic Organic Size Large Small Technology Manufacturing Service Goals and strategies Efficiency Innovation Organizational culture Rigid Adaptive External environment Stable Changing