1. Organizational Design, Diagnosis, and Development
Session 5
Size, Differentiation, & Integration

2. Objectives To examine the effect of size on organizational structure
To review potentialities for differentiation in the organization
To consider how differentiation affects the organization
To review techniques for integration of organizational units

3. The Affects of Size Size Specialization Standardization
Decentralization
Information
Technology
Inefficiency
Uncertainty

4. Size & Uncertainty
Small size, certain environment: Ex. A family business. Personal controls, informal
Large size, certain environment: Ex. Bank. Bureaucratic controls
Small size, uncertain environment: Ex. Electronic firm. Organic form
Large size, uncertain environment: Ex. University, Highly departmentalized, localized control, overarching control by top administration & councils

5. Differentiation
Differentiation: Formation of units to handle specialized functions
Lateral differentiation: Units are formed at the same level of authority
Vertical (hierarchical) differentiation: Units are formed at varied levels of authority

6. Lateral Differentiation
Goals vary between functional areas
Time orientation varies
Task vs relationship orientation varies
Unit structure varies

7. Factors Affecting Lateral Differentiation
Environment: External demands on the organization require separate units from those which deal with internal demands
Technology: Varying technologies in the organization require separate units to deal with specialized operations.

8. Vertical Differentiation

9. Integration
Integration: The mechanisms for coordinating efforts between departments and unit
Lateral integration: Using both new structures and boundary roles to achieve coordination across departments
Vertical integration: Using both new hierarchy and information systems to coordinate between layers of authority

10. Backwards & Forwards
Summing up: Today’s session involved a look at the affects of organizational size on its structure. We all discussed differentiation in the organization and what affects it as well as the need for integration
Looking ahead: Next time we begin to look at ways to design groups, departmentation.