Organizational Design Process and Integration: Key Principles and Effective Features
Item 7. The Basic Process Design and Integration
1. Introduction
Definition of Organizational Design Process
“Specific management tasks and activities taking place within the organization to its environment through a set of processes, such as to provide a framework in which individuals relate and resources to achieve compliance certain objectives.”
Organizational Design Process
Combination of two factors:
- Orderly distribution of tasks between the individuals of the organization.
- Coordination of efforts.
Objectives:
- Develop formal and informal structure in which individuals relate and transfer resources to achieve objectives.
2. Concept of Setting in Organization Design
The fit or congruence in organizational design is the degree to which the system components fit together in a coherent or consistent and is one of the key issues in organizational design.
The concept of setting can be applied in three areas:
- SCOPE OF THE STRATEGY: The setting in this area occurs when the chosen strategy is consistent with the existing environment, internal situation and the mission and objectives.
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- FIELD OF ORGANIZATIONAL DESIGN: Is that the adjustment of the elements of the organization are consistent with each other and in turn that this coherence is compatible with the environment or context in which we operate. This is precisely the area on which we will focus and strategy.
- GLOBAL SCOPE: Implies consistency of the organization as a whole and when they get the two previous settings. That is, when selecting an appropriate strategy (strategic fit) and in turn we implement a consistent and compatible with this strategy (organizational fit).
ORGANIZATIONAL DESIGN SCHEME OF GALBRAITH AND KAZANJIAN
STRATEGY
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Results
Within the study of organizational level we can distinguish different levels of adjustment:
- First Level: Set between the components of the organization as two to two.
- Second Level: Set between the components of the organization considered as a whole.
If we focus on the first level, the table shows the fit between the various components and an example that clarifies the concept:
First Level
ADJUSTMENT | EXAMPLE |
Individual / Organization formal | Is there a convergence of the objectives of individuals and the organization? Ex: The company must address objectives of the individuals in the organization. |
Individual / Task | Do individuals with the skills and techniques to achieve the demands of the tasks? Ex: Individuals perform tasks and make sure if we are the best can play or can play other better. We must always assign the right people to each task. |
Individual / Organization informal | How to achieve the needs of individuals in the informal organization? Eg: The organization has to deal with that, although the individual has his freedom of action and can have bad relations with others, relationships are the most favorable for it. The departments that have more to have more conflicts. |
Task / Formal organization | Are the organizational arrangements to achieve the demands of the task? Ex: The company says each has q as related to the following for the company to flow properly. This has to do with orders to be perfect and there are no gaps. |
Task / Organization informal | Does the structure of the informal organization carrying out the tasks? Eg conflicts between workers and in many cases the heads are things the organization does not control. |
Organization formal / informal organization | Are the goals and informal organizational structures consistent with the formal organization? Ex: The objectives never coincide. Everyone looks after their interests. |
There is no single way to get the fit of an organizational design, so that various combinations of design variables can lead to the same results in terms of organizational effectiveness.
It is not something static that arises only once, this is a dynamic process to consider changes in the environment, strategy or internal conditions in the organization.
3. Processing of Information Needs and Capabilities
The organizational design should allow the generation and transmission of information between those who implement and manage the tasks of the organization.
From this definition, the model presents the following principles of transmission:
- Different tasks pose different information processing needs: The greater the uncertainty as much information must be processed among decision makers for their successful implementation.
- Factors affecting the information processing needs:
Environmental conditions. If this is stable, the organization is aware of it through past experience, but if it is complex, uncertainty is an element linked to their development.
Nature of the task. The need for information is determined by the diversity of objectives (e.g., different product lines are manufactured), the interdependence between subtasks and the unpredictability of the task (e.g., routine or non-routine task).
Performance level required to perform the task. The larger, more alternatives should be considered when making a decision (impact and importance of the work I do).
- Different organizational designs provide different information processing capabilities:
- The main mechanisms for general information processing capacity:
Differentiation of activities, such as departmentalization allows people separated from the rest group that conditions existing information flows within the company.
Coordination mechanisms, hierarchies, rules, procedures, committees… facilitate the transfer of information from one unit to another.
Management processes such as planning and control systems, information systems management or incentive systems.
3. The organizational fit between task and organizational design will occur when the information processing needs of the task match the information processing capacity of organizational design.
There is a “mismatch” when:
- The information processing needs are beyond the capacity of organizational design. The design is not capable of handling the task, for example, may be a lack of coordination, a lack of control, a saturation of the line of authority can not solve the anticipated problems…
- The information processing needs are lower than the capacity of organizational design. In this case, the organization is operating with excessive costs and although the task is running at the required level of performance, design efficiency suffers.
4. Basic Principles of Organizational Design
Designed the structure in 3 perspectives:
1. VERTICAL: Specifying the chain of command or authority.
2. HORIZONTAL: Specifying the lesser or greater division of labor and specialization of tasks. As the company grows it is necessary to specialize in tasks. These will require more people and so on.
3. SEARCH THE BALANCE OF PROCEDURE: Having a hierarchical line of authority, causing gaps and try to cover this because if not covered there is no connection between them and other departments.
VERTICAL DESIGN PRINCIPLES |
BASIC
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DERIVATIVES
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HORIZONTAL DESIGN PRINCIPLES |
BASIC
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DERIVATIVES
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BALANCE DESIGN PRINCIPLES |
BASIC
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DERIVATIVES
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7. Effective Design Features
We can say that there is no single suitable design that is best for all organizations.
The main determinants are the conditions of environment, technology, organization, goals and objectives, life cycle that is (age) and culture.
Context variables (CONTINGENCIES)
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The characteristics of good design are:
- EFFICIENCY, i.e., do things. In the late 80’s and early 90’s, companies like IBM or General Motors faced difficult situations introducing new designs. Changing design configurations can be done to eliminate duplication, improve responsiveness and achieve economies of scale.
That is, we must ensure efficient designs and the goals of adequate resources.
E.g., an organization will be inefficient when there are more people right, i.e., have positions that are not necessary and to avoid this inefficiency, the organization does not have to lay off but may relocate to these workers in other activity that is efficient for the company.
Another possible inefficiency, red tape is because they may be useless and carry complex and slow process, so that should diminish as they are not necessary.
- INNOVATION. Even organizations that operate on simple and static environments require some degree of innovation and design should be stimulated through the provision of resources and the necessary communication. And if the environment is complex and dynamic, innovation is essential. In this case the designs that keep the organization in close contact with environmental elements are critical to the survival of the company.
In conclusion, organizations must innovate the organizational design, not the product, since either you innovate or company may disappear.
E.g., in telecommunications:
Telefonica, new functions should be reorganized to prevent customer churn due to great competition today. To create this new department call you if you want to leave that company’s offering of new products and avoid the leak.
Another example is BIMBO. All businesses are affected by the crisis, however, there are some like Bimbo affecting them less because people are deprived of other activities such as food gym.
Despite this, Bimbo also have to innovate in other ways, perhaps, as specialized its workers to avoid monotony and increase productivity.
- FLEXIBILITY AND ADAPTABILITY. Not only is it necessary to innovate, the ability to change and respond to environmental conditions is critical for survival. It should also achieve a balance with maintaining a certain degree of consistency and predictability. The company must be able to adapt to threats and anticipating more flexible.
E.g., outdoor stoves. Because of new anti-snuff companies stoves should have anticipated the demand for outdoor heaters for bars, as they must adjust to new situations and increase their customers, sales, etc.
- FACILITATION OF INDIVIDUAL PERFORMANCE AND DEVELOPMENT. Whatever the design, should enable individuals to perform at its highest capacity as possible and encourage them to develop learning new activities and to accept new responsibilities. It should also provide a clear career path. Many times, instead of contributing to these activities, the block and stifle the human factor. For example, functional designs can classify individuals into narrowly defined functional tasks.
That is, performance should be facilitated and that if a worker feels will be made more productive and the company have to provide worker’s professional development so that it can make the most of their workers.
Ex: HR Departments of large companies employ staff trained to motivate workers.
FACILITATION COORDINATION AND COMMUNICATION. Although it is not sufficient, the right design will facilitate coordination and communication where needed most. In other words, to facilitate communication within the company through a formal organization (rules and tasks you have to make employees and organizations).
Due to the vertical design may be lack of communication, the solution would be to establish a formal structure that facilitates coordination and communication among workers of a company.
- FACILITATING THE DEVELOPMENT AND IMPLEMENTATION OF THE STRATEGY. The relationship between strategy and design has been the subject of many investigations in the field of business organization. As organizations grow and adopt new strategies may need to modify their designs. And at the same time, different design configurations can be made available various resources and information that can result in new strategies.
That is, if any company wants to grow in the market has to invest, because you will need to create new departments, expanding departments such as finance, sales, thus to have more customers and grow the company.