Lecture 3 Mechanistic and Organic Forms of

Organisational Structure
Understanding Business Organisations
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UnderstandingBusiness
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Understanding Business
Organisations
Lecture 3:
Mechanistic and Organic Forms of
Organisational Structure
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.2
This topic will cover:
The main characteristics of mechanistic and
organic forms of organisation structure
The role of contingencies in choosing the most
Scope and Coverage
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appropriate form of structure
The main types of contingent factors shaping
organisation structures
The opportunities for management to select the
most appropriate structure
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.3
By the end of this topic, students will be able to:
Compare and contrast the mechanistic and organic
forms of organisation structure
Describe how contingencies play a role in selecting
Learning Outcomes
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the most appropriate form of structure
Understand the influence of the various contingent
factors on organisation structure
Explain why management choice is also a factor in
deciding upon an organisation structure
Lecture 3 Mechanistic and Organic Forms of
Organisational Structure
Understanding Business Organisations
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.4
An organisations strategy is
more likely to succeed if it
has an appropriate structure
E l i
Importance of Organisational
Structure
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Encourages people to act in
ways that support the
strategy
Supports organisational
goals
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.5
Emphasises the vertical hierarchy to achieve co-
ordination
Responsibilities are clearly defined
Rigorous reporting requirements
Mechanistic Structure
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g p g q
Policies are applied consistently
Communications are mainly vertical
Vertical aspects of the structure dominate and
control the organisation
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.6
Horizontal aspect of the structure is more influential
Tasks are broadly defined and flexible
Cross functional teams set up to work on problems
Authoritybased more on expertise than position in
Organic Structure
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Authority based more on expertise than position in
hierarchy
Communication is horizontal among those familiar
with the task
Lecture 3 Mechanistic and Organic Forms of
Organisational Structure
Understanding Business Organisations
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.7
Managers need to decide which approach is
appropriate
Mechanistic or Organic?
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Take account of theories that have been developed
Decision may depend upon contingencies
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.8
Mechanistic Organic
Specialised tasks Contribute experience to common
tasks
Hierarchical structure of control Network structure of contacts
Comparison of Mechanistic and
Organic Organisations
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e a c ca s uc u e o co o e o s uc u e o co ac s
Knowledge located at top of
hierarchy
Knowledge widely spread
Vertical communication Horizontal communication
Loyalty and obedience stressed Commitment to goals more
important
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.9
Contingencies are factors that encourage
managers to favour one approach rather than
another
They seek to create a structure that is consistent
The Influence of Contingencies
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with these contingencies
Successful organisations typically have a good fit
between contingency factors and structure
Lecture 3 Mechanistic and Organic Forms of
Organisational Structure
Understanding Business Organisations
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.10
Contingency factors Organisation structure
Strategy Mechanistic
Environment
Contingency Factors Shaping
Organisation Structures
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Size/Age Performance
Technology
Interdependence
Political contingencies Organic
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.11
Strategy adopted Appropriate organisation structure
Cost leadership strategy focus is on
increasing efficiency to bring costs down
below those of competing firms
Clear functional structure task
specialisation and strict chain of
command ensure that work is done as
efficiently as possible
Strategy as a Contingency
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Differentiation strategy focus is on
innovation and developing new products
or services more rapidly than competing
firms
Matrix or team-based structure
encourages innovation and flexibility by
having staff working together from across
functional boundaries
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.12
Structure
Environment as a Contingency
Mechanistic Organic
Uncertain
(unstable)
Incorrect fit:
Mechanistic structure
in uncertain
environment
Correct fit:
Organic structure in
uncertain environment
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Environment
(unstable)
environment
Structure too tight
Certain
(stable)
Correct fit:
Mechanistic structure
in certain environment
Incorrect fit:
Organic structure in
certain environment
Structure too loose
Lecture 3 Mechanistic and Organic Forms of
Organisational Structure
Understanding Business Organisations
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.13
Organisations go through four distinct stages in
their life, each with an appropriate structure:
Birth stage few partners or employees, little division of
labour centralised structure
Youth stage starts to grow, departments created
Size/Age as a Contingency
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controls become more formal
Mid-life stage continues to grow with extensive
division of responsibility growth of functional
departments
Maturity large and mechanistic, strong vertical system
and lots of rules creation of separate divisions
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.14
Organisational structure needs to reflect
technology used
IT can be used to rationalise processes and cut
costs
Technology as a Contingency
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Also used to support a more decentralised organic
structure
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.15
J oan Woodwards study in 1965 identified three
broad types of manufacturing processes:
Unit and small batch production
Large batch and mass production
Continuous process
Woodwards Manufacturing
Technology Study
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Continuous process
Concluded there was a relationship between the
degree of technical complexity and the structure of
the organisation
Different manufacturing technologies impose
different demands on people and organisations
Lecture 3 Mechanistic and Organic Forms of
Organisational Structure
Understanding Business Organisations
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.16
Refers to the extent to which departments rely on
each other
Low level means they can work independently
Departmental Interdependence
as a Contingency
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High level means constant exchanges
These require different structural forms:
Pooled interdependence
Sequential interdependence
Reciprocal interdependence
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.17
Form of interdependence Type of co-ordination required
Example of Pooled
Interdependence (a Bank)
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Clients
Chain of command
Standardise procedures
Rules and regulations
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.18
Form of interdependence Type of co-ordination required
Example of Sequential
Interdependence (Assembly Line)
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Client
Plans and schedules
Scheduled meetings
Liaison roles
Lecture 3 Mechanistic and Organic Forms of
Organisational Structure
Understanding Business Organisations
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.19
Form of interdependence Type of co-ordination required
Example of Reciprocal
Interdependence (Hospital)
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Client
Unscheduled meetings
Teams
Task forces
Project manager
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.20
Previous points discussed are collectively known
as the contingency approach to organisation
structure
The most effective structure will depend upon the
The Contingency Approach
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situation in which the organisation is operating
Successful organisations adopt a structure that is
right for their strategy and environment
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.21
Counterbalance to the contingency approach
States that management has a choice over the
structural form
Process of organisational choice and design is
Management Choice
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g g
shaped by political processes
Structures will reflect the interests of politically
powerful groups in an organisation
Managers can make a choice based on their own
preferences
Lecture 3 Mechanistic and Organic Forms of
Organisational Structure
Understanding Business Organisations
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.22
An organisations strategy is more likely to succeed if
it has an appropriate structure
Choice is between mechanistic or organic
Contingencies encourage managers to favour one
approach rather than another
C ti i i l d t t i t
Summary
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Common contingencies include strategy, environment,
technology and interdependencies
Successful organisations adopt a structure that is right
for their strategy and environment
Managers often have a choice over the structural form
Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.23
References
Boddy, D. (2005), Management: An Introduction,
3rd edition, Prentice Hall, Chapter 12
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Mechanistic and Organic Forms of Organisational Structure Lecture 3 - 3.24
Lecture 3 Mechanistic and Organic Forms
of Organisational Structure
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Any Questions?