Dimensions of Organization

Structure
COMPLEXITY: Degree of differentiation within
organization
Horizontal differentiation: Degree of horizontal
separation between units
Vertical differentiation: Depth of the organization
hierarchy
Spatial differentiation: Degree to which location
of facilities and personnel are dispersed
geographically
HORIZONTAL DIFFERENTIATION:
Degree of differentiation between units based on
orientation of members, nature of tasks they
perform, their education and training
Larger the number of occupations (specialized
knowledge, skills), more complex the
organization
Diverse orientations lead to
communication/coordination difficulty
Different goal emphases, time orientations,
different work vocabulary: chemical engineer vs,
personnel recruitment interviewer



Most visible evidence: Specialization and
Departmentation
Specialization: The particular grouping of
activities performed by an individual
Can be achieved in two ways: functional
specialization and social specialization
Functional specialization: Division of labour: jobs
are broken down into simple and repetitive tasks
creates high substitutability among employees,
easy replacement by management
Social specialization: Individuals are specialized,
rather than their work professionals whose
skills can not be routinized civil engineers,
nuclear physicists, nurses etc

WHY DIVISION OF LABOR STILL WORK?
In highly sophisticated, complex jobs, no
one person can perform all the tasks wing
to physical limitations
Efficiency: Ones skill at performing a task
increases through repetition
Training for functional specialization more
efficient from organizations perspective
Encourages creation of special inventions
and machinery
It creates groups of specialists

DEPARTMENTATION:
The way in which specialists are grouped
together
Helps coordinate activities
Created on the basis of: simple numbers,
function, product, service, client, geography,
process
Most large organizations use all six
VERTICAL DIFFERENTIATION:
Refers to depth in the structure complexity
increases with the number of hierarchical levels
1. Greater communication distortion coordination
of decision difficult overseeing of activities of
operatives by top management difficult
Vertical differentiation best understood as a
response to increase in horizontal differentiation
Need for supervision and coordination with
increased units of specialists to make units
see how their tasks fit into greater whole
Tall: Many layers; Flat: few levels
SPAN OF CONTROL:
The number of subordinates that a manager can
direct effectively
Wide span: large number of subordinates;
Narrow span: few underlings
Smaller the span, the taller the organization
Tall structures: closer supervision tighter
boss-oriented controls
coordination/communication complicated
Flat structures: shorter/simpler communication
chain less opportunity for supervision
reduced promotion opportunities
Recent studies: no support for flat organizations
to be preferable larger the organization, less
effective the flat organization tall structures
reduce managers routine supervisory
responsibilities spends more time with boss
type of job/individual characteristics of job holder
moderate span-organizational effectiveness
Spatial differentiation:
Degree to which location of offices, plants,
personnel dispersed geographically
An extended dimension to horizontal and vertical
differentiation possible to separate tasks and
power centres geographically dispersion by
both number and distance
Production and marketing functions from same
location vs. marketing in six different locations
Two banks with same asset size: unit banking
vs. branch banking regional offices nearby vs.
away from each other - increased
communication, coordination, control problems



Relationship between three elements:
At extreme ranges of organization size:
Most diversified industrial organizations
and Government organizations have high
intercorrelation
Colleges: low degree of vertical
differentiation little or no spatial
differentiation but high degree of
horizontal differentiation
Army battalion: high vertical differentiation
and little horizontal differentiaion
Why is complexity important:
Higher complexity: Greater need for effective
communication, coordination and control devices
Economies that complexity creates may be
counterbalanced by increased burden of keeping
organization together
FORMALIZATION
Refers to the degree to which jobs within organization
are standardized
Highly formalized jobs: incumbent minimum discretion
over what is to be done, when to be done, how he
should do it
Explicit job descriptions lots of organizational rules
clearly defined procedures covering work processes
Low formalization: employees behavior relatively
nonprogrammed
Formalization applies to both written and
unwritten regulations employees attitude
important
Range of formalization:
Simplest and most repetitive jobs: amenable to
high degree of formalization
Professional jobs ( lawyers, engineers, social
workers, librarians, public accountants ); low on
formalization
Level in the organization: Higher mployees do
jobs less repetitive, require unique solutions
formalization inversely related to level in
organization
Functional department ( kind of work ):
Production stable, repetitive activities - high
formalization vs. low formalization in sales and
research ( flexible/innovative )

Why formalization important:
Benefits that accrue from regulating employees
behavior reduces variability Big Mac
looks/tastes the same
Standardization promotes coordination highly
standardized set of repetitive activities Football
team, paramedic team, medical staff in operating
room
Economics of formalization: greater the
formalization, lesser the discretion from job
incumbent discretion costs money managers
in charge of critical decision making need
judgement ability, they come expensive
The Make or Buy Decision:
Formalization can take place on the job or off
When done on the job: externalized behavior
external to employee rules, procedures
specifically defined, codified, enforced through
direct supervision applies to unskilled
employees
Professionalization other alternative creates
internalized behavior through social
specialization (e.g. Engineers, MBAs)
Management to decide: Standardization to be
msde in house or bought outside
As the level of professionalization increases, the
degree of formalization reduces

Formalization Techniques:
Selection: Organizations personality and
culture and then screening applicants for
compatibility finding a fit
Role Requirements: Job analysis -> Job
descriptions -> Role expectations( by
loosening or tightening degree of formalization
is determined)
Rules, Procedures, Policies:
1. Rules: Explicit statements that tell an
employee what she ought or ought not to do
no room for judgement/dicretion
particular/specific required behavior pattern (
Middle managers prior approval for
expenditure> $500; TA bill in 7 days in
duplicate )
2. Procedures: Series of interrelated sequential
steps that employees follow in the
accomplishment of job tasks ensure
standardization of work processes same input
processed same way for same output each day
E.g. accounts-payable clerk
3. Policies: Guidelines that set constraints on
decisions that employees make provide
greater leeway than rules allow use of
discretion within limited boundaries may be
written or implied( giving preferences to
applicants related to existing employees ) E.g.
Personnel manual in hospital: pay competitive
wages
Training:
On-the-job: understudy assignments, coaching,
apprentice methods
Off-the job: classroom lectures, movies,
demonstrations, simulation exercises,
programmed instruction
Intent: teach preferred job skills, knowledge,
attitudes, preferred work behaviors
Orientation program for new recruits:
Organization objectives, history, philosophy,
rules, relevant personnel policies( hours of work,
pay procedures, OT requirements, benefit
programs) often followed by specific job
training ( e.g. computer programmers in banks,
McDonalds counter help )
Rituals:
Used as a formalization technique with members
who will have a strong and enduring impact on
the organization
Includes individuals who aspire to senior level
management positions
Members must prove that they can be trusted
and are loyal to the organization before thy can
be knighted
The proving process being the ritual
Managers the guardians of organization
ideology senior managers primary
gatekeepers Top positions usually rewards for
loyalty, lengths of service, commitment to goals,
norms of firm
CENTRALIZATION:
Where are decisions made: up on top by
senior management or down low
(decision makers closest to action)
The degree to which decision making is
concentrated at a single point in the
organization High centralization vs. low
centralization or decentralization
Centralization concerned with dispersion
of authority to make decisions within
organization, not geographic dispersion
Problematic issues with Centralization:
1. Do we look only at formal authority? Authority
formal rights to give orders, get orders obeyed
What about informal authority (VPs son-in-
law)?
2. Can policies override decentralization? Lower
level decisions often programmed by
organizational policies
3. What does concentration at a single point
mean? Individual, unit, or a level? Non-
participation of operatives in decision about
their work, isnt decision making centralized?
4. Does an information-processing system
that closely monitors decentralized
decisions maintain centralized control?
5. Does the control of information by lower-
level members result in the
decentralization of what appears to be
centralized decisions?
6. The more information input to decision is
filtered through others, the less
concentrated and controlled the decision
is


Interpretation
advice
Choice Authorization Execution
Info
Input
Situation
Action
What can
be done
What
should be
done
What is
intended
to be done
What is
authorized
to be done
What is
actually
done
Organization Decision-Making Process
Managers make decisions choices about goals, budget allocations, personnel,
Ways work to be done, ways to improve units effectiveness
Like knowledge of authority, chain of command, awareness of decision-making
process critical to understanding of centralization
Decision-making most centralized when decision maker controls all steps
Process decentralized when others control these steps
Why is Centralization Important?
Decision making and information processing
central for coordination
Information not the scarce resource
Processing capacity to attend to information the
scarce resource
Limit to process information beyond this
information overload dispersion of
concentration at single point is decentralization
Also decentralization facilitates speedy action at
the point where change is taking place
(Decentralization of marketing activities)
Decentralization provides more detailed input
into the decision( sales people deciding on
pricing of product than sales executive 3000 kms
away )
Decentralization provides motivation to
employees through participation in decision-
making ( Humanistic vs autocratic values )
Decentralization creates training opportunities
for low-level managers decision practice with
potential for minimum damage preparation for
greater authority in future
However, centralization preferred when
comprehensive perspective needed in decision
affects whole organization than some special
interest groups some activities like finance,
legal better done when centralized

Centralization, Complexity and Formalization:
Centralization and Complexity:
1. An inverse - relationship between the two
2. Decentralization associated with high complexity
3. More number of specialties->need for more
expertise/ability -> more professional training -> likely to
participate in decision making
4. Conversely greater the centralization, the less the
professional training exhibited by employees

Centralization and Formalization:
1. Relationship ambiguous
2. Recent support for high formalization-decentralization
hypothesis
3. Large unskilled workers: high
centralization/formalization
4. Large number of professionals: low
formalization/centralization