Organizational Management

Introduction

What is the best structure for an organization to adopt? As with so many questions, the best answer to this one is, "It depends." A modern approach to modern organizational design utilizes what is termed contingency organizational design, arranging a structure that is appropriate for the situation or environment in which the organization exists. There are number of factors that influence which type is the "best" form of organization.

Mechanistic Versus Organic Forms of Organization

The mechanistic organizational form is organized in a hierarchical fashion. The term hierarchy refers to the various levels of authority in an organization, ranging from the policy-making board of directors to the operating workers on the production floor. The hierarchy can be portrayed in the form of a pyramid. The mechanistic form of organization is typically highly structured, with authority and task roles strictly defined. Communication is expected to flow directly though the lines of authority.

The organic organizational form, on the other hand, is generally more open and flexible. Communication of information flows more freely and is not restricted by a hierarchical authority structure. Nor are tasks as strictly defined as in the mechanistic form. Decision making is also likely to be shared and more decentralized in the organic form.

Determinants of Organizational Structure and Design

If you were designing an organization, which organizational structure would you select-a mechanistic or an organic form? Your answer should depend on a variety of factors, such as company size, the environment, the work force, and production technology (Leifer, 1989). Keep in mind, however, that there are no absolute and clear-cut answers regarding which structures are always best. Contingency organization design can even exist within the same organization, some departments and divisions organized along mechanistic and others along organic lines.

According to Argyris, "keeping people immature is built into the very nature of the formal organization. He argues that because organizations are usually created to achieve goals or objectives that can best met collectively, the formal organization is often the architect's conception of how these objectives may be achieved".

Size as a Factor

The size of the organization tends to influence its design. Organizations often become more mechanistic in structure as they increase in size. Since large numbers of employees are more difficult to control, larger organizations generally require more formal policies, rules, and procedures to guide employees. Decision making too, in larger organization tends to be centralized at higher levels of the hierarchy. Although large mechanistic organizations may enjoy adequate performance, there is evidence that employees obtain greater satisfaction when working for smaller companies and in smaller departments (French, 1995).

The Nature of Environment

The environment in which organizations operate also influences design. Firms operating in a highly volatile and dynamic industry, such as compute soft- and hardware industries, generally have looser, more fluid structures than those operating in a mature, stable industry. Such organizations require managerial decision making to be flexible and timely because of the fierce competition that exists in the marketplace. Firms continually attempt to outdistance each other in the race for customers. In industries were markets and job tasks are fairly stable, however, organizations are more toward mechanistic forms of organization.

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