Prepared by:A. Irshad Ahmed. B.A, M.B.A.

The process by which managers select and manage

aspects of structure and culture, so that an

organization can control the activities necessary to

achieve its goals.

The growth of organization managers must decide how to control and coordinate the activities of the organization

The principal design challenge : how to manage differentiation to achieve organizational goals.

Differentiation is the process by which an organization allocates people and resources to organizational tasks and establishes the task and authority relationship that allow the organization to achieve goals.

OR the process of establishing and controlling the division of labor, degree of specialization in the organization.

Hal: 89 Differentiation at the B.A.R and Grille

From simple organization (differentiation low) complex organization (differentiation high)

The basic challenge is managing the increasing complexity of the organization’s activities.

KetekunanIntensitas

ORGANIZATION

DIVISION

FUNCTION

ROLE

Function and Divisions

1. Vertical differentiation (the distribution of authority)

2. Horizontal differentiation (grouping of organizational tasks into roles and roles in subunit-function & divisions)

Owners

Kitchen Function

DR Function

RS Function

ChefRole

DiswasherRole

Waiter Role

BusboyRole

BartenderRole

Other Role

Restaurant Managers

DIFFERENTIATION

CENTRALIZATION

STANDARDIZATION

INTEGRATION

DECENTRALIZATION

MUTUAL ADJUSTMENT

Horizontal differentiation specialization & productive

Minus: Limit communication between subunits and prevents

them from learning from one another.

Ex: bagian produksi dan R&D?Solution: to integrate functions to promote

cooperation, coordination, and communication among separate subunits

Contoh: use of IT for sharing databases, memos, reports, real time basis

The process of coordinating various tasks, functions,

and divisions so that they work together and not at

cross-purposes.

Hierarchy of Authority

Direct Contact

Liaison Role

Task Force

Team

Integrating Role

This differentiates people by the amount of authority

they possess. Because the hierarchy dictates who

reports to whom, it coordinates various

organizational roles.

Direct contact among managers creates a context

within which managers from different functions or

divisions can work together to solve mutual

problems. However several problems are associated

with establishing this contact. Because managers

from different functions may have different views

about what must be done to achieve organizational

goals.

Managers can increase coordination among functions

and divisions by establishing liaison roles. When the

volume of contacts between two functions increases,

one way to give one manager in each function or

division the responsibility for coordinating with the

other. These managers meet daily, weekly, monthly,

or as needed to solve handoff issues and transfer

problems.

A temporary committee setup to handle a specific

problem.

As an organization increases its size and complexity,

more than two subunits may need to work together to

solve common problems. For example, may require

input from production, marketing, engineering and

R&D.

A team is a permanent task force or committee. Most companies today, for example, have product development and customer-contact teams to monitor and respond to the ongoing challenges of increased competition in a global market.

At Amgen, one of the most successful global biotechnology companies, for example, the team system has proved to be a vital contributor to the company’s success.

A full time managerial position established specifically to improve communication between divisions.

Liaison Role Task Force

Team

Integrating Role

Washing Machine Division

Television and Stereo

Division

Integrating Role

SIMPLE

COMPLEX

Direct Contact

Liaison Role

Task Force

Team

Integrating Role

Matrix

A complex organization highly differentiated & highly integration to effectively coordinate its activities.

However, managers need to be sure do not differentiate or integrate too much because it is expensive numbers of managers employed

Centralization:

Organizational setup whereby the authority to make important decisions is retained by managers at the top of the hierarchy.

Centralization+ Lets top management coordinate organizational

activities and keep the organization focused on its goals

- Top managements become overloaded, little time to spend on long term strategic decision making and planning crucial future organizational activities

Decentralization:

An organizational setup whereby the authority to make important decisions about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy.

Decentralization+ promote flexibility and responsiveness by allowing

lower level managers to make on the spot decisions, they can demonstrates personal skills and competences

- Too much decentralization may lead an organization lose control of its decision making process

Good balance between long-term strategy making and short-term flexibility and innovations as lower managers respond quickly to problems and changes in the environment

Written rules and SOPs and unwritten values and norms are important forms of behavior control in organization

The challenge: design a structure that achieves the right balance between standardization and mutual adjustment.

Standardization: conformity to specific modes or examples—defined by sets of rules and norms

Mutual adjustment: the process through which people use their judgment rather than standardized rules to address problems, guide decision making and promote coordination

The challenge: to find a way using rules and norms to standardize behavior while at the same time allowing for mutual adjustment to provide employees with the opportunity to discover new and better ways of achieving organization goals.

Mechanistic structuresPeople behave in predictable ways, centralized, hierarchy

Organic structuresPromote flexibility, initiate change, adapt quick to changing conditions

Mechanistic Structure:

Organic Structure:

Simple Structure Low Differentiation Low Integration Centralization Decision MakingStandardization

Complex Structure High Differentiation

High Integration Decentralized

Decision Making Mutual Adjustment

LOW HIGHENVIRONMENTAL INCERTAINTY

Organic & Mechanic structures have very different implications for the way people behave

Organic encourages innovative behaviors, team work, self management to improve quality and customer service

Armed forces using organic??Many authority…