Mintzberg: Organizational Design: Fashion or Fit

By Group 2 Ankesh Manish Megha Nitish Ritvik Sivia

Organizational Structure Traditional Vs Mintzberg Approach

Traditional Approach - Maps of authority relationships
1) Assignment of tasks and responsibilities 2) Clustering of individual positions into units and the clustering of units into departments and larger units to form an organizational hierarchy 3) Provide mechanisms to facilitate vertical (top-to-bottom) coordination 4) Provide mechanisms to foster horizontal (across departments) coordination Mitzberg re-examined the research on organizational structure and developed a new approach using 5 component parts to describe the structure of the organization

The Five basic parts of the organization

Top Management

Technical Support

Middle Management

Administrative Support

Technical Core

 Strategic Apex - duties 1) Direct supervision 2) Relationships with external environment 3) Formulate strategy Technos-tructure - Standards 1) Standardization of work process 2) Standardization of work output
Operating Core: Functions 1) Secure inputs 2) Transform inputs to outputs 3) Distribute outputs 4) Provide direct maintenance Middle Line: Functions 1) Communication 2) Disturbance handling 3) Direct supervision (span of control)

Elements of Structure
The elements of structure include: Specializing tasks Formalizing procedures Formal training required for the job Grouping units Size of units or span of control Systems for planning and performance control Liaison devices, like task forces, integrating managers and matrix structure. Downward delegation or vertical decentralization Outward delegation or horizontal decentralization No single element determines the others; all elements form an integrated system.

Situational Factors

Situational factors that affect the elements of structure include the following: age and size of the organization, technology, means of production, environment in which the organization operates, and external control systems.

Type of organisation and environment

stable Complex Decentralised Bureaucratic (standardisation of skills) Centralised Bureaucratic (standardisation of work processes) dynamic Decentralised Organic (mutual adjustment) Centralised Organic (direct supervision)

Simple

The simple structure

Characteristics prime coordinating mechanism: direct supervision key part: strategic apex main design parameters: centralisation, organic structure situational factors: young, small, non-sophisticated technical system, simple, dynamic environment, possible extreme hostility or strong power needs of top manager, not fashionable Typical example: the entrepreneurial firm normally a boss and some employees (operating core) Under extreme conditions other organisations revert to the simple structure

The simple structure: Variants and hybrids

The simplest structure (more mutual adjustment) The crisis organisation (temporary) The autocratic organisation (dictatorship) The charismatic organisation

Important Features Flexible and dynamic, no bureaucracy Risky (depends on one person) Has a sense of mission, many people like them! Often a stage in a more mature organisations life Its very hard to grow large with a simple structure The transition from simple structure to other configurations can be difficult

The machine bureaucracy

Characteristics prime coordinating mechanism: standardisation of work processes key part: techno-structure main design parameters: behaviour formalisation, vertical and horizontal job specialisation, usually functional grouping, large operating-unit size, vertical centralisation and limited horizontal decentralisation, action planning situational factors: old, large, regulating, non automated technical system, simple and stable environment, external control, not fashionable The organisation as a programmed machine The operating core is the processor The techno-structure does the programming Low-level programming where assumptions are hard-coded into the design equipment job descriptions The focus is efficiency and control

Challenges for the machine bureaucracy

Work of complex environments cannot be rationalised into simple tasks The work of dynamic environments cannot be predicted and made repetitive Does not cope well with full automation of the operating core Behaviour and lack of mutual adjustment (govt) Human problems Split strategy formulation and strategy implementation Assumes full information Assumes enough stability so that strategies remain relevant during implementation

Industry Example
This structure develops preferentially in the public sector, automobile industry and, where reliability and security are the centre of attention, that is banks, hotel and restaurant chains, airlines, fire-brigades. A classical example is the company McDonald's.

Adhocracy
Complex and non-standardized, control by mutual adjustment instead of standardization, many managers scattered throughout (project managers, functional managers), least efficient but best for Innovation Example - NASA, Zain Telecom

Divisionalized Form
Independent units connected by overlay of administration, structure of most big corporations, standardized work outputs, performance of units usually tracked as economic outputs, social aspects of decisions are not recognized/rewarded Industry Examples
own corporate staff including President. Some parent companies do little more than provide capital and guide units to an organizational-wide strategy. The overall goal is to maximize the overall organizations performance. In order to accomplish this, managers at the parent use a combination of strategic and financial controls.

General Electric - Each unit is operated as a separate business with its

General Motors

In early 1900s, to handle the problems at the organization, CEO Alfred Sloan, Jr., reorganized GM round separate divisions. Each division represented a distinct business that would be self-contained and have its own functional hierarchy. Sloans new structure delegated day-to-day operating responsibilities to division managers. The small corporate level was responsible for determining the firms long-term strategic direction and for exercising overall financial control of semiautonomous divisions. Each division was to make its own business-level strategic decisions that would feed into the overall corporate strategy. Sloan's structural innovation had three important outcomes: Enabled corporate officers to more accurately monitor the performance of each business (simplified the problem of control) Facilitate comparisons between divisions, improved the resource allocation process Stimulated managers of poor performing divisions to look for ways of improving performance.

Abott Laboratories Inc., Microsoft, Walmart

Professional Bureaucracy
Standardized work skills (training), structure of hospitals, universities and professional firms, large professional operating core with lots of autonomy, large support staff to back-up professionals, best for stable and complex environment, poor innovation but perfects current knowledge Examples -Hospitals and universities Most universities have a dual administrative hierarchy with a professional side relying on professional standards for conduct and an administrative side relying more on rules and routines to accomplish tasks.

Overview of configurations
Structural configuration Prime coordinating mechanism Key part of organisation Type of decentralisation

Simple Vertical and horizontal Direct supervision Strategic apex structure centralisation Machine Standardisation of work Limited horizontal Techno-structure bureaucracy processes decentralisation Professional Vertical and horizontal Standardisation of skills Operating core bureaucracy decentralisation Divisionalised Limited vertical Standardisation of outputs Middle line form decentralisation Adhocracy Mutual adjustment Support staff Selective decentralisation

Configurations as diagnostic tools

Virtually all organizations experience the pulls that underlie the five configurations, as follows: top management pulls to centralize power the technostructure pulls to formalize the operators pull to professionalize the middle management pulls to balkanize the support staff pulls to collaborate. The organization tends to organize close to one of these configurations; if one pull fails to dominate organizational designers may need to balance two. To improve organizational design, managers should consider the pulls of their organizations to discover the configuration that serves as the best fit among component parts. Now lets understand how to use the configurations as diagnostic tools,

Fashion or Fit?
Is there internal consistency? Managers should be less concerned about the latest structural innovation and more concerned about pursuing the structure that best fits the organization and its environment Are external controls in line with purpose? Since external controls drive an organization toward machine bureaucracy, simple structures, professional bureaucracies, and adhocracies can find their internal consistency threatened by external controls. Is there a part that does not fit? Management may recognize that a part of the organization needs an autonomous structure. For example, a machine bureaucracy may need to reduce control on a research laboratory so the experts can innovate without hindrance from bureaucratic restrictions. Is the right structure in the wrong question? An organization achieve internal consistency, but its design no longer accommodates the environment. Configurations should match structure and situation. Changing the environment might involve identifying a niche for the organization. Changing the organization - evolving or revolutionizing to adapt to environment. Revolution - continuously adapting at the expense of internal consistency. Evolution maintains internal consistency, the structural fit to degrade in a dynamic environment.

Conclusion
Managers should design organizations by fit, not fashion. Managers should be less concerned about which configuration to use and more concerned about achieving configuration. Pick the structure that fits the organization or create a new configuration.

Thanks