Organisation Theory

Organisational Design: basics

23 November 2022

© HÖGSKOLAN DALARNA | 2017-03-02

• Part One: Organizing design

• Legstretch!

• Part Two: Designed organization

• Differentiation
• Integration

David Ricardo: theory of

comparative advantage
Gareth Jones:
• Differentiation: The process by
which an organization allocates
people and resources to
organizational tasks

• Division of labor: The process of

establishing and controlling the
degree of specialization in the
organization
Design: ”how to control
– that is, coordinate
organizational tasks and
motivate people who
perform them – to
maximize an
organization’s ability to
create value”
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NGL-centrum
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Gareth Jones:
• Organizational roles: Set of task-
related behaviors required of a person
by his or her position in an
organization

• Integration: The process of

coordinating various tasks, functions,
and divisions so that they work
together and not at cross-purposes
Taylor and scientific
management
• Taylorism (Fredrik Taylor)
sought to establish a form of
work management as a science
of the workplace
Management as skilled
labor
● Henri Fayol:
● Adminstrative management:
managers are experts at
managing:
• Mary Parker Follet
• the art of getting things done
through people
Organizational structure is
based on a system of
interlocking roles
Authority: The power to
hold people accountable for
their actions and to make
decisions concerning the use
of organizational resources
Control: The ability to
coordinate and motivate
people to work in the
organization’s interests
• As the division of labor
increases, managers
specialize in some roles
and hire people to
specialize in others
• Specialization allows
people to develop their
individual abilities and
knowledge within their
specific role
• The relationship of one
role to another is defined
by task-related behaviors
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Hierarchy: A classification of people according to
their relative authority and rank
• Vertical differentiation: The way an organization
designs its hierarchy of authority and creates
reporting relationships to link organizational roles
and subunits
• Horizontal differentiation: The way an
organization groups organizational tasks into roles
and roles into subunits (functions and divisions)

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• Hierarchy of authority - Dictates “who reports to
whom”
• Direct contact - Managers meet face to face (over
Zoom??) to coordinate activities
• Problematic that a manager in one function has no
authority over a manager in another
• Liaison roles: A specific manager is given
responsibility for coordinating with managers from
other subunits on behalf of their subunits

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• Task force: A temporary committee set up to
handle a specific problem
• Task force members responsible for taking coordinating
solutions back to their respective functions for further
input and approval
• Teams - A (permanent) task force used to deal
with ongoing strategic or administrative issues

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• Integrating role: A full-time position established
specifically to improve communication between
divisions. Focused on company-wide integration

• Integrating department - A new department

intended to coordinate the activities of functions or
divisions Created when many employees enact
integrating roles

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• Managers facing the challenge of deciding how
and how much to differentiate and integrate
must:
• Carefully guide the process of differentiation
• Carefully integrate the organization by choosing
appropriate integrating mechanisms

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• 15 minute break.
• Business Models

• Power
Gareth Jones:
• Centralized organization
Organizational setup in which the
authority to make important decisions is
retained by managers at the top of the
hierarchy

• Decentralized organization:
An organizational setup in which the
authority to make important decisions
about organizational resources and to
initiate new projects is delegated to
managers at all levels in the hierarchy
• Centralized organization: Organizational setup in
which the authority to make important decisions is
retained by managers at the top of the hierarchy
• Decentralized organization: An organizational
setup in which the authority to make important
decisions about organizational resources and to
initiate new projects is delegated to managers at all
levels in the hierarchy

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Should the education side of
universities have a centralized or a
decentralized organization?
Gareth Jones:
• Standardization: Conformity to
specific models or examples that are
considered proper in a given situation

• Mutual adjustment: The

compromise that emerges when
decision making and coordination are
evolutionary processes and people use
their judgment rather than
standardized rules to address a
problem
Formalization: The use of written rules and
procedures to standardize operations
• Rules: Formal, written statement that specify the
appropriate means for reaching desired goals
• Norms: Standards or styles of behavior that are
considered acceptable or typical for a group of people
• Socialization: Organizational members learn the norms
of an organization and internalize these unwritten rules of
conduct

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Challenge facing managers is:
• To find a way of using rules and norms to standardize
behavior
• To allow for mutual adjustment to give managers
opportunity to discover new and better ways to achieve
goals

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Leadership style
Acme:
• Organization chart
•”one-man band”
Omega
• few barriers between specialists
•”making sure everyone understands what
we’re doing and listening to suggestions”
Different focus in use of resources
Communication
• Top-down / Group interaction
Knowledge
• Top-down / Operative level initiatives
Cost reduction
• Top-down/ Shared development
Which organization can
deal with
Low transaction costs: High transaction costs:
• Exchange of nonspecific • Exchange or more specific
goods and services goods and services
• Low uncertainty • Increasing uncertainty
• Increasing number of • Falling number of exchange
exchange partners partners
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Lawrence & Lorsch, Organization and Environment 1967

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Structure / environment fit

(Burns & Stalker, The

Management of
Innovation 1961 )

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