Dimensions of Organization

Structure
-Presented by
Pranali Patankar
 Why Corporate Companies are
Restructuring?
Restructuring in:
 Costs
 More responsive to customers and competitors
 Removal of employees

Why:
 To meet the growing global business demands of customer

Restructuring in complexity, formalization and centralization

 Complexity
o Complexity refers to the degree of differentiation that exists
within an organization .

 Degree of differentiation:
1. Horizontal differentiation
2. Vertical differentiation
3. Spatial differentiation
 Horizontal Differentiation
 Horizontal differentiation refers to the degree of differentiation
between units based on orientation of members, the nature of
the tasks they perform, and their education and training.

 Specialization
 departmentation
 Vertical differentiation

 Vertical differentiation refers to the depth in the stucture.

 Tall structure
 Flat structure
 Spatial differentiation

 An organization can perform the same activities with the same

degree of horizontal differentiation and hierarchical
arrangement in multiple locations.

 Spatial differentiation refers to the degree to which the location

of an organization’s offices, plants and personnel are dispersed
geographically
 Why is complexity important?
 It creates different demands and requirements on manager’s
time.

 The higher the complexity, the greater amount of attention they

must pay to dealing with problems of communication,
coordination and control.
 Formalization
 Formalization refers to the degree to which jobs within the
organization are standardized.

 Range of formalization.
 Why is formalization important?
 Standardizing behavior reduces variability.
 Standardization also promotes coordination.

 Make or buy decision.

 Formalization techniques
1. Selection
2. Role requirement
3. Rules, procedure and policies
4. Training
5. rituals
 Relationship between formalization and
complexity
 Where employees perform narrow, repetitive and specialized
tasks, their routines tend to be standardized.

 High complexity being linked with low formalization.

 Division of labor, then tends to be associated with a high

degree of formalization

 High horizontal differentiation is achieved by hiring specialist

and professionals tend to low formalization.
 centralization
 Centralization refers to the degree to which decision making is
concentrated at a single point in the organization.
 A high concentration implies high centralization where low
concentration indicates low centralization refers
decentralization.

1. Do we look only at formal authority?

2. Can policies override decentralization?
3. What does concentration at a single point means?
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’s in
decentralization of what appears to be centralizes decisions?
 centralization
 Centralization more specially as the degree to which the formal
authority to make discretionary choice is concentrated in an
individual,unit,or level(usually high in the organization),thus
permitting employees (usually low in the organization)
minimum input into their work.
 Decision making and centralization
 The degree of control one holds over the full decision making
process is, itself, a measure of centralization.
 Decision making is most centralized when the decision maker
controls all the steps.
1. Situation
2. Information input
3. Interpretation and advice
4. Choice
5. Authorization
6. Execution
7. Action
 Relationship of centralization, complexity and
formalization
 Inverse relationship between centralization and complexity.

 Decentralization is associated with high complexity.

 Negative relationship between centralization and formalization

 High formalization can be found coupled with either

centralization or decentralization.