Dimensions of Organization Structure

CHAPTER-3
UNIT-3.1
Complexity

SOURCE:
Robbins, S. P. (1983). Organization Theory: Structures, Designs, And Applications, 3/e. Pearson Education India.
Dimensions of Organization Structure
Actual Dimensions: Contextual Dimensions

1. Complexity 1. Size
2. Formalization 2. Culture
3. Centralization 3. Strategy
4. Technology
5. Environment
 1. Horizontal Differentiation:
Considers the degree of horizontal separation
Complexity between units

2. Vertical Differentiation:
The degree of differentiation that Refers to the degree of depth
exists within an organization
3. Spatial Differentiation:
The degree to which the location of
an organization’s facilities and
personnel are dispersed
geographically
Horizontal Differentiation: Assigning specific job responsibilities to specific
people
Specialization: Particular grouping of activities performed by an individual. It
can be achieved through:
1. Functional Specialization or division of labor: Job is broken down into simple
repetitive task
2. Social Specialization: Individual is specialized rather than their work (professional
s)
Reasons for division of labor:
1. Physical limitations 3. Represent proper usage resources and skills level
2. Knowledge and skill limitations 4. Efficiency
 Horizontal Differentiation

b. Departmentalization: The way specialists are grouped together.

Departmentalization is the way in which organizations typically coordinate activities t
hat have been horizontally differentiated.
a. Functions
b. Product
c. Customer
d. Geography
e. Process
Vertical Differentiation: Refers to the depth in structure. The more levels that exist between t
op management and operatives, the greater the potential of communication distortion, the more
difficult it is to coordinate the decisions of managerial personnel, the more difficult for top
management to oversee the actions of operatives.

The determining factor is span of control

Defines the number of subordinates that a manager can direct effectively
N
Narrow span lead to taller A Wider span lead to flat organization structure
organization R
R
O WIDE
W
 Vertical Differentiation
Advantages of tall organizations:
1. Tighter controls
2. Better psychological career paths, better promotion opportunities
Disadvantages:
3. Coordination and communications become complicated
4. Costly
Advantages of Flat Organizations
5. Shorter and simpler communication chain
6. Efficient
Disadvantages
7. Loose controls
8. Reduced promotion chances
Spatial Differentiation: The degree to which the location of an organization’s office
s, plants, and personnel are dispersed geographically
Spatial differentiation can be thought as an extended dimensions to horizontal and
vertical differentiation.

Why is Complexity Important

The more complex an organization, the greater the need for effective communication,
coordination and control devices.
 Dimensions of Organization Structure
CHAPTER- 3
UNIT-3.2
Formalization

SOURCE:
Robbins, S. P. (1983). Organization Theory: Structures, Designs, And Applications, 3/e. Pearson Education India.
 Formalization
The degree to which jobs within the organization are standardized.
Formalization not only eliminates the employees discretionary behaviors but also confiscates th
e right to consider alternatives.

 In highly formalized jobs, the job incumbent has minimum amount of discretion over what
is to be done, and how he should do it. Consistent and uniform output.

 In jobs with low formalization, employees behavior is non-programmed. Employees have a

great deal of freedom to exercise discretion in their work.
 Range of Formalization
1. Un-skilled jobs versus
professional jobs
2. Kind of work being performed
(production versus sales)
3. Level in the hierarchy of
organization
Why is formalization
Important?
1. Standardized behavior reduces
Variability
2. Standardization promotes
coordination
3. Standardization offers
economies/cost effective
 The “Make or Buy” Decision
1. The “Make” decision refers to formalization achieved on the job. The term
externalized behavior is used. Formalization is external to the employee; the rules,
procedures, and regulations regarding work activity are specifically defined, codified
and enforced through direct management supervision. This characterizes unskilled wor
kers. It is also what is typically meant by formalization.

2. The “Buy” decision refers to creation of internalized behavior through social

specialization. Individual learns the values, norms, and expected behavior patterns.
Professional is “standardized” rather than the job. Only fine tuning is required – called
“cultural acclimatization (Culture adaptation)”.
 T
The Relationship between Formalization and Complexity
High horizontal differentiation, when hiring unskilled personnel to perform routine an
d repetitive task tends has high degree of formalization to facilitate coordination and
control. Where high horizontal differentiation is achieved by hiring professionals, for
malization tends to be low.
 Dimensions of Organization Structure

CHAPTER- 3
UNIT-3.3
Centralization

SOURCE:
Robbins, S. P. (1983). Organization Theory: Structures, Designs, And Applications, 3/e. Pearson Education India.
 Centralization
The degree to which decision making is concentrated at a single point in the
organization.
1. Do we look only at formal authority?
2. Can policies override decentralization? Yes
3. What does “ concentration at a single point mean? The single point implies at hig
h level
4. Does information processing system that closely monitors decentralized decisions
maintain centralized control? yes
5. Does the control of information by lower level members result in decentralization
of what appears to be centralized? Yes
 Why is Centralization Important
Reasons for Decentralization
 Avoidance of information overload
 Fast response to changing conditions
 Detailed input into decision making process
 Employee motivation
 Training opportunity

Reasons for Centralization

 Choosing action consistent with the best interest of the organization
 Some activities are done more effectively
 Relationship of centralization, complexity and formalization
Centralization and Complexity:
 The greater the centralization of decision making, the less professional training is
likely to be exhibited by employees.

Centralization and Formalization:

 If employees are predominantly unskilled one can expect high formalization and
centralized authority
 With professional employees one might predict low formalization and
decentralization
 Thank you
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