8.2 Organizational Design Decisions

There are two generic models of organizational design:

Mechanistic Organization

It is a rigid and tightly controlled structure characterized by high specialized, rigid departmentalization, narrow spans of control, high formalization, a limited information network and little participation in decision-making by lower-level employees.

Organic Organization

It is highly flexible which means jobs can change rapidly as needs require.

Employees require minimum formal rules and little direct supervision.

It may have specialized jobs but those jobs are not standardized.

The appropriate structure depends on four contingency variables:

Strategy.

Current strategy frameworks tend to focus on three dimensions:

8.2 Organizational Design Decisions

1.	Innovation: This reflects the organization's pursuit of meaningful and unique innovations.

2.	Cost Minimization: This reflects an organization's pursuit of tightly controlled costs.

3.	Imitation: This reflects an organization's seeking to minimize risk and maximize profit opportunities by copying the market leaders.

Innovators need the flexibility and free flowing information of the organic structure, whereas cost minimizers seek the efficiency, stability and tight controls of the mechanistic structure.

Imitators might use structural characteristics of both; mechanistic structure to maintain tight controls and low costs or the organic structure to mimic the industry,s innovative directions.

Size.

Large organizations tend to have more specialization, departmentalization, centralization, and rules and regulations than do small organizations.

But as organizations grow past a certain size, size has less influence on structure.

8.2 Organizational Design Decisions

Technology.

Every organization use some form of technology to convert its inputs into outputs.

Organizations adapt their structures to their technology.

The process or methods that transform an organization's inputs into outputs differ by their degree of routines.

In general, the more routine the technology, the more mechanistic the structure can be.

Degree of Environmental Uncertainty.

Some organizations face relatively stable and simple environments, others face dynamic and complex environments.

Because uncertainty threatens an organization's effectiveness, managers will try to minimize it.

The greater the uncertainty, the more an organization needs the flexibility offered by an organic design.

In stable, simple environments, mechanistic designs tend to be most effective.