OPD Mintzberg Article Group2

8/2/2019 OPD Mintzberg Article Group2

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Mintzberg:

Organizational Design: Fashionor Fit

By Group 2 Ankesh

ManishMeghaNitishRitvik

Sivia



Organizational StructureTraditional 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 unitsinto 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 anddeveloped a new approach using 5 component parts to describe thestructure of the organization



The Five basic parts of theorganization

TopManagement

Technical

Support

Technical Core

Administrative

Support

Middle

Management



• 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)





Type of organisation andenvironment

stable dynamic

Complex Decentralised

Bureaucratic

(standardisation of skills)

Decentralised

Organic

(mutual adjustment)

Simple Centralised

Bureaucratic(standardisation of work processes)

Centralised

Organic(direct supervision)



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 technicalsystem, 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 simplestructure

Th i l V i



The simple structure: Variantsand 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 organisation’s life

– It’s 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 jobspecialisation, 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 machinebureaucracy•

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 arenot recognized/rewarded

Industry Examples –

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

own corporate staff including President. Some parent companies do littlemore than provide capital and guide units to an organizational-widestrategy. The overall goal is to maximize the overall organization’s

performance. In order to accomplish this, managers at the “parent” use a

combination of strategic and financial controls.



General Motors – In early 1900’s, to handle the problems at the organization,

CEO Alfred Sloan, Jr., reorganized GM round separate divisions. Each divisionrepresented a distinct business that would be self-contained and have its own

functional hierarchy. Sloan’s new structure delegated day-to-day operatingresponsibilities to division managers. The small corporate level was responsible fordetermining the firm’s long-term strategic direction and for exercising overallfinancial control of semiautonomous divisions. Each division was to make its ownbusiness-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 eachbusiness (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 improvingperformance.

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 aprofessional side relying on professional standards for conduct and anadministrative side relying more on rules and routines to accomplish

tasks.

O i f



Overview ofconfigurations

Structural

configuration

Prime coordinating

mechanism

Key part of

organisation

Type of

decentralisation

Simple

structureDirect supervision Strategic apex

Vertical and horizontal

centralisation

Machine

bureaucracy

Standardisation of work

processesTechno-structure

Limited horizontal

decentralisation

Professional

bureaucracy Standardisation of skills Operating core

Vertical and horizontal

decentralisation

Divisionalised

formStandardisation of outputs Middle line

Limited vertical

decentralisation

Adhocracy Mutual adjustment Support staff Selective decentralisation



udiagnostic tools

Virtually all organizations experience the pulls that underlie the fiveconfigurations, 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 onepull fails to dominate organizational designers may need to balance two. Toimprove organizational design, managers should consider the pulls of their

organizations to discover the configuration that serves as the best fit amongcomponent 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 aboutpursuing 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, professionalbureaucracies, 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, amachine bureaucracy may need to reduce control on a research laboratory so the experts can innovatewithout 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 aboutwhich configuration to use and moreconcerned about achieving configuration.

• Pick the structure that fits the organization orcreate a new configuration.



Thanks

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