Organization Structures and Design
Organizational Design
In Designing Your Organization (2007:1), Kates and Galbraith define organizational design in the following way:
"Organizational design is the deliberate process of configuring structures, processes,
reward systems, and people practices to create an effective organization capable of achieving the business
strategy. The organization is not an end to itself; it is simply a vehicle for accomplishing the strategic
tasks of the business. It is an invisible construct used to harness and direct the energy of the people who
do the work."
Kates and Galbraith argue that an organization's structure is too often a barrier to effective performance.
Organizational Structure
"Structure is an entity (such as an organization) made up of elements or
parts (such as people, resources, aspirations, market trends, levels of competence, reward
systems, departmental mandates, and so on) that impact each other by the relationship they
form. A structural relationship is one in which the various parts act upon each other, and
consequently generate particular types of behavior." (Fritz, 1996:4)
In his classic Corporate Tides, Fritz points out that, in practice, organizational structures are rarely designed in
a deliberate manner. Small structures grow into larger ones and individual units become the focus of
managerial power. Fritz says that (1996:5): 'Departments and divisions become entrenched as power
systems.' Any structural change is likely to meet resistance from these power systems.
Fritz also argues that organizations are structured either to advance
or to oscillate. Advancement is a positive move from on state to another that acts as
a foundation for further advances. Fundamental to structural advancement is the concept of
resolution when an outcome is achieved and a particular problem is resolved. According
to Fritz (1996:6), management in an organization that is structured to advance coordinate
'individual acts into an organizational tapestry of effective strategy.' When all the individuals
in this utopian organization are acting together, the result is synergy, allowing the achievement
of 'enormous feats.'
The alternative is structural oscillation. Fritz (1996:6) explains this:
'Oscillating behavior is that which moves from one place to another, but then moves back
towards its original position.' So many organizations set out on some change program, full of
enthusiasm and energy. But, six months later, the enthusiasm has evaporated and the program
peters out leaving very little changed.
Labovitz and Rosansky (1997:7) consider that senior managers can achieve alignment to
ensure advancement through:
* Carefully crafting and articulating the essence of their business and
determining the Main Thing.
* Defining a few critical strategic goals and imperatives and deploying them
throughout their organizations.
* Tying performance measures and metrics to those goals.
* Linking those measures to a system of rewards and recognition
* Personally reviewing the performance of their people to ensure the goals are met.
Labovitz and Rosansky criticize traditional structures of organization that are
based on the notion of breaking up a managerial problem into pieces: departments and divisions. As
they point out (1997:8): "Psychologists have long recognized that human beings like people
who are like themselves and tend to reject people who are different from them. Yet organizations
continue to create differences between people in the interest of efficiency. Line versus staff,
management versus labor, field versus corporate, international versus domestic, East versus West,
accounting versus sales - the list goes on. No wonder it's so hard to focus people around
common goals when they are so different from each other simply by virtue of what they do
and where they do it. Specialization and expertise can be a wedge that drives people further
apart and makes it difficult for them to work together."
Roberts (2004: 32) argues that whereas strategic choice and organizational design are
are immensely complex - indeed, 'mindbogglingly complicated' - there is an underlying logic based
on the concept of 'fit':
"(...) Certain strategies and organizational designs do fit one another
and the environment, and thus produce good performance, and others do not. Moreover, there
are frequently recognizable, understandable, and predictable relations among the environmental
features and the choice variables of strategy and organization that determine which
constellations of choices will do well and which are less likely to do so. These relations arise for both
technological and behavioral reasons. Recognizing these relations and understanding their
implications can guide the design problem."
References
Fritz, R. (1996) Corporate Tides: The Inescapable Laws of Organizational Structure
, Berrett-Koehler
Labovitz, G. and Rosansky, V. (1997) The Power of Alignment: How Great Companies Stay Centered and Accomplish Extraordinary Things
, John Wiley & Sons.
Roberts, J. (2004) The Modern Firm: Organizational Design for Performance and Growth,
Oxford University Press.
The Modern Firm: Organizational Design for Performance and Growth
by John Roberts
Business firms around the world are experimenting with new organizational designs,
changing their formal architectures, their routines and processes, and their corporate cultures
as they seek to improve their current performance and their growth prospects.
In this book, John Roberts argues that there are predictable, necessary arrangements among
these changes that will improve performance and growth. The organizations that are
successful will establish patterns of fit among the elements of their designs, their
competitive strategies, and the external environment in which they operate, and will go about this in a
holistic manner.
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