Basic Challenge of Organizational Design

1. Prepared by: Meily Margaretha Basic Challenge of Organizational Design

2. INTRODUCTION • The growth of organization  managers must decide how to control and coordinate the activities of the organization • The principal design challenge : how to manage differentiation to achieve organizational goals.

3. DIFFERENTIATION • Differentiation is the process by which an organization allocates people and resources to organizational tasks and establishes the task and authority relationship that allow the organization to achieve goals. • OR the process of establishing and controlling the division of labor, degree of specialization in the organization.

4. EXAMPLE: DESIGN CHALLENGE • Hal: 89  Differentiation at the B.A.R and Grille • From simple organization (differentiation low)  complex organization (differentiation high) • The basic challenge is managing the increasing complexity of the organization’s activities.

5. SYARAT DASAR Diferensiasi: • Organizational Role A set of task related behaviors required of a person by his/her position in an organization • Ketika division of labor tinggi, maka muncul spesialisasi  muncul function, division, support function, production function, dll)

6. Building Block of Differentiation ORGANIZATION DIVISION FUNCTION ROLE Intensitas Ketekunan

7. Function and Divisions

8. Dua Tipe Diferensiasi • Vertical differentiation (the distribution of authority) • Horizontal differentiation (grouping of organizational tasks into roles and roles in subunit-function & divisions)

9. Dua Tipe Diferensiasi

10. Another Three Organizational Design Challenges DIFFERENTIATION INTEGRATION CENTRALIZATION DECENTRALIZATION STANDARDIZATION MUTUAL ADJUSTMENT

11. BALANCING DIFFERENTIATION & INTEGRATION • Horizontal differentiation  specialization & productive • Minus: • Limit communication between subunits and prevents them from learning from one another. • Ex: bagian produksi dan R&D? • Solution: to integrate functions  to promote cooperation, coordination, and communication among separate subunits • Contoh: use of IT for sharing databases, memos, reports, real time basis

12. Solusinya:Integration and Integrating Mechanisms Hierarchy of Authority Task Force Direct Contact Team Liaison Role Integrating Role

13. Form of Integrating Mechanism Task Force Liaison Role Team Integrating Role Television and Stereo Division Washing Machine Division Integrating Role

14. Direct Contact SIMPLE Liaison Role Task Force Team Integrating Role COMPLEX Matrix

15. Differentiation vs Integration • A complex organization  highly differentiated & highly integration to effectively coordinate its activities. • However, managers need to be sure do not differentiate or integrate too much because it is expensive  numbers of managers employed

16. 2. BALANCING CENTRALIZATION & DECENTRALIZATION • Centralization : pengambilan keputusan terpusat pada top management • Decentralization: pengambilan keputusan di delegasikan kepada para manajers di segala level

17. ADVANTAGE & DISADVANTAGE • Centralization + Lets top management coordinate organizational activities and keep the organization focused on its goals - Top managements become overloaded, little time to spend on long term strategic decision making and planning crucial future organizational activities

18. ADVANTAGE & DISADVANTAGE • Decentralization + promote flexibility and responsiveness by allowing lower level managers to make on the spot decisions, they can demonstrates personal skills and competences - Too much decentralization may lead an organization lose control of its decision making process

19. The Result of Balancing • Good balance between long-term strategy making and short-term flexibility and innovations as lower managers respond quickly to problems and changes in the environment

20. 3. BALANCING STANDARDIZATION & MUTUAL ADJUSTMENT • Written rules and SOPs and unwritten values and norms are important forms of behavior control in organization • The challenge: design a structure that achieves the right balance between standardization and mutual adjustment.

21. Standardization: conformity to specific modes or examples—defined by sets of rules and norms • Mutual adjustment: the process through which people use their judgment rather than standardized rules to address problems, guide decision making and promote coordination

22. Standardization vs Mutual adjustment • The challenge: to find a way using rules and norms to standardize behavior while at the same time allowing for mutual adjustment to provide employees with the opportunity to discover new and better ways of achieving organization goals.

23. Mechanistic and Organic Organizational Structures

24. MECHANISTIC & ORGANIC ORGANIZATIONAL STRUCTURES • Mechanistic structures People behave in predictable ways, centralized, hierarchy • Organic structures Promote flexibility, initiate change, adapt quick to changing conditions

25. Mechanistic muncul ketika: Organic muncul ketika: • SPESIALISASI INDIVIDU • MEKANISME INTEGRASI SEDERHANA • SENTRALISASI • STANDARISASI • SPESIALISASI GABUNGAN • MEKANISME INTEGRASI KOMPLEKS • DESENTRALISASI • MUTUAL ADJUSTEMENT

26. LOW ENVIRONMENTAL INCERTAINTY HIGH Mechanistic Structure: Organic Structure: • Simple Structure • Low Differentiation • Low Integration • Centralization Decision Making • Standardization • Complex Structure • High Differentiation • High Integration • Decentralized Decision Making • Mutual Adjustment

27. Is organic structures better than a mechanistic structure? • Organic & Mechanic structures have very different implications for the way people behave • Organic  encourages innovative behaviors, team work, self management to improve quality and customer service • Armed forces  using organic?? • Many authority…

28. The Contingency Approach to Organizational Design • Keputusan mengenai apakah organic atau mechanistic structure yang menjadi desain dilihat dari situasi tertentu yang dihadapi organisasi seperti: • Lingkungan • Teknologi • Nature dari tugas itu sendiri • Jenis orang yang dipekerjakan

29. CONCLUSION

30. ANY QUESTIONS??