This document discusses key concepts in organizational structure and design. It defines differentiation as the process of allocating people and resources to tasks and establishing relationships to achieve goals. As organizations grow in size and complexity, managers must decide how to control and coordinate activities through differentiation. The challenges are managing differentiation to achieve goals and balancing specialization with integration to promote cooperation. Other concepts covered include centralization versus decentralization of decision-making, standardization versus mutual adjustment of behaviors, and mechanistic versus organic structures.

1. Prepared by:
A. Irshad Ahmed. B.A, M.B.A.

2. The process by which managers select and manage
aspects of structure and culture, so that an
organization can control the activities necessary to
achieve its goals.

3. 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.

4. 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.

5. 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.

6. ORGANIZATION
DIVISION
FUNCTION
ROLE
Intensitas
Ketekunan

7. Function and Divisions

8. 1. Vertical
differentiation (the
distribution of authority)
2. Horizontal differentiation
(grouping of organizational tasks
into roles and roles in subunitfunction & divisions)

9. Owners
Restaurant
Managers
Kitchen
Function
Chef
Role
Diswasher
Role
DR
Function
Waiter
Role
Busboy
Role
RS
Function
Bartender
Role
Other Role

10. DIFFERENTIATION
INTEGRATION
CENTRALIZATION
DECENTRALIZATION
STANDARDIZATION
MUTUAL
ADJUSTMENT

11. 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. The process of coordinating various tasks, functions,
and divisions so that they work together and not at
cross-purposes.

13. Hierarchy of
Authority
Task Force
Direct Contact
Team
Liaison Role
Integrating Role

14. This differentiates people by the amount of authority
they possess. Because the hierarchy dictates who
reports
to
whom,
organizational roles.
it
coordinates
various

15. Direct contact among managers creates a context
within which managers from different functions or
divisions can work together to solve mutual
problems. However several problems are associated
with establishing this contact. Because managers
from different functions may have different views
about what must be done to achieve organizational
goals.

16. Managers can increase coordination among functions
and divisions by establishing liaison roles. When the
volume of contacts between two functions increases,
one way to give one manager in each function or
division the responsibility for coordinating with the
other. These managers meet daily, weekly, monthly,
or as needed to solve handoff issues and transfer
problems.

17. A temporary committee setup to handle a specific
problem.
As an organization increases its size and complexity,
more than two subunits may need to work together to
solve common problems. For example, may require
input from production, marketing, engineering and
R&D.

18. A team is a permanent task force or committee. Most
companies today, for example, have product
development and customer-contact teams to monitor
and respond to the ongoing challenges of increased
competition in a global market.
At Amgen, one of the most successful global
biotechnology companies, for example, the team
system has proved to be a vital contributor to the
company’s success.

19. A full time managerial position established specifically
to improve communication between divisions.

20. Task Force
Liaison Role
Team
Integrating Role
Washing
Machine
Division
Integrating
Role
Television
and
Stereo
Division

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

22. 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

23. Centralization:
Organizational setup whereby the authority to make
important decisions is retained by managers at the top
of the hierarchy.

24. 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

25. Decentralization:
An organizational setup whereby the authority to
make important decisions about organizational
resources and to initiate new projects is delegated to
managers at all levels in the hierarchy.

26. 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

27. 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

28. 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.

29. 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

30. 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.

32. Mechanistic
structures
People behave in predictable ways,
centralized, hierarchy
Organic structures
Promote flexibility, initiate change,
adapt quick to changing conditions

33. 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

34. 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…