This document discusses various structural dimensions in organizations, including complexity, differentiation, formalization, and centralization. It defines these concepts and explores their interrelationships. Complexity refers to the amount of differentiation, which can be horizontal, vertical, or spatial. Horizontal differentiation includes specialization, departmentalization, and the division of labor. Formalization standardizes jobs through techniques like selection, role requirements, and rules/procedures. Centralization concentrates decision-making at a single point versus decentralization. The relationships between these dimensions, like how horizontal differentiation impacts formalization, are important to understand organizational design.

1. STRUCTURAL DIMENSIONS IN
ORGANIZATIONS
Mr. Sanket Senapati

2. Some of the Basics…
• Administrative Component
• Autonomy
• Centralization
• Complexity
• Delegation of Authority
• Differentiation
• Integration
• Professionalism
• Span of Control
• Specialization
• Standardization
• Vertical Span

3. COMPLEXITY
• What is Complexity?
-Complexity refers to the amount of
differentiation that exists within an
organization
-It can be of three types
Horizontal Differentiation
Vertical Differentiation
Spatial Differentiation

4. HORIZONTAL DIFFERENTIATION
-Refers to the degree of differentiation between
units based on the orientation of members, the
nature of the tasks that they perform and
their education and training
Hor.
Differentiation
Specialization
Departmentalization
Division of
labor
Social
Specialization

5. HORIZONTAL DIFFERENTIATION
• Specialization refers to the grouping of
activities performed by an individual
1. Division of labor or functional specialization: -
-Jobs are broken down into simple and routine
tasks
-High substitutability of employees
2. Social Specialization: Individuals are
specialized rather than the work
An increase in either form of specialization
increases the complexity in the organization
WHY?

6. HORIZONTAL DIFFERENTIATION
• Specialization is linked with departmentalization
• Division of labor creates groups of specialists
• Departmentalization is the way in which
organizations typically coordinate activities
which have been horizontally differentiated
• Departments can be created on the basis of
simple numbers, function, product or service,
geography etc.
• Functional specialization can also be geographic
in nature

7. VERTICAL DIFFERENTIATION
• Refers to the depth of the structure
• Vertical differentiation can be best understood
as a response to the increase in horizontal
differentiation
• Organizations with the same number of
employees need not have the same span of
control (employee number=4096)
• Evidence is clouded on the effectiveness of tall
or flat structures
• Context is of vital importance (type of job held
and characteristics of the job holder)

8. SPAN OF CONTROL

9. VERTICAL DIFFERENTIATION
What factors influence the span of control?
1. The ability and expertise of the manager in the
controlling position
2. The nature of the task being performed (i.e.
routineness of the task and the inter-
relatedness among the subordinates)
3. The spatial differentiation
4. The amount and type of interaction required by
the supervisor position with higher level
positions
The more competent the manager and
subordinates, the less geographically
dispersed and the less interrelated and more
routine tasks, the wider the span of control
can be

10. SPATIAL DIFFERENTIATION
• Multiple locations increases complexity
• Spatial differentiation can be thought of as an
extension to vertical and horizontal
differentiation
• What is its linkage to horizontal
differentiation?
• Physical separation itself would increase
complexity
• What is its linkage with vertical differentiation?

11. FORMALIZATION
• Formalization refers to the degree to which jobs
within the organization are standardized.
• Job Incumbent has minimum discretion over what
needs to be done
• Where formalization is low then employees’
behavior is non-programmed
• Formalization is a measure of standardization
• Standardization removes the need for the
consideration of alternatives
• Does formalization have to be in writing? And what
is the range?

12. FORMALIZATION
Formalization decreases variability
Formalization promotes coordination
Formalization promotes economy of costs
Formalization promotes order in IPR issues

13. HOW DOES STANDARDIZATION PROVIDE FOR
INTEGRATION?
Method of
Standardization
Example
Process Guidelines or instructions on how to
produce output
Inputs: Reduce
uncertainty &
unpredictability
• Raw Materials
•Human Resources
•McDonald’s specifications on the type
of beef to be used in burgers
•McDonald’s, Disney, Tata's, Xerox etc.
Outputs
Finished products
meet the required
standards or not
•TQM
•Auto companies inspecting t

14. FORMALIZATION
• Is formalization internal or only remains an
external entity?
• What is the importance of socialization in
formalization (Arthur Andersen)
• As the level of professionalization increases in an
organization, formalization decreases
• Can the standardization desired be made internally
or bought from outside?
• How are professionals formalized into the job?

15. TECHNIQUES OF FORMALIZATION
• SELECTION
-Job applicants are screened
-Need to define the yield and the utility of the
selection instruments
-Candidates who fit into the organization
-Selection techniques such as interviews, work
samples, assessment centers and psychometric
tests
-Controls for employee discretion

16. TECHNIQUES OF FORMALIZATION
• ROLE REQUIREMENTS
-Job analysis along with job descriptions and
specifications
-Desirable role that goes with a job helps in
controlling employee behavior
-Role expectations are explicit or can be defined
narrowly
-KPA, setting of objectives and the setting of goals
to regulate roles

17. TECHNIQUES OF FORMALIZATION
• RULES, POLICIES AND PROCEDURES
• TRAINING
• RITUALS

18. FORMALIZATION AND COMPLEXITY
• Formalization and complexity are interlinked
together
• Cases of high complexity linked with low levels of
formalization
• Horizontal differentiation achieved through
division of labor facilitates high formalization
and vice versa.
• People conducting non-routine jobs are socialized
on internal standards of control
• Key to understanding this relationship is
understanding how horizontal differentiation is
achieved

19. CENTRALIZATION
• Centralization is the most problematic
of the three statements
• The degree to which decision making is
concentrated at a single point in the
organization
• Decentralization
• Centralization differs from spatial
differentiation

20. CHALLENGES OF CENTRALIZATION
1
• Do we look only at formal authority?
• What importance do you give to
informal authority?
2
• Can policies override decentralization?
• Is decentralization artificial?
3
• What does concentration at a single
point mean?
• Where is decision making
concentrated?

21. CHALLENGES OF CENTRALIZATION
4
• Does an information system that
closely monitors decentralized
decisions maintain centralized
control?
5
• Does control by lower level
managers result in the
decentralization of centralized
decisions?

22. IMPORTANCE OF CENTRALIZATION
• Managers are limited in their ability to process
information
• Rapid adaptation to the environment
• Participation in the decision making process
• Training to the lower level employees
• Under what conditions is centralization
preferred?
• Relations with complexity and formalization