Organizational Design

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Organizational Design

Introduction

Organizational design is the process of structuring an organization so as to enhance organizational effectiveness in light of the contingency factors the firm faces. As they develop, organizations grow through the stages of inception, formalization, elaboration and transformation.

Paths of Transition - Multi-unit and Virtual Structures

For large organizations that have progressed through the developmental stages, transition to a multi-unit structure is a matter of forming teams and giving them autonomy by decentralizing operations and reducing middle management. Transition to the virtual structure is more dramatic, requiring massive downsizing and the formation of contractural relationships.

For small organizations that have jumped directly from inception or early formalization to transition, adoption of a multi-unit structure means rapid growth through merger or internal expansion. In contrast, movement into a virtual structure requires the identification of prospective contractors and development of contractural relationships. For example, in the 1990s Ron Oklewicz's Telepad, manufacturer of handheld pro-based computers, developed its computer with GVO, an industrial design company in Palo Alto, CA, and collaborated with a battery maker to design a portable power supply. Then it manufactured the product using spare capacity at an IBM plant in Charlotte, North Carolina, and contracted with Automatic Data Processing for that firm to act as a payroll agent for its production employees, By forming strategic alliances, joint ventures or other contractural relationships, with various firms, a relatively small company like Telepad can form a temporary business entity with the apparent resources of a much larger organization.

If successful, transitions that take place during the stage of transformation result in post-bureaucratic structures that enable companies to act both large and small at the same time. Through mutual adjustment and decentralization, firms are able to realize extensive flexibility. Through large size, whether real or virtual, firms are able to control the scope of resources needed to accomplish complex tasks in an effective manner. Key to the success of such organizations, are the information-processing networks that tie their members together. In the absence of modern computer equipment, post-bureaucratic structures could not exist.

We are now entering an era that is witnessing the emergence of the virtual manager. Already, many people "commute" to work electronically using computers telephones and email to clock in, clock out, exchange information with headquarters and fulfill all types of managerial duties. In this day and age it is possible that headquarters cease to exist entirely. And thus, a company may consist of a single individual managing by electronic network a collection of contractural relationships that allows the creation, production and distribution of goods or services. This possibility suggests that the next postbureaucratic structure may be no structure at all, at least not in the traditional sense.

  

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