DESIGNING THE SUPERSTRUCTURE

Presented by J. B. Nangpuhan II (MPA Student) for the class (Organizational Design) of Dr. S. K. Kim at Chonnam National University, South Korea, 2010

 

SUMMARY

 

KEY TERMS:

·         superstructure – 상부 구조

·         grouping – 분류

·         top-down procedure – 상의하달식의 절차

·         bottom-up procedure – 세부적인 절차

INTRODUCTION:

How should positions be grouped into units? How large should each unit be? These two questions pertaining to the design of the superstructure of the organization will be discussed in this chapter. Through the process of grouping into units that the system of formal authority is established and the hierarchy of the organization is built. The pictorial representation of this hierarchy is the organigram as a result of the grouping process. Grouping process is a successive clustering from first-order clusters or units into larger clusters or units until the entire organization is contained in the final cluster. In principle, given overall organizational needs – goals, missions, as well as technical systems to accomplish them, the procedures in organizational design are as follows: First step, a “top-down” procedure which starts from general needs to specific tasks will be undertaken by combining tasks into positions according to the degree of specialization desired and determines how formalized each should be as well as what kind of training and indoctrination it should require. Second step is building the superstructure by determining what types and how many units should be grouped into ever-more-comprehensive units until the hierarchy is complete. Third step is a “bottom-up” procedure from specific tasks to the overall hierarchy. Finally, the superstructure is fleshed out and decision-making powers allocated.

The procedure stated above is a procedure in principle but the organizational designer takes shortcuts by reversing the top-down or bottom-up procedure. In fact, organizational design is much less common than organizational redesign – incremental shifts from existing structures. In practice, as goals and missions change, structural redesign is initiated from the top-down; as the technical system of the operating core changes, it proceeds from the bottom-up.

 

I.        UNIT GROUPING – grouping is a fundamental means to coordinate work in the organization. Four important effects in grouping are the following:

1.       Grouping establishes a system of common supervision among positions and units. Unit grouping is the design parameter by which the coordinating mechanism of direct supervision is built into the structure.

2.       Grouping requires positions and units to share common resources.

3.       Grouping creates common measures of performance. Joint performance measures further encourage the members to coordinate their activities.

4.       Grouping encourages mutual adjustment. It encourages coordination by mutual adjustment.

 

Thus, grouping can stimulate to an important degree two important coordinating mechanisms – direct supervision and mutual adjustment – and can form the basis for a third – standardization of outputs – by providing common measures of performance. Unit grouping is one of the most powerful of the design parameters. However, strong coordination within a unit creates problems of coordination between units. In this case, each unit develops a propensity to focus ever more narrowly on its own problems while separating itself ever more sharply from the problems of the rest of the organization. Unit grouping encourages intragroup coordination at the expense of intergroup coordination.

 

A.      Bases for Grouping

1.       Grouping by knowledge and skill – positions may be grouped according to the specialized knowledge and skills. Figure 3-1 on page 49 shows a typical organigram of the medical component of a Quebec teaching hospital.

2.       Grouping by work process and function – units may be based on the process or activity used by the worker. Figure 3-2 on page 50 shows the organigram for a cultural center where grouping is based on work process and function.

3.       Grouping by time – groups may be formed according to when the work is done.

4.       Grouping by output – units are formed on the basis of the products they make or the services they render. Figure 3-3 on page 50 shows the product grouping by divisions.

5.       Grouping by client – groups may also be formed to deal with different types of clients.

6.       Grouping by place – groups may be formed according to the geographical regions in which the organization operates. An example is shown in Figure 3-4 on page 51.

 

However, the bases of grouping have some ambiguities or confusions. The notion of grouping by process, people, place, or purpose (output) is in fact one of the pillars of the classical literature on organization design. Simon argued that the same group can often be perceived in different ways. He pointed out the ambiguities between process and purpose which come from organizations in which operators are professionals. His example about a typist who moves his fingers in order to type (purpose); the typist types in order to reproduce (process); reproduces in order to answer an inquiry (purpose).

Process and purpose are linked in a hierarchy of organizational means and ends where each activity being a process for higher-order goal and a purpose for a lower-order goal.  In the same sense, the whole organization can be viewed as a process in society – police departments for protection, food companies for nourishment. All the bases for grouping are compressed into two essential grouping: market grouping and functional grouping. Market grouping comprises the bases of output, client, and place. Functional grouping comprises the bases of knowledge, skill, work process, and function. Grouping by time can be considered into either category. In effect, we have taken the fundamental distinction between grouping activities by ends, by characteristics of the ultimate markets served by the organization – the products and services it markets, the customers it supplies, the places where it supplies them. We have also taken into consideration the fundamental distinction of grouping by means, the functions (including work processes, skills, and knowledge) it uses to produce its products and services.

 

B.      Criteria for Grouping – this constitute the prime criteria that organizations use to design units.

1.       Work-flow interdependencies

Grouping of operating tasks should reflect natural work-flow interdependencies. The difference of natural and unnatural grouping is shown in figure 3-5. Grouping on the basis of work-flow interdependencies creates what some researchers call a “psychologically complete task.” In the market-based grouping, the members of a single unit have a sense of territorial integrity; they control a well-defined organizational process; most of the problems that arise in the course of their work can be solved simply, through their mutual adjustment; and many of the rest, which must be referred up the hierarchy, can still be handled within the unit, by that single manager in charge of the work flow.

James Thompson discusses three basic kinds of interdependencies:

a.       Pooled interdependence – involving only the sharing of resources;

b.      Sequential interdependence – the work is fed from one task to the next (more complex and more costly); and

c.       Reciprocal interdependence – the work is passed back and forth between tasks (the most complex and most costly)

 

Thompson claims that organizations try to group tasks so as to minimize coordination and communication costs. The basic units are formed to handle reciprocal interdependence, if any. If there is none, then the basic units are shaped according to sequential interdependence, if any. If there is none, the basic units are shaped according to common processes to facilitate the handling of pooled interdependence. The importance of establishing a hierarchy is for the higher-order groupings to work on “residual” interdependencies where one grouping cannot contain all the interdependency. In this case, which priority are the several criteria be exercised? According to Thompson, the organization designs the lowest-level groups to contain the major reciprocal interdependencies; higher-order groups are formed to handle the remaining sequential interdependencies; and the final groups, if necessary, are formed to handle any remaining pooled interdependencies. A typical illustration of Thompson’s idea is shown in Figure 3-6 (page 57) of a five-tier hierarchy of an apocryphal international manufacturing company.

 

2.       Process interdependencies

This is related to processes used in the work flow. The effect of this is to encourage functional grouping related to specialization where specialists are grouped together for them to learn from each other and become more adept at their specialized work. They also feel more comfortable “among their own” with their work judged by peers and by managers expert in the same field.

 

3.       Scale interdependencies

Groups may have to be formed to reach sizes large enough to function efficiently. As an example, setting up a central maintenance department for the whole factory where the maintenance man in each department would have to be jack of all trades while the one among many in a maintenance department can specialize, like in preventive maintenance. However there are issues of the concentration and dispersal of services in the organization but the issue lends itself well to mathematical formulation and has been so treated in some of the literature like Kochen and Deutsch, 1973.

 

4.       Social interdependencies

This is a criteria dealing about social relationships of the organization. Workers had to form groups to facilitate mutual support in a dangerous environment (Trist and Bamforth, 1951). This system is also called sociotechnical by Bristish Tavistock Institute. Another reason is to facilitate social interaction and so avoid boredom (Hawthorne). As a result, the design of every superstructure ends up as a compromise between the “objective” factors of work flow, process, and scale interdependency, and the “subjective” factors of personality and social need. This kind of interdependency gives a confusing reality in the organigram conceived on paper but in practice, it seems screwy.

 

C.      Grouping by Function

The main purpose of grouping by function is to pool human and material resources across different work flows. Grouping by function – by knowledge, skill, work process, or work function – reflects a primary concern for process and scale interdependencies and perhaps secondarily for social interdependencies, generally at the expense of those of the work flow. It also encourages specialization such as establishing career paths for specialists within their own area of expertise, by enabling them to be supervised by one of their own, and by bringing them together to encourage social interaction.

However, the functional structure poses a lot of weaknesses in the organization:

1.       Individuals focus on their own means, not the organization’s broader ends.

2.       Performance cannot be easily measured in the functional structure.

3.       The functional structure lacks a built-in mechanism for coordinating the work flow.

 

The functional structures – notably, where the operating work is unskilled – tend to be the more bureaucratic ones. Their work must be formalized that requires a more elaborate administrative structure. This needs more analysts to formalize the work and more managers to coordinate the work across the functional units. Bureaucratic structures (with unskilled operators) rely more extensively on the functional bases for grouping since they are organized by the function performed rather than the market served. But to rationalize their structures, such bureaucracies prefer to group according to the work processes used and then to coordinate by the formalization of work, involving the proliferation of rules. This way, on paper at least, all relationships are rationalized and coherent.

 

D.      Grouping by Market

The use of market-based grouping is to set up relatively self-contained units to deal with particular work flows. Ideally, these units contain all the important sequential and reciprocal interdependencies, so that only the pooled ones remain. Each unit draws its resources and perhaps certain support services from the common structure and in turn contributes its surpluses or profits back to it. This grouping can easily measure performance because it tends to indentify functions for a given set of products, services, clients, or places. It is being illustrated by Lawrence and Lorsch by forming each group to be responsible for art, television and copy in their accounts (1967).

However, just like the functional structure, market-based grouping have some weaknesses. First is there is less specialization because of coordination across specialties. This is illustrated in a retail company, a hardware where the customer has two options in search for special items for his nail sculptures. At an advantage, although less machinelike and less specialized; it can do more tasks and change more easily, it is flexible because its units are independent with each other, new units can easily be added or old ones deleted, and closing down one have little effect on the others. Another study by Kover (1963-64) showed that specialists had much less communication with colleagues in their own functions and even with the clients because of control by the managers of the market units. Thus, sense of professionalism diminished among specialists, increasing dissatisfaction with their work, and alienation from the firm. Second is there will be wasting of resources at the lowest unit level since it must duplicate personnel and equipment.

The market structure cannot take advantage of economies of scale the way functional structure can because of less functional specialization. Choosing the market basis for grouping, the work-flow coordination is concentrated at the expense of process and scale specialization. Thus, if the work-flow interdependences are the significant ones and if they cannot easily be contained by standardization, the organization should try to contain them in a market-based grouping to facilitate direct supervision and mutual adjustment. However, if the work flow is irregular (as in a job shop), if standardization can easily contain work-flow interdependences, or if the process and scale interdependences are the significant ones (as in the case of organizations with sophisticated machinery), then the organization should seek the advantages of specialization and choose the functional basis for grouping instead.

 

E.       Grouping in Different Parts of the Organization

It is useful to distinguish the first-order grouping –that is, individual positions into units – from higher-order grouping of operators, analysts, and support staffers as individuals into their basic working units, and the latter pertains to the grouping of managers in order to build the formal hierarchy. A characteristic of the first-order groupings is that operators, analyst, and support staffers tend to be grouped into their own respective units in the first instance. As shown in Figure 3-6, positions in the operating core can be grouped on a functional or a market basis, depending primarily on the importance of process and scale of interdependences as opposed to those of the work flow. But in operating cores manned by professionals, the functional and market bases for grouping are often achieved concurrently.

By definition, only one level of grouping in the operating core where the operators are grouped into units managed by the first-line supervisors. Then grouping brings line managers together and so builds the administrative superstructure of the middle line. In designing the superstructure, which order of priority is considered more than which basis of grouping (Thompson).  Particularly in large organizations, market basis for grouping is more common at the higher levels of the middle line than at the lower ones.  On the administrative structure, there is only one grouping at the strategic apex (by definition) and that encompasses the entire organization – all its functions and markets. In the point of view of the organization, this can be thought of as a market group; while from society’s point of view, the whole organization can also be considered as performing some particular function.

Staff personnel – both analysts and support staff – are not often found in the structure as they tend to report to managers of their own specialty. The position of support staffs in the superstructure depends primarily on the staffers’ interactions. And the forming of small units among staffers or a concentrated one also depends on the factors relating to the organization.

 

II.      UNIT SIZE

This issue concerns how large each unit or work group should be. It tends to answer the following questions: a. How many people should report to each manager (the manager’s span of control)? b. What shape should the superstructure be: tall, with small units and narrow spans of control, or wide, with large units and wide spans of control? According to Colonel Lydal Urwick (1956, p.41), “no supervisor can supervise directly the work of more than five or, at the most, six subordinates whose work interlocks”. But a lot of studies have shown that this idea is not being followed. The issue is not a simple one and the focus on control is misplaced. Control – that is, direct supervision – is only one factor among many in deciding how many positions to group into one unit, or how many units to group in one larger unit, in both cases under a single manager. Hence, we prefer the term unit size to “span of control.”

 

A.      Unit Size in Relation to the Coordinating Mechanisms

Much of the confusion in this are seems to stem from considering unit size only with respect to the coordinating mechanism of direct supervision, not of standardization or mutual adjustment. According to some traditional management theorists, control and coordination could be achieved only by direct supervision. Let’s take two propositions, one dealing with standardization, the other with mutual adjustment.

First, compared with direct supervision, the greater the use of standardization for coordination, the larger the size of the work unit. It means that the more coordination in a unit is achieved through the systems of standardization designed by the technostructure, the less time its manager need spend on the direct supervision of each employee, and so the greater the number of employees that can report to him. To better achieve efficiency in this large unit, there should be very tight system of performance control using all kinds of rules and regulations and of training and indoctrination programs for the managers. Thus, we cannot conclude that being a member of a large unit automatically frees the individual from close control. The individual might be free from control of the boss, perhaps, but not necessarily from the systems of the technostructure, or even from the person’s earlier training and indoctrination.

The second proposition is as follows: compared with standardization and often even direct supervision, the greater the reliance on mutual adjustment (owing to interdependencies among complex tasks), the smaller the size of the work unit. Before arriving to the concept of this proposition, let us discuss the relationship between complex interdependent tasks and small unit size in two ways: a.) the more interdependent the tasks (complex or not) in a unit, the greater will be the need for contact between the manager and the employees to coordinate their work. The manager will have to monitor and supervise the unit’s activities more closely and to be more readily available for consultation and advice. In this case, the manager requires a small span of control which is favorable to Urwicks’ principle of span of control using the word “interlocks”. b.) the employees themselves must communicate on a face-to-face basis to coordinate their work that’s why there should be an increase in mutual adjustment. This requires that the work unit must be small to encourage convenient, frequent, and informal interaction among its entire members. Based on a study conducted, a group of five to seven members is still manageable. The less the reliance on direct supervision (in favor of mutual adjustment), the narrower the manager’s span of control. And because of the need for mutual adjustment, unit size must be small.

There are confusions between standardization of skills and mutual adjustment that will result in small and large unit. Thus, looking at unit size in terms of all the coordinating mechanisms helps to sweep away some of the confusion. With regards to tall (with small units) versus flat (large units) structure, top managers seem to be more satisfied in tall structures because they do the controlling while lower level managers prefer flat structures where they have more freedom from their own managers.

Unit size is driven up by: 1. Standardization of all three types, 2. Similarity in the tasks performed in a given unit, 3. The employees’ needs for autonomy and self-actualization, and 4. The need to reduce distortion in the flow of information up the hierarchy. On the other hand, unit size is driven down by: 1. The need for close direct supervision, 2. The need for mutual adjustment among complex interdependent tasks, 3. The extent to which the manager of a unit has nonsupervisory duties to perform, 4. The need for member of the unit to have frequent access to the manager for consultation or advice, perhaps because of security needs.

 

B.      Unit Size by Part of the Organization

The question on how does unit size vary from one part of the organization to another have no concrete answers because unit size in influenced by many factors. Let’s take into consideration some warranted general comments.

In the operating core, we would expect to find the largest units since this part of the organization tends to rely most extensively on standardization for coordination, especially standardization of work processes. Managerial work is generally complex so we might expect the size of units in the administrative structure to depend heavily on the interdependence at a given level of the hierarchy. In this case, market grouping is often selected because it contains the work-flow interdependences within each unit. Whereas, functional grouping often does not, require either that a higher-level manager coordinate the work flow across different units or that the managers or members of each of the units in question do so themselves through mutual adjustment. Only a few functional units can be grouped into a higher-order unit, whereas, typically, many more market-based units can be so grouped. And since organizations vary the bases for grouping used at different levels in the administrative hierarchy, the middle line of the large organization will exhibit a wavy shape so they can choose flat where grouping is based on markets and tall when grouping is based on function. As we move up in higher levels of the hierarchy, we expect mutual adjustment resulting to a decrease in unit size. So the overall managerial hierarchy should look like a cone – albeit a wavy one – with progressively steepening sides. The chief executive officer is expected to have the narrowest span of control in the organization. But when market grouping is used, and the people reporting to the chief executive themselves supervise functional units, his span of control will be wider than theirs.

We can conclude that highly bureaucratic organizations, heavily dependent on technocratic staff groups to formalize the operating work, the spans of control of the first-line supervisors should be high because of the extensive standardization in the operating core and the managers higher up should be small because of the need for mutual adjustment with the staff members. This is actually what comes up from the study of Woodward to mass-production firms but firms in process industries exhibited very narrow spans of control for both first-line supervisors and managers in the center of the middle line.

With regards to the staff units, the structure would tend to be bureaucratic and the units therefore large on the part of the unskilled workers. But on the part of the professionally-type staff units, it is composed of small size units since the work within these units is complex and created interdependences among the professionals. The managers of technocratic units must spend a good deal of their time “selling” the proposals to their units in the middle line. The support specialists also serve the rest of the organization and so their managers must spend good deal of time in liaison with it.

To conclude, we would expect in general that the operating core of the organization to assume flat shape, the middle line to appear as a cone with progressively steepening sides, and the technostructure and more professional support units to be tall in shape.

 

OPINION

Each individual belongs to a certain organization or if not, he or she may be part of lots of organizations. I for one also joined some organizations from childhood to adulthood. Some of those organizations which I became a member no longer exist this time while others are still active. I believe to the importance of joining organizations but how to manage it effectively is still a quandary I haven’t learned. Designing effective organizations is very interesting as I will be learning lots of procedures and theories that lie within those different kinds of approaches within and outside the organization.

In this particular chapter, designing the superstructure seems quite confusing especially when selecting the best procedure in designing and the unit size that is suitable in an organization. In the ‘top-down’ and ‘bottom-up’ procedures, selecting the best procedure depends on changes in goals, missions, and the technical system of the organization. With this, I think that in a certain organization, there is no fix procedure to be followed and it depends on the perception of those in charge in overseeing the best interest of the organization which is the strategic apex from time to time. In unit grouping, the two important coordinating mechanisms – direct supervision and mutual adjustment – will determine the performance of each unit in particular and the organization in general. In here, strong coordination in a unit creates problems between and among units in terms of coordination. Applicable tools to solve the problem on coordination is to formalize procedures  by strengthening standardization taking into account the objective of the organization and how to achieve it. Like for example, in a university, the main objective is to give proper education to students since they are the direct clients. And since the students have differing fields of interests, colleges are established to form each field of interest. Within a college, it contains more than two fields of interests and so there are departments formed with the professors along with staffs in each department. In this case, there could be an instance that mutual coordination between colleges or departments is difficult to achieve which was confirmed by the study of Kover (1963-64). But all of them are trained and indoctrinated to educate the students within their unit as the main objective of the university. Market-based grouping is preferred in this example since each unit deals with particular workflows.

Another concern of this chapter is the size of the unit or the span of control on the part of the manager. Selecting unit size again depends on the interest of the organization as influenced by direct supervision. But sometimes, there are conflicts between each unit because of misunderstanding between managers and employees which is unavoidable. I think the success of a unit in achieving the objective is measured based on the efficiency and skill of the manager to control the unit. Even if the employees are skilled and professional in their field, but if the manager shows no personality to control the group, the unit will be a failure. By how large and small a unit should be depends on the function of the unit and the capability of the manager to employ different supervising mechanisms. 

 

Reference:

Mintzberg, H. (1993). Structure in Fives: Designing Effective Organizations. Upper Saddle River, NJ: Prentice-Hall, Inc. 45-72