Organizational designs

A review of the evidence linking organizational structures to employee performance and satisfaction leads to a pretty clear conclusion—you can’t generalize. Not everyone prefers the freedom and flexibility of organic structures. Some people are most productive and satisfied when work tasks are standardized and ambiguity is minimized—that is, in mechanistic structures. So any discussion of the effect of organizational design on employee behavior has to address individual differences. To illustrate this point, let’s consider employee preferences for work specialization, span of control, and centralization.

The evidence generally indicates that work specialization contributes to higher employee productivity, but at the price of reduced job satisfaction. However, this statement ignores individual differences and the type of job activities people do.

As we noted previously, work specialization is not an unending source of higher productivity. Problems start to surface, and productivity begins to suffer, when the human diseconomies of doing repetitive and narrow tasks overtake the economies of specialization. As the workforce has become more highly educated and desirous of jobs that are intrinsically rewarding, the point at which productivity begins to decline seems to be reached more quickly than in decades past.

Although more people today are undoubtedly turned off by overly specialized jobs than were their parents or grandparents, it would be naïve to ignore the reality that there is still a segment of the workforce that prefers the routine and repetitiveness of highly specialized jobs. Some individuals want work that makes minimal intellectual demands and provides the security of routine. For these people, high work specialization is a source of job satisfaction. The empirical question, of course, is whether this represents 2% of the workforce or 52%. Given that there is some self-selection operating in the choice of careers, we might conclude that negative behavioral outcomes from high specialization are most likely to surface in professional jobs occupied by individuals with high needs for personal growth and diversity.

We find fairly strong evidence linking centralization and job satisfaction. In general, organizations that are less centralized have a greater amount of participative decision making. And the evidence suggests that participative decision making is positively related to job satisfaction. But, again, individual differences surface. The decentralization satisfaction relationship is strongest with employees who have low self-esteem. Because individuals with low self-esteem have less confidence in their abilities they place a higher value on shared decision making, which means that they’re not held solely responsible for decision outcomes.

Our conclusion:
To maximize employee performance and satisfaction, individual differences, such as experience, personality, and the work activity should be taken into account. In addition, national culture influences the preference for structure, so it too needs to be considered. For instance, organizations that operate with people from high power distance cultures, such as those found in Greece, France, and most of Latin America, will find employees much more accepting of mechanistic structures than where employees come from power distances countries. So you need to consider cultural differences along with individual differences when making predictions on how structure will affect employee performance and satisfaction.

One obvious insight needs to be made before we leave this topic:
People don’t select employers randomly. There is substantial evidence that individuals are attracted to, selected by, and stay with organizations that suit their personal characteristics. Job candidates who prefer predictability, for instance, are likely to seek out and take employment in mechanistic structures, while those who want autonomy are more likely to end up in an organic structure. So the effect of structure on employee behavior is undoubtedly reduced when the selection process facilitates proper matching of individual characteristics with organizational characteristics.