Effect of Change and Uncertainty on Organization Design

No organization design remains unchanged. People change, technology changes, environment changes and the organization itself matures. Thus, even a manager who has discovered an optimum structure for a given technology and environmental setting must continually modify the structure to fit new stages in the organization’s growth.

Case studies have always indicated that an entrepreneur of a small firm tends to minimize formal organization structure and to operate in a manner consistent with participative theories.

Upon developing a larger and more complex organization, this entrepreneur reaches a stage that requires hiring professional managers and formalizing their relationships on the basis of classical concepts. Later, upon diversification into varied industries concepts of System 4 become more relevant.

Organization design tends to change as the characteristics of the economy ands society change. In less developed societies, the supply of educated managers is scarce, reducing the possibilities of delegating authority to trained supervisors and developing skilled staffs of specialists.

The classical approaches serve as the basis for structural decisions. As the workforce becomes more specialized and educated and subordinates develop aspirations for more involvement demands for participative approaches increase.

Thus structural guidelines must change to accommodate these aspirations. Transfers of structural concepts from environmental setting to another therefore depend upon a careful study of the characteristics of both environments.

Contingency approaches to organization design are rapidly expanding. Empirical research is providing additional factors to be considered in adapting structure to the needs of the organization. Practitioners with little sophistication in design have experimented with unique approaches that have been successful. The result is that the subject of design has moved from a routine application of simple concepts to a challenging matching of designs to new technologies and environments.