COMPLEXITY
3 components of the concept:
- Horizontal Differentiation Vertical Differentiation (Hierarchical) Spatial Dispersion
The three elements can vary independently of each other. They can also vary together (as is the case in small organizations), however this does not happen in large organizations.
Horizontal differentiation
It is the subdivision of tasks performed by the organization among its members. There are two basic types:
1) Assigning specialists a wide range of tasks
2) Thorough subdivision of tasks to assign to unskilled people.
As indicators of horizontal complexity, most authors propose as indicators the number of divisions within the organization and the number of specialties within these divisions.
Vertical or hierarchical differentiation
Basically it refers to the number of levels or positions that exist between the highest executive and the employees that work in the production lines. It is assumed that the higher in the hierarchy there will be more authority.
For both types, the rule applies that the greater the differentiation, the greater the problems of control, coordination and communication the organization will have.
Spatial Scattering
It can be a form of horizontal or vertical differentiation. It measures the separation of tasks or power centers. Complexity increases with greater dispersion.
Consequences of Complexity
There is a marked tendency for organizations to become increasingly complex as their activities and environment become more complex.
Increasing complexity creates coordination and control problems. Coordination and Control Problems
Lawrence and Lorsch studies: effects of the environment on the complexity of companies.
Example of the plastics industry:
6 companies were studied, all with 4 basic departments (Sales, Production, Applied Research, Fundamental Research).
Highly competitive industry, with short product life cycles, based on relevant scientific knowledge. Very high product launch rate.
Changing and turbulent environment, but a quite certain production process.
The authors found that differentiation in these organizations involved much more than simple task differentiation, they involved behaviors and attitudes of their members. Most importantly, this differentiation of tasks, behaviors and attitudes was closely related to the environment in which the different departments had to perform. A high degree of differentiation (complexity for these authors) is related to a highly complex and differentiated environment. Standardized packaging industry: extremely stable environment. Very low product launch rate. They were the least complex.
Packaged food industry: they were somewhere in between the other two. Product launch rate was average.
Conclusions:
The form an organization takes depends on the environmental conditions it faces. Of course, there are other factors (such as size, culture, etc.) but these must be added after considering the environment as it imposes the basic requirements to shape the organization.
Regarding the consequences of complexity on the organization, the authors work with the concepts of Integration (quality of the state of collaboration between the departments necessary to achieve unity) and the Effectiveness of organizations.
The most complex companies are generally the most effective, but they are the ones with the greatest integration problem, since a high degree of conflict is generated in them.
Effectiveness is not a function of a certain organizational model.
FORMALIZATION
It refers to the use of rules and procedures designed to handle the contingencies an organization faces. The extent and extent of these varies on a continuum ranging from maximum formalization (extremely inflexible rules and procedures) to minimal formalization (extremely flexible), where there are generally no established procedures or rules.
Rules and procedures are not necessarily required to be in writing. Sometimes the unwritten are as demanding as the written ones. Relationship of the Formalization with other organizational variables
Centralization of power: The greater the centralization of power, the greater the formalization. Change programs: Formalization is negatively related to the adoption of new programs.
Technology: The more routine, the more formalization.
Reactions to formalization:
- "Bureaucratic" behavior: it begins with the need to control subordinates and then manifests itself in a rigid adherence to the rules. An impulse is generated to introduce more and more rules, an exaggerated indifference, a resistance to change.
- "Burotic" behavior: implies cutting the system, personalizing each activity and considering each rule as designed to lead us to frustration.
Bureaucratization is not the same as formalization
Bureaucracy is broader, inversely related to professionalization.
Formalization and Professionalization
They are incompatible. The more professionalization, the more conflict formalization will generate in an organization. Both processes are designed to do the same thing: organize and regularize the behavior of the members of the organization. The formalization through establishing rules, procedures and means to guarantee that they are complied with. Professionalization is not based on the organization for it.
CENTRALIZATION
It refers to the distribution of power within organizations. What is to be centralized or decentralized:
Centralization is the right to make decisions. If most decisions are made at the top, the organization is centralized. It does not necessarily refer to who makes the decisions, because if it is the case that operational personnel make decisions limited by organizational policies, we are still in a highly centralized scenario.
Another element of centralization is how to evaluate activities. If the evaluation is made by individuals who are at the top, there is centralization.
Centralization and other organizational variables
Size:
The greater the size, the greater the decentralization. It is impossible to control large organizations from the top.
Technology:
The greater the technology, the greater the centralization.
Environmental factors:
The results are contradictory. Some think that the greater the competition or dynamism of the medium, the greater the need to decentralize, but others have concluded the opposite. The same applies to the issue of environmental stability: instability requires decentralization.
Consequences of centralization:
| Advantage | Disadvantages | |
| Coordination | Greater coordination through central management | Uniform policies are used regardless of local conditions |
| Decision-making perspective | The entire company is considered when decisions are made at the top | Company perspective may ignore divisional characteristics and problems |
| Quick decision-making | Faster central administration when there are emergencies | Delays in the normal decision-making process. |
Forms of centralization:
|
Level to make decisions not covered by policies |
Few policies defined broadly | Many narrowly defined policies |
|
Cusp |
Autocracy / Centralized Most of the
Decisions should refer to higher levels. |
Bureaucracy / Centralized Problems don't
cutlery must refer to the highest levels |
|
Base |
Collegiate / Highly Centralized Most decisions are made at low levels with no restrictive policies | Bureaucracy / Decentralized Most
Decisions are made at low levels within well defined policy frameworks. |
