Introduction to Organizational
Design
Article: Van Hootegem (2015)
The traditional manner of working
Adam Smith advocated the rapid dissemination of specialization as he anticipated that it would result
in major productivity gains. The reason for this is increased expertise employees acquire when
carrying out simple activities.
- He was the first modern economist.
Frederick Taylor major proponent of Smith’s standardization.
- Assumption that employees work harder when they are paid by piece.
o Not true in reality higher supply than demand would lower the price of the good.
Employees aware of this were working slower to keep prices high.
This created to separation of the workforce to managers and employees.
Management- a professional group that overlooks the process of
production and ensures the right organizational performance.
Employees no longer had an overview of the process of production.
Henry Ford Employees forced to do repetitive jobs.
- Various layers of line managers were appointed in order to monitor and synchronize the
performance of the work.
- Still widely used,
- The organization looks inward at the activities it performs.
- Similar activities are accommodated within the same organizational unit resulting in a
functional structure.
- Functional structure can adapt 2 formats:
o In 1st format, we see a structure where the order is sent crisis-cross from one process-
oriented department to another involves back-and-forth movement (spaghetti-like
processes).
o In 2nd format, orders undergo a stable processing pattern, it may be possible to retain the
same routing on every occasion line structure. Employees who belong to the same
department or team in a functional structure often have the illusion that they are
collaborating.
Marx: employees are alienated from each other since they perform work that is
(functionally) detached. (But they have the illusion that they are collaborating.
Functional organization characteristics:
- Short-cycle work, still driven by Ford and the call centers. It is a special version, which applies
fragmentation to an extreme level.
, - Fragmentation into separate processing tasks, which creates huge dependence and hence
complexity between all the components that are linked together.
- Sum of efficient parts is bound to be an organization that is efficient overall Specific activity-
focused departments are created.
- In departments employees develop further specializations to perform their own, specific sub-
operation.
- Many middle-management positions.
Problems caused by a changing environment
From SSST to a VUCA environment
Traditional manner of working As long as
the emphasis in the economy was placed on
mass production and price competitiveness,
cost reductions could be achieved thanks to
economies of scale, and the need to change
remained limited. functional organization
as: Stable, Secure, Simple, and Transparent
(SSST).
After 1970 organizational environment
became: Volatile, Uncertain, Complex, and
Ambiguous (VUCA):
- Increased emphasis on high-quality products and services, in addition to completion on price.
- Increased flexibility.
- Innovation as a hallmark of the economy.
- Requirement for sustainability.
- Organizations need to offer manageable work.
In a new environmental requirement, it is very hard to operate an organization with a traditional manner
of working troubles in a traditional setting in a new environment make itself apparent through
bottlenecks.
Functional organization in a VUCA world: bottlenecks and symptoms
Given the increasingly high level of VUCA:
- An ever-increasing number of orders will need a multidisciplinary approach level supply to
demand and to meet short times of delivery it is more important to be informed of each other's
field of activity and to make clear agreements with the others.
- Increase in knowledge.
- Less likely that one person can oversee the entire process need for a multidisciplinary
approach (functional design is unsuited for this approach).
o Functional approach results in a fragmented approach to the customer, since every
department or silo is responsible for only part of the customer's requirements, whereas
nobody has the overall responsibility Interspersing (przeplatajace sie) customer
requests cause bottlenecks and hence longer waiting times and delivery times.
, o Functionally structured organizations that they do not focus on the customer, but rather
on their own departments and their own processes.
o Supervisors become restless, because the command-and-control modus operandi is
continuously invalidated.
- Shift in purpose from production to steering, from value creation to management.
o In the Netherlands, steering and management are therefore sometimes scornfully
referred to as the 'freeloaders'.
o The professionals on the shop floor are in the first instance loyal to their own
occupational area rather than to the organization.
o Employees who cannot rely on their profession because they are only assigned a
narrowly defined task, therefore focusing on the world outside work.
- Law of Van Hootegem “There is no such thing as a perfect rule. Any imperfections of an
intrinsically imperfect rule are, as a rule, replaced by a new, intrinsically imperfect rule. The latter
imperfections are, as a rule, replaced by a new, intrinsically imperfect rule.”
o Social mechanism embodied in this law results in an increasing level of proceduralism,
and organizations designed in this way end up increasingly inhumane and ritualistic.
Challenges in the labor market
- Working on the quality of the job ensures that employees remain in work for longer and that the
sector's appeal increases simultaneously.
Jobs considered as 'high-quality' the stress model designed by Karasek (1979):
- The model indicates that the work
demands do not cause stress; instead,
they combine work-related needs and
the scope for decision-making
associated with the job. If that scope
is limited, high work-related demands
cannot be met, which causes
symptoms of stress. Inversely, having
sufficient capacity for decision-making
makes it possible to adequately
handle work-based requests, as a
result of which these demands are
instead experienced as challenging and motivating, and the job provides opportunities to learn.
- Model offers a positive message:
o Shows a way to prevent risks, avoiding risks.
o The absence of risks results in more significant learning opportunities, satisfaction,
motivation, drive, innovative employee behavior, and, eventually, better performance by
employees. shows all sorts of opportunities.
- Converting high-strain jobs to active ones requires adjustments in how the work is organized.
, Total workplace innovation (TWIN)
Organize Differently and Work Better: entirely choose to focus on the
customer.
For a good customer focus, organizations must no longer look inward to the activities they carry out in
order to group similar activities.
A design sequence
Total Workplace Innovation follows a specific design sequence. no different than the traditional
organization.
Design of the structural organization:
- Starts with the leadership structure who will be allowed to make which decisions.
o Constructed top-down and is usually depicted graphically in an organization chart.
- Setting mission and vision the focus lies on the customer.
o What does this organization want to be, and what would mankind and society miss out
on if this organization ceased to exist?
- Strategy development and practical job requirements development to meet the performance
based on mission and vision.
o What we as an organization want to achieve, what it could cost, and which performance
requirements are less important (if necessary).
- What does the value-added process consist of? With respect to working out who the different
(groups of) customers are.
o Executing activities
value-added process.
- Sort the customers and their orders
going in search of customers
(orders) with common
characteristics.
- Specialization relating to a
specific customer (and demand).
o Parallelization creating
parallel order streams,
which each have central
interdependence within
the stream, but which are
minimally dependent on
each other.
o Preparatory and supporting activities are assigned.
- Leadership issues are only addressed once design choices have been made. allows for a more
democratic organization to be
created, with fewer managers. In this
organization, managers are, in
principle, no longer concerned with
extinguishing fires but with strategic
