Organizational Analysis and Planning

Organizational analysis and planning focuses on cultivating and maintaining an efficient workforce through design and structure of an organization, including the relationship and behavior of individuals within organizations. Specifically, organizational analysis is concerned with developing models and theories that accurately capture the functioning and development of organizations and that account for the ways in which organizations respond to and bring about changes. Organizational planning, on the other hand, involves designing an organization's structure and dividing up the responsibilities of an organization. The goals of organizational analysis and planning typically have been to determine the best way to view and organize a company in order to manage it successfully and to bring about greater efficiency.

MODELS OF OGANIZATIONAL ANALYSIS

One of the basic techniques of organizational analysis is modeling—developing models of organizations that delineate the way they function and evolve in order to identify the best way of managing each one. Modeling enables managers to determine the crucial variables in particular circumstances so they can experiment with different combinations of variables to achieve their desired results. For example, managers can determine the best combination of technology and organizational structure for their company by using organizational models.

Organizational models typically focus on behavior, structure, or technology. In consideration of these variables, four general models of organizational analysis exist: the rational (also called the classical model), the natural system (also called the participative model), the socio-technical, and the cognitive model.

Rational Model. A pioneer of the rational model of organization was Frederick Taylor, who was influential near the start of the twentieth century. Taylor's background in engineering prompted his organizational analysis on efficiency. In Taylor's view, there was one best way—the most efficient way—to perform a task. Scientific management sprang from his work, with resultant time and motion studies in which tasks were timed and employee motions were gauged for efficiency. The best way to perform a task, in Taylor's view, was the way that accomplished the task in the least amount of time. He extended this view from employees to management, suggesting that nearly all organizational tasks could become more efficient if scientific principles were applied.

This was at the dawn of the introduction of the automobile to America. Although many Western European nations began manufacturing automobiles before the early twentieth century, production efficiencies still had a long way to go. Applying scientific management principles helped Ford Motor Company develop the first American, mass-produced automobile. Frederick Taylor, then, was correct. Scientific management did work, but it was not without problems. The main problem was that it ignored the boredom that repetitive tasks created for workers. Workers became simply replaceable parts in the organizational machine.

In addition, the rational model of organization presupposes that decisions about an organization's structure are reached because of the rational assessment of an organization's needs, goals, and external influences. And like Taylor's scientific management, this is true in some situations, but is not comprehensive enough to tell the whole story of how needs, goals and external influences affect organizational analysis and planning.

The rational model assumes that deviations from rationality result from errors in judgment and calculation as well as from ignorance. This model treats organizations as mechanical groups because it conceives of the organization as having a structure of different parts, and that all of these parts can be modified and manipulated in order to improve the efficiency of the entire

organization. Furthermore, individual parts of the organization are viewed as modifiable through deliberate effort. Finally, this model sees the long-term development of the organization as modifiable and controllable through planned modification in order to accomplish definite goals.

The rational model is still pervasive among managers and corresponds to the pyramidal organizational structure, in which top managers are at the apex and employees are at the bottom. Managers possess the authority in this model, defining and assigning tasks to the employees, who are charged with completing the tasks. They must begin by giving employees clear and detailed instructions. After that, managers must evaluate employee performance and distribute rewards and punishments based on the way employees performed their tasks.

Managers assume that worker motivation is directly correlated with economic rewards and punishments meted out by the managers. Motivation, from a rational perspective, simply involves increasing pay or threatening workers with various punishments. Hence, according to this model, managers rely on pay and related forms of compensation to motivate workers to complete their tasks efficiently in order to achieve company goals.

The problem with this assumption is that there are many motivators other than money, there can be many ways to perform a given task, and there are many organizational goals that are not rational. The rational model is thus a starting point for thinking about organizational analysis, but certainly not encompassing enough to provide a complete picture.

Natural System Model. In contrast to the rational model, the natural system model views organizations holistically, that is, as systems. The natural system model sees an organization as not only striving to accomplish its own goals, but also other important goals. An organizational structure is regarded as an institution in its own right that has needs of its own. Hence, according to this model, an organization seeks to maintain a balance of its various needs and goals, which may restrict the way it pursues other goals.

Unlike the rational model of organization, the natural system model sees the modification of an organization as unplanned and adaptive reactions to unstable conditions that threaten the balance of the organization as an entire system. The way an organization responds to problems is characterized as a defense mechanism and as being influenced by the common values ensconced in the members of the organization. This model concentrates on threats to an organization's equilibrium, that is, on events and activities with the potential of disrupting an organization's balance.

When deviations from organizational plans and goals occur, they are seen not as the product of error or ignorance, but as the result of limitations brought about by an organization's social structure. This model generally is based on the concept of organizations as organisms in which all the parts are interconnected and interdependent. Consequently, changes in one part of an organization are thought to have an impact on other parts of the organization, and so planned modification of the organization is difficult.

In practical terms, the natural system model strives to balance the needs of all the members of the organization as well as other stakeholders, such as customers, shareholders, and suppliers. This model holds that organizations function best when members belong to at least one effective work group (department, committee, or staff group), thereby contributing to the goals of organizations. Members who belong to more than one work group help link the different units of the organization together and facilitate communication and the exchange of information throughout the organization.

The natural system model views change as affecting the entire organization, not just individuals or individual units. Consequently, managers cannot change just one small part of an organization; rather, they must change the whole organization. As a result, planning for change must be comprehensive and systematic. Theoretically, the natural system model helps prevent conflicts, in that changes take place only with the involvement of each member of the organization. Therefore, commitment to change is greatly increased and conflict over change is limited.

Sociotechnical Model. Due to the limitations of the previous models of organization, theorists developed other models to capture the essence and functioning of modern organizations. The sociotechnical model does not rely on the mechanical and biological analogies of the rational and natural system models. Instead, the sociotechnical model views organizations as having a greater ability to modify their form and structure. Nevertheless, like the natural system model, the sociotechnical model sees organizations as evolving. An organization changes when the expectations of its members change as a result of their collaboration with other members and the exchange of information.

This model views organizations as systems that interact with their environments. Through the course of this interaction, organizational behavior is affected by human, social, technological, and organizational inputs. These inputs are all interdependent, thus a change in one causes a change in the others. The basic tenets of the socio-technical model include the belief that behavior in

organizations can have a number of causes, that organizations are systems, and that informal social systems are different from formal social systems.

An organization's main task is accomplished through the process of inputs being converted into outputs. The organization is designed around these tasks. Similarly each unit of the organization is designed around its specific subtask. The sociotechnical model assumes that an organization's effectiveness is determined by its design to perform its main task. Organizations have differentiated, yet integrated, units based on three primary factors: technology (including techniques, skills, and materials), geographic location, and time (work shifts). According to this model, if an organization is effectively designed around its main task and if its units are differentiated and integrated effectively, then the number of conflicts will be reduced.

Cognitive Model. The cognitive model of organization consists of three primary components: cognition, the decision-making or problem-solving process, and an organizational setting. Cognition refers to the information-processing units of an organization and its organizational units. The decision-making or problem-solving component is a series of steps, operations, and procedures that an organizational unit uses to make decisions or solve problems. The organizational setting component is the arrangement of the organization, that is, the way tasks are distributed and the way processes are coordinated.

Although the rational model of organization focuses on clarifying and assigning tasks, it does not address the other aspects of organizations. In particular, it provides little in terms of the ways organizations solve problems once tasks are clarified and assigned. The cognitive model moves beyond this level of organizational analysis by focusing on the processes through which organizations assign specific activities and times for the activities to be performed.

The cognitive model focuses on the decision-making process of an organization. An organization makes decisions in accordance with its objectives and based on available information. Since this model views individuals as having the capacity to do only a few things at a time, the organization functions as the combination of these limited capacities and facilitates the overall completion of a number of complex tasks, which are broken down into a series of subtasks so that individuals can perform them. These subtasks are the areas of specialization within an organization. Specialization, in turn, brings about the flow of specific information to and from specialized units.

This model provides several key insights into the workings of organizations. It conceives of an organization as a process that develops from the interaction of human cognition, organizational structure, and the types of decisions that need to be made. Because of these characteristics, the cognitive model focuses on the development and adaptation of organizations in different circumstances. Furthermore, this model accounts for the way in which specialization affects organizational behavior and coordination.

In conclusion, because each different organization model has its advantages and disadvantages, managers must decide which one (or ones) best captures the workings of their company by evaluating the assumptions and key processes of each, as well as by determining which one can solve the kinds of problems they need to solve.

TYPES OF ORGANIZATIONAL PLANNING STRUCTURES

Organizational planning involves designing an organization's structure to maximize efficiency. This includes dividing a company up into different units, departments, and teams. Prior to this division, managers must consider a company's goals and business obstacles as well as alternative company structures. Business goals may include, for example, increasing the flow of information, promoting teamwork, and reducing redundancy. Next, managers must consider the different organizational structures and select the one that holds the greatest potential for eliminating problems with the current corporate structure or for bringing about the desired structural environment. The selection may be made by taking different organizational models into consideration, as well.

Managers and executives generally divide an organization into different units based on one of the following six criteria:

Function. A manufacturing firm typically includes functional units such as engineering, production, finance, sales, and personnel. These different functions are controlled by managers who head each function. In this organizational structure, each function primarily focuses on its core tasks (e.g., production or finance).

Product. Large, diversified companies may find it advantageous to divide their tasks based on product groups, such as foodstuffs, farm chemicals, and pharmaceuticals. This organizational structure has the benefit of enabling each business unit to produce desired results. However, it can lead to high administrative costs and redundancy.

Customers. Companies may be divided into different units based on target customers. For example, a book publisher may be organized by retail bookstores, mail-order book stores, online book stores, and school system

tier, such as elementary, middle school, high school, and higher education.

Geographic Location. Many sales and service companies use geographic location as the basis for creating departments within the organization. This organizational structure calls for members of each group to concentrate on particular locations for which they are responsible.

Process. Some companies are organized by process. Process organization is common in manufacturing and clerical companies. For example, natural gas companies have different units for exploration, production, and distribution. This type of organizational structure enables each unit to have its own specialists.

Matrix. Matrix organizational structures include not only general functional units like production, sales, and finance, but also product or geographic units. Company executives frequently oversee the product units directly. The product units, in turn, collaborate with and coordinate the functional units. By adopting the matrix arrangement, companies attempt to reap the benefits of the functional and the product or geographic structures, while bypassing the inefficient and redundant aspects of the product structure. A company with a matrix organizational structure has functional units such as development, production, and sales matched in a matrix by product or geographic location.

Since the globalization of companies and businesses, matrix structure has been viewed as a popular option for organizations. As Margaret Oertig and Thomas Buergi note, “Many international companies have projects spanning a variety of nationalities, involving great geographical distance and a range of time zones.” However, not all companies consider matrix structure an ideal method of organization. For example, Hewlett Packard CEO, Mark Hurd and former CEO of General Electric Jack Welch have both offered criticisms of matrix organizational structure, arguing that it can create complex reporting and accountability issues for workers within a company.

A McKinsey Quarterly article from 2007 notes that matrix organizations seem ideal for a global company while echoing these criticisms of matrix organization. Instead, the article's authors advocate the use of what they term “formal networks” as an organizational structure. While “formal networks” resemble a matrix structure in that they attempt to collect team members from all areas of an organization, the authors point out that “formal networks” are less hierarchical than matrix organizations.

Ultimately, company executives and managers must strive to select the organizational structure that best suits their fields of business; that offers the optimal amount of control, specialization, and cooperation; and that facilitates key business activities while also taking into consideration concerns for efficiency and effectiveness.

SEE ALSO Organizational Chart; Organizational Development; Organizational Structure

BIBLIOGRAPHY

Bryan, Lowell L., Eric Matson, and Leigh M. Weiss. “Harnessing the Power of Informal Employee Networks.” The McKinsey Quarterly. November 2007, 44–55.

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Goodman, Paul S., and Denise M. Rousseau. “Organizational Change that Produces Results: The Linkage Approach.” Academy of Management Executive 18, no. 3 (2004): 7–20.

Oertig, Margaret and Thomas Buergi. “The Challenges of Managing Cross-cultural Virtual Project Teams.” Team Performance Management 12, no. 1/2 (2006): 23–30.

Roberts, John. The Modern Firm: Organizational Design for Performance and Growth. Oxford University Press, 2004.

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Welch, Jack, and Suzy Welch. “Call It Work-Life Choices”, Business Week, November 27, 2006, Issue 4011

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