In “Organizational design: fashion or fit,” Henry Mintzberg (1981) explores the natural configurations of organizations that result from elements of structure and situation to discover that consistency, coherence, and fit are the keys to successful organizational design.
Mintzberg asserts that problems in organizational design come from two mistaken assumptions: 1) that organizations are alike, and 2) that effective organizations have coherent component parts. Rather, organizational characteristics fall into natural configurations, which are simple structure, machine bureaucracy, professional bureaucracy, divisionalized form, and adhocracy. Mismatched characteristics within these configurations will prevent an organization from achieving natural harmony. To design effective organizations, managers must achieve a proper fit of organizational characteristics. The following Précis summarizes Mintzberg’s article to find how harmonizing organizational parts may lead to organizational success.
Deriving organizational configurations
Literature in organizational design identifies five organizational configurations, which develop from a framework of coordinating mechanisms: simple structure, machine bureaucracy, professional bureaucracy, divisionalized form, and adhocracy. Most organizations have characteristics from each configuration, but one likely dominates. To design an effective organization, management must find the proper fit among the parts, elements, and structure of the organization, which all should be in harmony with the situational factors that affect the organization.
Basic parts of the organization
The basic parts that help to describe and differentiate the five configurations are the strategic apex, operating core, middle line, and staff, as described below:
- The strategic apex is top management.
- The operating core is the key people top management hires to do the basic work of the organization.
- The middle line is the management level that intermediates between top management and the operating core.
- The staff personnel includes technostructure and support staff. Technostructure includes the people who plan and control work and staff. Support staff includes the people who serve others in an organization.
The elements of structure
The elements of structure include:
- Specializing tasks
- Formalizing procedures
- Formal training required for the job
- Grouping units
- Size of units or span of control
- Systems for planning and performance control
- Liaison devices, like task forces, integrating managers, and matrix structure.
- Downward delegation or vertical decentralization
- Outward delegation or horizontal decentralization
No single element determines the others; all elements form an integrated system.
Situational factors that affect the elements of structure include the following: age and size of the organization, technology, means of production, environment in which the organization operates, and external control systems.
The five configurations
In the simple structure, the strategic apex coordinates the organizational activities through direct supervision. In other words, one or a few top managers coordinate the activities of a core group of employees. Commonly seen in entrepreneurial companies, the simple structure has minimal staff or middle line workers, little standardization, and makes limited use of planning, training, or liaison devices. This lean and flexible structure can foster basic creativity while allowing the organization to outmaneuver bureaucracies in a dynamic environment. However, strict centralization threatens the long-term viability of the simple structure. Nearly all organizations start as simple structures with chief executives yielding considerable power. Simple structures abhor standardization, yet age and growth compel an organization to bureaucratize or remain dependent on the founder’s survival. Highly autocratic, the simple structure is out of fashion, but is a fit for startup organizations, for organizations in simple and dynamic environments, and for organizations that face extreme and hostile pressures.
A machine bureaucracy emerges as situational factors like age, growth, stable environment, and external controls drive an organization to coordinate work through standardization. The technostructure becomes the key part of the machine bureaucracy as analysts standardize work and processes. Power concentrates at the top, while a middle line emerges to coordinate work of the operating core and to manage conflicts that result from rigid departmentalization. The machine bureaucracy seeks stability, so tends to build its own internal and external support services and even acts as its own customer. Franchises like McDonald’s, In-and-Out, and Starbucks serve as classic examples of machine bureaucracies because they have achieved success through meticulous standardization that produces cheap and efficient products. In spite of being the most prevalent of the five configurations, the machine bureaucracy is out of fashion because it produces monotonous work, isolates employees, becomes obsessed with controlling markets and workers, and produces inflexible organizations.
The professional bureaucracy coordinates activities by standardizing the skills of employees rather than processes. This design uses an operating core of highly trained professionals with a substantial operating staff. Used in hospitals, universities, legal firms, and other organizations operating in stable but complex environments, the professional bureaucracy decentralizes authority, putting power in the professionals and in the associations and institutions that train the professionals. The support staff handles the routine tasks that the professionals delegate. A parallel autocratic hierarchy emerges to control the staff. Standardization allows professionals to perfect skills and to develop autonomy. However, the professional bureaucracy restricts the organization’s ability to adapt if the environment becomes unstable, does not produce integrated entities, and has difficulty quantifying goals. Professional bureaucracy is fashionable because it offers democracy and autonomy for professional workers.
The divisionalized form emerges when an organization needs to coordinate the activities of parallel operating units, which are led be autonomous middle-line managers. An organization divisionalizes to create semi-autonomous market-based units for diversified products while retaining centralized power. External controls from headquarters tend to push the divisionalized form toward machine bureaucracy, which discourages risk-taking and innovation while spreading consequences among divisions. As the organization grows, power tends to be gathered into a few hands, encouraging irresponsible practices. The divisionalized structure is fashionable, used throughout the Fortune 500 and in European companies. Hospital systems, unions, and government entities have also adapted the divisionalized structure. However, the divisionalized structure seems unsuited for professional environments because 1) successful divisionalization requires measurable goals, and 2) the professionals in these organizations resist the resulting technocratic controls and top-down decision making that result from divisionalization.
The opposite of bureaucracy, adhocracy is a structure in which power and control dynamically shift by mutual adjustment among competent professionals. While the experts in a professional bureaucracy work autonomously to perfect their skills, the experts in an adhocracy work as teams to create things. The adhocracy distributes power unevenly into the hands of the experts needed for a particular decision. Abundant managers have a narrow span of control, serving as experts who not only work with the teams but who also link the teams. The power base in adhocracy is in proficiency rather than authority, which erases the distinction between line and staff while engaging everyone in strategic management.
The adhocracy has two basic forms, the operating adhocracy, and the administrative adhocracy. The operating adhocracy completes innovative projects for clients. Examples include advertising agencies and think tanks. The administrative adhocracy takes on innovative projects on its own behalf. Examples include NASA or a producer of electronic components.
Adhocracies are a fit for organizations operating in complex and dynamic environments, which require sophisticated innovation and cooperative efforts from functionally diverse experts. Combining democracy with an absence of bureaucracy, adhocracy is in fashion--considered the structure of the age. While adhocracy can be extraordinary at innovation, the structure has difficulty accomplishing the ordinary because it requires inefficiency to be effective, is flooded with managers, requires resource-intensive communication and relationship systems, seemingly takes forever to accomplish simple tasks so that everyone can contribute, and is rife with the ambiguity that causes conflict and political behavior.
Configurations as diagnostic tools
Virtually all organizations experience the pulls that underlie the five configurations, as follows: top management pulls to centralize power, the technostructure pulls to formalize, the operators pull to professionalize, the middle management pulls to balkanize, and the support staff pulls to collaborate. The organization tends to organize close to one of these configurations; if one pull fails to dominate organizational designers may need to balance two. To improve the organizational design, managers should consider the pulls of their organizations to discover the configuration that serves as the best fit among component parts. To understand how to use the configurations as diagnostic tools, managers should consider four forms of misfit, as follows:
Are the internal elements consistent?
Managers should be less concerned about the latest structural innovation and more concerned about pursuing the structure that best fits the organization and its environment.
Are the external controls functional?
Since external controls drive an organization toward machine bureaucracy, simple structures, professional bureaucracies, and adhocracies can find their internal consistency threatened by external controls.
Is there a part that does not fit?
Management may recognize that a part of the organization needs an autonomous structure. For example, a machine bureaucracy may need to reduce control on a research laboratory so the experts can innovate without hindrance from bureaucratic restrictions.
Is the right structure in the wrong question?
An organization may achieve internal consistency, but find that its design no longer accommodates the environment. In other words, the organization may find itself “with the right structure in the wrong environment” (p. 115). Configurations should not only match the structure but also match the situation. The question becomes whether to change the organization or to change the environment. Changing the environment might involve identifying a niche that is more suited for the organization. Changing the organization involves evolving or revolutionizing the organization so that it may adapt to the environment. Revolution involves continuously adapting the organization at the expense of internal consistency. Evolution maintains the internal consistency while allowing the structural fit to degrade in a dynamic environment.
In short, managers should design organizations by fit, not fashion. Managers should be less concerned about which configuration to use and more concerned about achieving configuration. In other words, pick the structure that fits the organization or create a new configuration.
Mitzberg, H. (1981). Organization design: Fashion or fit? Harvard Business Review, 59 (1), 108-116.