Differentiation and Integration and the Organization’s Environment

It is on the states of dillrirnil*ttlon and integration in organizational systems that this  xludy places major emphasis. As organizations deal with ilirii ext mini environments, they become segmented into units, rach of which has as its major task the problem of dealing with a part of the conditions outside the firm. This is a trsull of the fact that any one group of managers has a limited span of surveillance. Each one has the capacity to deal with only a portion of the total environment. If we take as an example either a division of a large, diversified corporation ot a medium-sized manufacturing firm, we readily observe sales, production, and design units, each of which is coping with a portion of the organization’s external environment. The  sales unit faces problems associated with the market, the customers, the competitors, and so on. The production unit deals with production equipment sources, raw materials sources, labor markets, and the like. Such external conditions as the state of scientific knowledge and opportunities for expanding knowledge and applying it are in the most general sense the purview of the design unit. These parts of the system also have to be linked to- gether toward the accomplishment of the organization’s overall purpose. This division of labor among departments and the need for unified effort lead to a state of differentiation and integration within any organization.

The concepts of differentiation and integration as applied to organizations are not novel. They have been discussed in one way or another by a number of organization theorists and researchers. The best way to understand the differences in our approach from those of the other writers on organizational topics is to point to the way these concepts have been used in the past. In so doing we acknowledge our intellectual debt to these earlier theorists, and also recognize that the limitations of their use of these concepts have become apparent only through increased knowledge about the functioning of organizations.

Early writers about organizations, who have been labeled the classicists, were concerned with differentiation and integration.3 Fayol, Gulick, Mooney, and Urwick dealt with how best to divide the tasks of the organization and how to obtain integration within it. From our point of view, however, their major failing was that they did not recognize the systemic properties of organizations. As a consequence, they failed to see that the act of segmenting the organization into departments would influence the behavior of organizational members in several ways. The members of each unit would become specialists in dealing with their particular tasks. Both because of their prior education and experience and because of the nature of their task, they would develop spe- cialized working styles and mental processes.4 For example, research managers and their subordinates tend to develop a distinct pace of work and orientation to time and to technical achievement as they spend hours puzzling over ambiguous problems. Similar points could be made about the ways of thinking and behavior patterns of other functional groups, such as production and sales. By differentiation we mean these differences in attitude and behavior, not just the simple fact of segmentation and specialized knowledge.

The observation of these differences is, of course, not new. In the course of this study, however, we have gone beyond everyday observation to identify three specific dimensions of the differences in ways of thinking and working that develop among managers in these several functional units. First, we have investigated the differences among managers in different functional jobs in their orientation toward particular goals. To what extent are managers in sales units concerned with different objectives (i.e., sales volume) from those of their counterparts in production (i.e., low manufac-turing costs) ? Second, we have been interested in differences in the time orientation of managers in different parts of the organization. Might production executives not be more pressed by immediate problems than design engineers, who deal with longer-range questions? Third, we have been concerned with differences in the way managers in various functional departments typically deal with their colleagues, that is with their interpersonal orientation.B Are managers in one part of the organization more likely to be preoccupied with getting the job done when they deal with others, while those in another unit pay more attention to maintaining relationships with their peers? In selecting these three categories of orientations to examine, we are not suggesting that these are the only differences that might be found among managers in different parts of an organization, but only that they seemed to be three important dimensions which our own observations of managerial behavior and earlier behavioral science research have suggested might be important.

The early organization theorists also did not recognize that each of the functional units would develop different formal reporting relationships, different criteria for rewards, and different control procedures, depending on the task of each unit.6 Thus, the production department might have many levels in the management hierarchy, rewards for performance in meeting cost and quality standards, and control systems that measure these criteria in detail. On the other hand, a research unit might have fewer supervisory levels for each supervisor, rewards for performance of a broad objective such as “contribution to knowledge,” and a much less precise control system. The variation in the formality of structure is the fourth dimension of differentiation among functional units that we have attempted to investigate.

In summary, when we refer to differentiation among units, we will mean differences in orientation and in the formality of structure. While these four characteristics are not all-inclusive and homogeneous, they do provide us with short- hand measures of differentiation as we define it in this study — the difference in cognitive and emotional orientation among managers in different functional departments. When we describe pairs of units or organizations as having more or less differentiation, we will be referring to whether the managers in the various units are quite different (more differentiation) in these four attributes or whether they are relatively similar (less differentiation) .

As the early organization theorists did not recognize the consequences of the division of labor on the attitudes and behaviors of organization members, they failed to see that these different orientations and organizational practices would be crucially related to problems of achieving integration. Because the members of each department develop different interests and differing points of view, they often find it difficult to reach agreement on integrated programs of action.7 A plant manager and a sales manager with different assigned responsibilities could quite naturally be expected to hold different views about the best price for a particular product. The plant manager might find a higher price, which would give him a wider latitude in production costs, desirable, while the sales manager might prefer a lower price, which would enable him to meet competition more effec- tively. This very elementary example of a built-in conflict of interests is compounded a hundred times over in a real organization, and the issues at stake are seldom so clear cut. It does, however, illustrate how we define integration—the quality of the state of collaboration that exists among departments that are required to achieve unity of effort by the demands of the environment. While we will be using the term “integration” primarily to refer to this state of interdepartmental relations, we will also, for convenience, use it to describe both the process by which this state is achieved and the organizational devices used to achieve it.

Source: Lawrence Paul R., Lorsch Jay W. (1967), Organization and Environment: Managing Differentiation and Integration, Harvard Business School.

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