A number of researchers have studied the relation between structure and performance, typically by comparing the structures of high- and low-per- formance firms. Their tendency has been to attribute effectiveness to the fit between certain design parameters and some situational factor—for exam- ple, the size of the organization, the technical system it uses, or the dynam- icnature of its environment. One study, however, carried out by Khand- walla (1971, 1973b, 1974), found that effectiveness was dependent on the interrelationships among design parameters; in other words, on the use of different ones in a consistent or integrated manner.
These studies lead us to two important and distinct conclusions about structural effectiveness. The first we can label the congruence hypothesis: effective structuring requires a close fit between the situational factors and the design parameters. In other words, the successful organization designs its structure to match its situation. And the second we can call the configuration hypothesis: effective structuring requires an internal con- sistency among the design parameters. The successful organization devel- ops a logical configuration of the design parameters.
Do these two hypotheses contradict each other? Not necessarily. Not as long as an organization’s major situational factors—for example, its size on the one hand and its technical system on the other—do not call for design parameters that are mutually inconsistent. Where they do, the orga- nization would have to trade off situational fit for consistency in its internal structure. But where they do not, the organization would simply select the structural configuration that best matches its situation. Of course, this situation is not something beyond the organization’s control. That is, it can choose not only its design parameters, but certain aspects of its situation as well: it designs its own technical system, decides whether or not to grow large, gravitates to an environment that is stable or dynamic, and so on. Thus the situational factors can be clustered, too. This conclusion enables us to combine the two hypotheses into a single, extended configuration hy- pothesis: effective structuring requires a consistency among the design parameters and contingency factors.
Our preference, as has been evident, is for the extended configura- tion hypothesis. But before we can develop it, we need to consider the congruence hypothesis, because the research has shed a good deal of light on the relations between design and situation. These findings will in fact help us to develop the configurations and enable us to build the situational factors into them.1
In discussing these relationships in this chapter, we shall treat the situational factors as independent variables (that is, as given) and the design parameters as dependent ones (that is, to be determined). These assump- tions will, of course, be dropped when we get to the configurations. As we argued earlier, because the configurations are systems, no one of their parts is independent or given; rather, each is integrated with, and hence dependent on, all the others.
In addition, we shall consider a set of intermediate variables in this chapter, through which the situational factors affect the design param-eters. These concern the work that is done in the organization and include the comprehensibility of the work (which most strongly affects specializa- tion and decentralization); the predictability of the work (which most strongly affects standardization in its three forms, which means the design parameters of behavior formalization, planning and control systems, and training and indoctrination); the diversity of the work (which most strong- ly affects the choice of bases for grouping units, as well as behavior formal- ization and the use of liaison devices); and the speed with which the organization must respond to its environment (which most strongly affects decentralization, behavior formalization, and unit grouping).
We discuss age and size, technical system, and environment in two ways in this chapter—in terms of a set of hypotheses, each typically relat- ing to a specific situational factor to one or more design parameters, and in terms of a framework or set of organizational types suggested by this set of hypotheses. (The power factors will be discussed only in terms of the nypotheses.) As we shall see, these types reinforce the findings of the earlier chapters that point the way to our configurations.
Source: Mintzberg Henry (1992), Structure in Fives: Designing Effective Organizations, Pearson; 1st edition.