Foundations of Organization Design: The Organization in Five Parts

Organizations are structured to capture and direct systems of flows and to define interrelationships among different parts. These flows and interre- lationships are hardly linear in form, with one element following neatly after another. Yet words must take such a linear form. Hence, it sometimes becomes very difficult to describe the structuring of organizations ex- clusively in words. These must be supplemented with images. Thus we rely heavily on diagrams in this book. In fact, we require a basic diagram to represent the organization itself, a diagram that can be played with in various ways to show the different things that can happen in organizations and the different forms that organizations themselves can take.

We can develop such a diagram by considering the different compo- nent parts of the organization and the people contained in each. At the base of the organization can be found its operators, those people who per- form the basic work of producing the products and rendering the services. They form the operating core. As we noted earlier, in the simplest of organi- zations, the operators are largely self-sufficient, coordinating through mu- tual adjustment. The organization needs little more than an operating core. But as the organization grows and adopts a more complex division of labor among its operators, the need for direct supervision increases. It becomes mandatory to have a full-time manager who sits at what we shall call the strategic apex. And as the organization is further elaborated, more managers are needed—not only managers of operators but also managers of managers. A middle line is created, a hierarchy of authority between operating core and strategic apex. Note that the introduction of managers gives rise to a new form of division of labor, of the administrative type— between those who do the basic work and those who administer it in one form or another.

As the process of elaboration continues, the organization may turn increasingly to standardization as a means of coordinating its work. The responsibility for much of this standardization falls on another group of people, whom we shall call the analysts. They too perform administrative duties, but of a different nature—often called “staff.” These analysts form what we shall call the technostructure, outside the hierarchy of line authori- ty. Here, then we have a second administrative division of labor—between those who do (or supervise) the work and those who standardize it. In fact, by substituting standardization for direct supervision—a process known as the “institutionalization” of the manager’s job—the analysts weaken the control that managers are able to exercise over the operators’ work, much as the earlier substitution of direct supervision for mutual adjustment weakened the operators’ control over their own work.

Finally, as it grows, the organization tends to add staff units of a different nature, not to effect standardization but to provide indirect ser- vices to itself, anything from a cafeteria or mailroom to a legal counsel or public relations department. We call these people and the part of the orga- nization they form the support staff.

This gives us five parts of the organization. As shown in Figure 1-2, we have the operating core at the base joined to the strategic apex on top by the middle line, with the technostructure and support staff off to either side. This figure will serve as the theme diagram of this book, its “logo,” if you like. We shall use this figure repeatedly to make our points about structure, sometimes overlaying flows on it, sometimes distorting it to show distinctive characteristics of particular kinds of organizations.

Our logo shows a small strategic apex connected by a flaring middle line to a large, flat operating core. These three parts of the organization are shown in one uninterrupted sequence to indicate that they are typically connected through a single line of formal authority. The technostructure and the support staff are shown off to either side to indicate that they are separate from this main line of authority and influence the operating core only indirectly.

It might be useful at this point to relate this scheme to some terms commonly used in organizations. The term middle management, although seldom carefully defined, generally seems to include all members of the organization not at the strategic apex or in the operating core. In our scheme, therefore, “middle management” would comprise three distinct groups—the middle-line managers, the analysts, and the support staff. To avoid confusion, however, the term middle level will be used here to de- scribe these three groups together, the term management being reserved for the managers of the strategic apex and the middle line.

Figure 1-2.    The five basic parts of the organization

The word staff should also be put into this context. In the early litera- ture, the term was used in contrast to line; in principle, line positions had formal authority to make decisions, staff positions did not; they merely advised those who did. As we shall see later, this distinction between line and staff holds up in some kinds of structures (at least for the analytic staff, not the support staff) and breaks down in others. Nevertheless, the distinc- tion between line and staff is of some use to us, and we shall retain the terms here though in somewhat modified form. Staff will be used to refer to the technostructure and the support staff, those groups shown on either side of our theme diagram. Line will refer to the central part of the diagram, those managers in the flow of formal authority from the strategic apex to the operating core. Note that this definition does not mention the power to decide or advise. As we shall see, the support staff does not primarily advise; it has distinct functions to perform and decisions to make, although these relate only indirectly to the functions of the operating core. The chef in the plant cafeteria may be engaged in a production process, but it has nothing to do with the basic manufacturing process. Similarly, the tech- nostructure’s power to advice sometimes amounts to the power to decide, but that is outside the flow of formal authority that oversees the operating core.2

Let us now take a closer look at each of the five parts of the organization.

1. The operating core

The operating core of the organization encompasses those members—the operators—who perform the basic work related directly to the production of products and services. The operators perform four prime functions: (1) They secure the inputs for production. For example, in a manufacturing firm, the purchasing department buys the raw materials, and the receiving de- partment takes them in the door. (2) They transform the inputs into outputs. Some organizations transform raw materials—for example, by chopping down trees and converting them to pulp and then paper. Others transform individual parts into complete units—for example, by assembling typewrit- ers—and still others transform information or people, by writing consult- ing reports, educating students, cutting hair, or curing illness. (3) They distribute the outputs—for example, by selling and physically distributing what comes out of the transformation process. (4) They provide direct sup- port to the input, transformation, and output functions—for example, by performing maintenance on the operating machines and inventorying the raw materials.

Standardization is generally carried the furthest in the operating core, in order to protect the operations from external disturbance. How far, of course, depends on the work being done. Assemblers in automobile facto- ries and professors in universities are both operators, although the work of the former is far more standardized than that of the latter.

The operating core is the heart of every organization, the part that produces the essential outputs that keep it alive. But except for the very smallest ones, organizations need administrative components too. The ad-ministrative component comprises the strategic apex, middle line, and technostructure.

2. The strategic apex

At the other end of the organization lies the strategic apex. Here are found those people charged with overall responsibility for the organization—the chief executive officer (whether called president, superintendent, or pope), and any other top-level managers whose concerns are global. Included here as well are those who provide direct support to the top managers— their secretaries, assistants, and so on.3 In some organizations, the strate- gic apex includes the executive committee (because its mandate is global even if its members represent specific interests); in others, it includes what is known as the chief executive office—two or three people who share the job of chief executive. The strategic apex is charged with ensuring that the organization serve its mission in an effective way, and also that it serve the needs of those who control or otherwise have power over the organi- zation (such as its owners, government agencies, unions of the employees, pressure groups).

This entails three sets of duties. One already discussed is that of direct supervision. To the extent that the organization relies on this mecha- nism of coordination, it is the managers of the strategic apex (as well as the middle line) who effect it. They allocate resources, issue work orders, authorize major decisions, resolve conflicts, design and staff the organiza- tion, monitor employee performance, and motivate and reward em- ployees.

Second is the management of the organization’s boundary condi- tions—its relations with its environment. The managers of the strategic apex must spend a good deal of their time informing influential people in the environment about the organization’s activities, developing high-level contacts for the organization and tapping these for information, negotiat- ing major agreements with outside parties, and sometimes serving as fig- ureheads as well, carrying out ceremonial duties such as greeting impor- tant customers. (Someone once defined the manager, only half in jest, as that person who sees the visitors so that everyone else can get their work done.)

The third set of duties relates to the development of the organiza- tion’s strategy. Strategy may be viewed as a mediating force between the organization and its environment. Strategy formulation therefore involves the interpretation of the environment and the development of consistent patterns in streams of organizational decisions (“strategies”) to deal with it. Thus, in managing the boundary conditions of the organization, the managers of the strategic apex develop an understanding of its environ- ment; and in carrying out the duties of direct supervision, they seek to tailor strategy to its strengths and its needs, trying to maintain a pace of change that is responsive to the environment without being disruptive to the organization. Of course, as we shall see later, the process of strategy formulation is not as cut and dried as all that. For one thing, the other parts of the organization—in certain cases, even the operating core—can play an active role in formulating strategy. For another, strategies sometimes form themselves, almost inadvertently, as managers respond to the pressures of the environment, decision by decision. But one point should be stressed— the strategic apex, among the five parts of the organization, typically plays the most important role in the formulation of its strategies.

In general, the strategic apex takes the widest, and as a result the most abstract, perspective of the organization. Work at this level is gener- ally characterized by a minimum of repetition and standardization, consid- erable discretion, and relatively long decision-making cycles. Mutual ad- justment is the favored mechanism for coordination among the managers of the strategic apex itself.

3. The middle line

The strategic apex is joined to the operating core by the chain of middle- line managers with formal authority. This chain runs from the senior managers to the first-line supervisors (such as shop foremen), who have direct authority over the operators, and embodies the coordinating mecha- nism that we have called direct supervision. Most such chains are scalar— that is, run in a single line from top to bottom. But as we shall see later, not all: some divide and rejoin, a “subordinate” having more than one “superior.”

The organization needs this whole chain of middle-line managers to the extent that it is large and reliant on direct supervision for coordination. In theory, one manager—the chief executive at the strategic apex—can supervise all the operators. In practice, direct supervision requires close personal contact between manager and operator, with the result that there is some limit to the number of operators any one manager can supervise— his so-called span of control. Small organizations can get along with one manager (at the strategic apex); bigger ones require more (in the middle line). Thus, an organizational hierarchy is built, as a first-line supervisor is put in charge of a number of operators to form a basic organizational unit, another manager is put in charge of a number of these units to form a higher level unit, and so on until all the remaining units can come under a single manager at the strategic apex—designated the “chief executive of- ficer”—to form the whole organization.

In this hierarchy, the middle-line manager performs a number of tasks in the flow of direct supervision above and below him. He collects “feedback” information on the performance of his own unit and passes some of this up to the managers above him, often aggregating it in the process. He also intervenes in the flow of decisions. Flowing up are distur- bances in the unit, proposals for change, decisions requiring authorization. Some the middle-line manager handles himself, others he passes up for action at a higher level in the hierarchy. Flowing down are resources that he must allocate in his unit, rules and plans that he must elaborate, and projects that he must implement there. But like the top manager, the middle manager is required to do more than simply engage in direct super- vision. He, too, has boundary conditions to manage. Each middle-line manager must maintain liaison contacts with other managers, analysts, support staffers, and outsiders whose work is interdependent with that of his own unit. Furthermore, the middle-line manager, like the top manager, is concerned with formulating the strategy for his unit, although this strat- egy is, of course, significantly affected by the strategy of the overall organi- zation. But managerial jobs shift in orientation as they descend in the chain of authority. They become more detailed and elaborated, less abstract and aggregated, more focused on the work flow itself.

4. The technostructure

In the technostructure we find the analysts (and their supporting clerical staff) who serve the organization by affecting the work of others. These analysts are removed from the operating work flow—they may design it, plan it, change, it, or train the people who do it, but they do not do it themselves. Thus, the technostructure is effective only when it can use its analytical techniques to make the work of others more effective.

Who makes up the technostructure? There are the analysts concerned with adaptation, with changing the organization to meet environmental change, and those concerned with control, with stabilizing and standardiz- ing patterns of activity in the organization. In this book we are concerned largely with the control analysts, those who focus their attention directly on the design and functioning of structure. The control analysts of the tech- nostructure serve to effect certain forms of standardization in the organiza- tion. This is not to say that operators cannot standardize their own work— just as everyone establishes his or her own procedure for getting dressed in the morning—or that managers cannot do it for them. But in general, the more standardization an organization uses, the more it relies on its tech- nostructure. Such standardization reduces the need for direct supervision, sometimes enabling clerks to do what managers once did.

We can distinguish three types of control analysts, to correspond to the three forms of standardization: work-study analysts (such as industrial engineers), who standardize work processes; planning and control ana- lysts (such as long-range planners, quality control engineers, production schedulers, and accountants), who standardize outputs; and personnel analysts (including trainers and recruiters), who standardize skills (al- though most of this standardization takes place outside the organization, before the workers are hired).

In a fully developed organization, the technostructure may perform at all levels of the hierarchy. At the lowest levels of the manufacturing firm, analysts standardize the operating work flow by scheduling production, carrying out time-and-method studies of the operators’ work, and institut- ing systems of quality control. At middle levels, they seek to standardize the intellectual work of the organization (for instance, by training middle managers) and carry out operations research studies of informational tasks. And on behalf of the strategic apex, they design strategic planning systems and develop financial systems to control the goals of major units.

Although the analysts exist to standardize the work of others, their own work would appear to be coordinated with others largely through mutual adjustment. (Standardization of skills does play a part in this coor- dination, however, because analysts are typically highly trained special- ists.) Thus, analysts spend a good deal of their time in informal communi- cation.

5. Thesupportstaff

A glance at the chart of almost any large contemporary organization re- veals a great number of units, all specialized, that exist to provide support to the organization outside its operating work flow. Those make up the support staff. For example, in a university, we find the alma mater fund, university press, bookstore, printing service, payroll department, janitorial service, mailroom, security department, switchboard, athletics depart- ment, student residence, faculty club, and so on. Xone is a part of the operating core; that is, none engages in teaching or research, or even supports it directly (as does, say, the computing center or the library). Yet each exists to provide indirect support to these basic missions. In the manufacturing firm, these units run the gamut from legal counsel to plant cafeteria.

The surprising thing is that these support units have been all but totally ignored in the literature on organizational structuring. Most often they are lumped together with the technostructure and labeled the “staff” that provides advice to management. But these support units are most decidedly different from the technostructure—they are not preoccupied with standardization and they cannot be looked upon primarily as advice givers (although they may do some of that, too). Rather, they have distinct functions to perform. The university press publishes books, the faculty club provides a social setting for the professors, the alma mater fund brings in money.

Why do large organizations provide so many of their own support services, instead of purchasing them from outside suppliers? The answer seems to lie in control, the large organization wishing to exercise close control over these services, perhaps to reduce the uncertainty of having to buy them on the open market. By publishing its own books, the university avoids some of the uncertainties associated with the commercial houses; by fighting its own court cases, the manufacturing corporation maintains close control over the lawyers it uses; and by feeding its own employees in the plant cafeteria, it shortens the lunch period and, perhaps, even helps to determine the nutritiousness of the food.

Many support units are self-contained; they are mini-organizations, many with their own equivalent of an operating core, as in the case of the printing service in a university. These units take resources from the larger organization and, in turn, provide specific services to it. But they function independently of the main operating core. Compare, for example, the maintenance department with the cafeteria in a factory, the first a direct service and an integral part of the operating core, the second quite separate from it.

The support units can be found at various levels of the hierarchy, depending on the receivers of their service. In most manufacturing firms, public relations and legal counsel are located near the top, since they tend to serve the strategic apex directly. At middle levels are found the units that support the decisions made there, such as industrial relations, pricing, and research and development. And at the lower levels are found the units with more standardized work, akin to the work of the operating core— cafeteria, mailroom, reception, payroll. Figure 1-3 shows all these support groups overlaid on our logo, together with typical groups from the other four parts of the organization, again using the manufacturing firm as our example.

Because of the wide variations in the types of support units, we cannot draw a single definitive conclusion about the favored coordinating mechanism for all of them. Each unit relies on whatever mechanism is most appropriate for itself—standardization of skills in the office of legal council, mutual adjustment in the research laboratory, standardization of work processes in the cafeteria. However, because many of the support units are highly specialized and rely on professional staff, standardization of skills may be the single most important coordinating mechanism.

Do the staff groups of the organization—technocratic as well as sup- port—tend to cluster at any special level of the hierarchy? One study of twenty-five organizations (Kaufman and Seidman, 1970) suggested that whereas the middle lines of organizations tend to form into pyramids, the staff does not. Its form is “extremely irregular”—if anything, inversely pyramidal (p. 446). Hence, while our logo shows the middle line as flaring out toward the bottom, it depicts both the technostructure and the support staff as forming ellipses. Later we shall see that, in fact, the specific shape varies according to the type of structure used by the organization.

Figure 1-3.    Some members and units of the parts of the manufacturing firm

Organizations have always had operators and top managers, people to do the basic work and people to hold the whole system together. As they grew, typically they first elaborated their middle-line component, to effect coordination by direct supervision. But as standardization became an accepted coordinating mechanism, the technostructure began to emerge. The work of Frederick Taylor gave rise to the “scientific management” movement of the 1920s, which saw the hiring of many work-study ana- lysts. Just after World War II, the establishment of operations research and the advent of the computer pushed the influence of the technostructure well into the middle levels of many organizations, and with the more recent popularity of techniques such as strategic planning and sophisti-cated financial controls, the technostructure has entrenched itself firmly at the highest levels of organizations as well. And the more recent growth of the support staff has perhaps been even more dramatic, as all kinds of specialization developed—scientific research in a wide number of fields, industrial relations, public relations, and many more. Organizations have sought increasingly to bring these as well as the more traditional support functions such as maintenance and cafeteria within their boundaries. Thus, the ellipses to the left and right in our logo have become great bulges in many organizations. Indeed, one researcher found that firms in the modern process industries (such as oil refining) averaged one staff member for fewer than three operators, and in some cases, the staff people actually outnumbered the operators by wide margins (Woodward, 1965:60).

Source: Mintzberg Henry (1992), Structure in Fives: Designing Effective Organizations, Pearson; 1st edition.

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