Thursday, October 13, 2011

Organization Theory - 22

In the last blog, we discussed about Rituals and Training as a means for Formalization in organization. Over the last few blogs we have looked at 2 major concepts - Formalization and Complexity. Time is apt for us to understand the relation between these 2 dimensions of organization structure.

For clarity sake, let’s begin with the scenario of an assembly line used to produce cars. 

Lets us look at this video from the YouTube which mentions about ford's T model car being produced through assembly line. 

In an assembly line, workers have highly specialized tasks with standardized routine and lots of formal rules and procedures to follow. Let us focus on the section in the video around 1.20 seconds where the worker is really building pieces of the tyre rim. It becomes very clear that he has different units, and a set of procedures for inserting the forks into the rim and then punching them. These discrete pieces are then put up together to create a complete wheel rim by the next employee.

For ease of understanding and coordination, it is pretty clear that there would have been a strict procedure to achieve the target of building a car. Each employee would be asked to do a specific piece of the task and not the whole of the car. Everyone was given a particular task to perform and also along with it was a particular set of rules to follow. 

The above is a scenario of functional specialization! Where there is a very strong association between formalization and specialization (dimension of complexity). It would be also interesting to ask if, the scenario would be same in case of social specialization.

A professional like an engineer or a charted accountant doesn’t require a great number of rules and regulations to perform ones task. Imposing rules and regulations would only mean redundant control.

As a simple underlying rule one could use to understand the complexity-formalization relation is to focus on the degree of horizontal differentiation and the way it is achieved.

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