To design the most suitable organization for a company, we must understand about the scale of the company. For the new company, ussually the problem is unclear responsibility. In this organization people will take on new tasks as the need arises and it’s very unclear who is responsible for what, and who is supposed to report to whom.
And to face this challenge the company then creates differentiation, the vertical differentiation to specify the level of authority and the horizontal differentiation to specialize the level of competency. And then the organization will grow and will face a new challenge, when the differentiation become so big, the challenge will be people will difficult to communicate and coordinate in this organization. In this organization specifying tasks and roles is supposed to help coordinate the work process, but here it builds barriers between people and function.
To face this challenge the organization should do the integration mechanisme, start from Hierarchy of Authority, Direct Contact, Liason Role, Task Force, Team Committee, Integrating Role nd Integrating Department. This mechanisme is depend on the complexity of the differentiation.
The challenge for Organization Designer is to establish a level of integration that matches the organization level of differentiation. We must achieve an appropriate balance between differentiation and integration. Because a complex organization that is highly differentiated need a high level of integration to coordinate its activities effectively.
At all costs, We must need to be sure they are not differentiate or integrate their organization too much. Because differentiation and Integration area both expensive in terms of the number of managers employed and the amount of managerial time spent on coordinating organization activities.
Source: Gareth Jones, Organizational Theory, Design and Change, 2010
