Decentralization and Organizational Structure in Complex Environments

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The environment is complex (we hire professionals and experts) and dynamic (not normalized). The technical system is not routine and non-regulatory, involving units or small batches.

Specialization

Relies on professionals (high and low EV EH).

Training

High (experts).

Indoctrination

Important. Professionals are motivated to innovate and assimilate the corporate culture. They should be given this indoctrination.

Execution

Low, to facilitate innovation.

Coordination

Each professional requires prior preparation (skills). The group is the most comprehensive array of potential linkage devices.

Size of Units

Usually small.

Planning and Control Performance Measures

Limited. There is selective decentralization (decisions in different units/different functional specialties) horizontal and vertical to the professional (where they are). There is parallel decentralization (common decisions, parallel to different specialists) vertical to the project manager.

Adhocracy

Operational Adhocracy

Operates on behalf of its clients. This usually involves complex technical processes and difficult automation. In each project team, the line manager and what we normally call support staff can take their rightful place alongside operations specialists, even reaching freely exchanged their roles.

Administrative Adhocracy

Key considerations:

  1. Does not take the form of machine bureaucracy.
  2. Cannot be completely eliminated or outsourced.
  3. Cannot be automated.

Types of Decentralization and Elements of the Structure

Vertical Decentralization

Refers to the hierarchical structure (not techno-structure, no staff). There is a dispersal of formal decision-making power as one descends the hierarchy. May be selective or parallel.

Selective Vertical Decentralization

Decisions of various kinds are made in different departments (functional clustering criterion). Coordination of decisions is achieved mainly by fostering liaison devices for mutual adaptation.

Parallel Vertical Decentralization

Decisions of various kinds are taken in one department that monitors the entire workflow (markets grouping criterion). It is the only way to give these organizations some autonomy. Decision-making is often coordinated by standardization of outputs.

Horizontal Decentralization

Measures the extent to which decision processes are controlled from outside the chain of command: techno-structure, staff, including the operational core. These represent informal power. Horizontal decentralization could also be selective or parallel, but less frequently.

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