Organisational Complexity

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As an organization grows, there is a necessity to grow from generalist to specialist organization. Organization structure is all about grouping the people and the tasks in the best way, that tells them what to do and what not to do. In small organizations, there is random communication amongst people, but in large organizations communication clustering starts happening. People start clustering, communicating with people depending on their need. For example, Sales people cluster with other Sales people and Finance people communicate more with other Finance people. So, communication is maximum within clusters and there is minimum inter-cluster communication generally. So, the objective of organization structure is to maximize hidden cluster communication and minimize inter-luster communication. It is more effective to have some sort of grouping. Within the group, due to the same nature of jobs, they develop a lingo, trait which distinguishes one cluster from another. So, they now start thinking of having a set of rules for governing these groups. The communication between the clusters happens through the bosses or the person designated in the cluster for liaisoning roles. Complexity refers to the degree of differentiation that exists within an organization. Complexity can be classified into three types: 1.Horizontal Complexity / Differentiation – Degree of Horizontal separation between units 2.Vertical Complexity / Differentiation – Depth of the organizational hierarchy 3.Spatial Complexity / Differentiation – Degree to which the location of an organization’s facilities and personnel are dispersed geographically

Horizontal Differentiation refers to the degree of differentiation between units based on the orientation of members, the nature of the tasks they perform, and their education and training. The complexity of an organization increases with the increase in the number of different...
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