Effect of Organizational Design on Job Satisfaction with Specific Reference to Organic and Mechanistic Designs

Submitted to Prof. Yamini Prakash

Submitted by Group No. 10, Section C Group Members: Sunitha R (Team Coordinator) Naveena Raja Swamy Mahesh Prakash Prabu M Ulaganathan N Preethi Viswanathan Mukul Gupta FPM13011 PGP28114 PGP28119 PGP28120 PGP28124 PGP28137 FPM13008

Table of Contents
1. Introduction ........................................................................................................................................ 3 1.1 Job Satisfaction ............................................................................................................................. 3 1.2 Organic and Mechanistic designs.................................................................................................. 3 2. Review of Literature ............................................................................................................................ 4 3. Research Methodology ....................................................................................................................... 7 3.1 Research Objective ....................................................................................................................... 7 3.2 Propositions .................................................................................................................................. 7 3.3 Research Design ............................................................................................................................ 7 3.4 Sampling Plan ................................................................................................................................ 8 3.5 Target Population.......................................................................................................................... 8 3.6 Sampling Technique ...................................................................................................................... 8 3.7 Sample size and Design ................................................................................................................. 8 4. Data Analysis ....................................................................................................................................... 9 5. SAMPLE PROFILE ............................................................................................................................... 10 6. DATA ANALYSIS ................................................................................................................................. 12 6.1 Satisfaction pertaining to Working hours ................................................................................... 13 6.2 Satisfaction pertaining to Relationship with co-workers/Superiors ........................................... 13 6.3 Satisfaction pertaining to Opportunity to utilize your skills and talents .................................... 13 6.4 Satisfaction pertaining to Salary ................................................................................................. 14 6.5 Satisfaction pertaining to Growth/Opportunities for promotion ............................................... 14 6.6 Satisfaction pertaining to variety of Job responsibilities ............................................................ 15 6.7 Satisfaction pertaining to Recognition and rewards................................................................... 15 6.8 Satisfaction pertaining to Participation in decision making ....................................................... 15 6.9 Satisfaction pertaining to Motivation from superiors ................................................................ 16 7. Recommendations ............................................................................................................................ 16 8. Conclusion ......................................................................................................................................... 17 REFERENCES .......................................................................................................................................... 18 APPENDIX .............................................................................................................................................. 19

1. Introduction
Organizational Design is a process that enhances the probability of success of the organization. More specifically, Organization Design is a formal, guided process for integrating the people, information and technology of an organization. It is used to match the form of the organization as closely as possible to the purpose(s) the organization seeks to achieve. Through the design process, organizations act to improve the probability that the collective efforts of members will be successful. Organizations can be categorized along a continuum ranging from a mechanistic design to an organic design. Employee Job satisfaction depends on number of factors pertaining to work itself, relations of the employees with their subordinates and superiors, goal personality compatibility etc. Apart from these, organizational design also influences the level of job satisfaction an employee derives. In the light of this observation, this study tries to understand the effect of organic and mechanistic designs of the organization structures on employee job satisfaction.

1.1 Job Satisfaction

Job satisfaction is in regard of ones feeling or state of mind regarding the nature of their work. Job satisfaction describes a positive feeling about a job, resulting from an evaluation of its characteristics. A person with a high level of job satisfaction holds positive feelings about his or her job, while a person with a low level holds negative feelings. Job satisfaction can be influenced by a variety of factors, e.g., the quality of one's relationship with their supervisor, the quality of the physical environment in which they work, degree of fulfillment in their work, etc.

1.2 Organic and Mechanistic designs

In general, a mechanistic design means that the organization is characterized by machine-like standard rules, procedures, and a clear hierarchy of authority. These organizations are highly formalized and are also centralized, with most decisions made at the top. An organic design means that the organizations is much looser, free flowing, and adaptive. Rules and regulations often are not written down or, if written down, are flexibly applied. People may have to find their own way through the system to figure out what to do. The hierarchy of authority is looser and not clear-cut. Decision-making authority is decentralized.

Various contingency factors will influence whether an organization is more effective with a primarily mechanistic or a primarily organic design. The differences in organic and mechanistic designs are explained by the variables given as under; Centralization versus decentralized structure: centralization means that decision authority is located near the top of the organizational hierarchy. In decentralization, decision making authority is pushed down to lower organizational levels. Specialized tasks versus empowered roles: in a mechanistic design, tasks are broken down into specialized, separate parts, as in a machine, with each employee performing activities according to a specific job description. In an organic design, employee play a role in the team or department and roles may be continually redefined or adjusted. Formal versus informal systems: with mechanistic design, there are numerous rules, regulations and standards procedure. With an organic design, on the other hand, there are few rules or formal control systems. Vertical versus horizontal communication: Mechanistic organization emphasizes vertical communication up and down the hierarchy. In an organic design, there is a greater emphasis on horizontal communication, with information flowing in all directions within and across departments and hierarchical levels. Hierarchy of authority versus Collaborative Team work: In organizations with a mechanistic design, there is a close adherence to vertical hierarchy and the formal chain of command. An organic design on the other hand, emphasizes collaborative team work rather than hierarchy.

2. Review of Literature
Alexander Nikolenko1, Brian H. Kleiner, (1996) said, Organizations are subject to a variety of constantly changing internal and external influences, such as organizational strategy and environmental conditions in his work titled "Global trends in organizational design". Of these, of particular importance are the development of the global marketplace and increasing global competition, and the emergence of a knowledge-based economy that is characterized by a high level of development of communications and information technologies. In response to these factors, new forms of organization structure have emerged: the horizontal organization, the network organization and the virtual corporation. Asks whether such
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structures are adequate to meet the constant change of the world into which we are moving, and whether they can meet the needs of organizations in varying situations in different economies in disparate countries and with different cultures. Rachid Zeffane2, (1992) in his "Organizational Structures: Design in the Nineties", Reviews and discusses some major issues and controversies of the early 1990s. Focuses on issues pertaining to organizational restructuring and design in the face of emerging contemporary forces and examines corporate responses to those forces. Examines, in particular, the problem of choice of appropriate structures and the controversies and implications relating to downsizing in the light of dominant suggestions and various research findings from different platforms of management thinking. This concludes with suggestions for organizational success in these areas. Michael W. Stebbins3, Abraham B. Shani, (1995) supposed in his study titled "Organization design and the knowledge worker", that the field of organization design is changing rapidly, reflecting contributions from managers and diverse organizational consultants. One of the most recent developments is in the design of non-routine systems. Explores non-routine systems design from a socio-technical systems (STS) perspective. Includes a brief discussion of non-routine systems and an examination of alternative methods for diagnosing and redesigning organizations composed of knowledge workers. The results of two STS case studies provide new learnings and point to special design principles for nonroutine systems. This concludes with implications for both managers and STS consultants interested in management of knowledge workers. Richard A. Yoder4, Scott L. Eby, using Swaziland's Ministry of Health as a case study assessed the extent to which the empirical data supports anecdotal information and trends towards decentralized and participatory management systems. Specifically, this study measures the level of participation in decision making and assesses its impact on job satisfaction, measures the level of and analyses differences in job satisfaction by job classification, and identifies and analyses the determinants of employee job satisfaction. Data were obtained from a survey questionnaire which was constructed and administered to 447 employees of the Ministry of Health, a 42 per cent sample, at fifteen representative locations throughout the country. Simple descriptive statistics and multivariate techniques are used to analyze the data. From the analysis, policy implications are developed for designing
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administrative structures and systems that respond to emerging quality of work life needs, strengthening productivity, and improving the quality of services provided. Acorn5 S, et al tested a theoretical model of the following variables, decentralization, professional autonomy, job satisfaction, and organizational commitment. Data were collected through a comprehensive survey of first-line nurse managers (N = 200) in acute care hospitals with more than 100 beds in British Columbia, Canada. The final model excluded all explored personal characteristics of the nurse manager-gender, health or vitality status, marital status, age, education, and years of supervisory or management experience. Job satisfaction was found to be an important predictor of organizational commitment. However, decentralization was most important because it affected organizational commitment directly, as well as indirectly, through professional autonomy and job satisfaction. Daulatram B. Lund6, (2003) found in his paper titled, "Organizational culture and job satisfaction", this empirical investigation examines the impact of organizational culture types on job satisfaction in a survey of marketing professionals in a cross-section of firms in the USA. Cameron and Freemans (1991) model of organizational cultures comprising of clan, adhocracy, hierarchy, and market was utilized as the conceptual framework for analysis. The results indicate that job satisfaction levels varied across corporate cultural typology. Within the study conceptual framework, job satisfaction invoked an alignment of cultures on the vertical axis that represents a continuum of organic processes (with an emphasis on flexibility and spontaneity) to mechanistic processes (which emphasize control, stability, and order). Job satisfaction was positively related to clan and adhocracy cultures, and negatively related to market and hierarchy cultures. Mary S. Thibodeaux7, Sandy K. Faden, (1994) in their study "Organizational Design for Self-managed Teams", explores the organizational components deemed necessary to the development of heterogeneous self-managed work teams. Explains the interrelationship between organizational structure and strategies. Describes the organic structure, with emphasis on formalization, socialization, training and empowerment/ decentralization, as the cornerstone of the development of these teams. This outlines strategies for effective use of communication, shared values and trust.

3. Research Methodology
3.1 Research Objective
This study has one major research objective. It is to determine the effect of organizational design elements on Job satisfaction of the employees. There are few secondary objectives like studying different structural design elements, and its varying effect on different aspects of employee job satisfaction. Based on these objectives following research question is formed: Q1. What is the influence of Mechanistic structure of the organization and Organic structure of the organization on the employee Job satisfaction?

3.2 Propositions
The following propositions were proposed for understanding the relationship between organizational design and level of employee job satisfaction. 1. 2. Mechanistic organizational design results in lesser employee Job satisfaction. Organic organizational structure results in higher employee job satisfaction.

3.3 Research Design

In order to determine the perspective of employees in different organizations the Descriptive Research method of Conclusive Research Design is followed in human resource studies. In this study, we tried to understand the employees level of satisfaction with respect to the organizational structure they belong to. This study is more of exploratory and combined with descriptive research. Since the objective of Descriptive research is to describe the characteristics on the basis of the prior formulation of specific assumptions, it is very much relevant for this study. At the same time exploratory research was useful in understanding the research problem clearly. For this we used extensive secondary data research, expert opinion and conducted telephonic conversations with the sample respondents. In the descriptive research, the primary emphasis is on data collection through a survey and Interview method of data collection. It includes selecting the right kind of respondents, designing an appropriate questionnaire, administering questionnaire, conducting interviews, collecting the data preparing it, and finally concluding with the findings of the research tools. In order to
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perform the descriptive research, in this study, single cross-sectional design is followed. In this methodology of descriptive research one sample of respondents is drawn from the target population and information is obtained from this sample once. Thereafter the assumptions would be analyzed using the appropriate research tools.

3.4 Sampling Plan

Sampling is the act, process, or technique of selecting a suitable sample, or a representative part of a population for the purpose of determining parameters or characteristics of the whole population. Sampling is one of the components of a research design. It is the only feasible way to collect research data in this organizational structure and behavior problem.

3.5 Target Population

The target population is people who are working in organizations having organizational structures appropriate to this study. People who are working at different hierarchy level and playing different roles in the organization from different organizational designs are in the target population.

3.6 Sampling Technique

The study is a single cross sectional study because the data were collected at a single point of time. For the purpose of present study, a related sample of population was selected on the basis of convenience. Reasons for using Convenience Sampling Technique: Convenience sampling is least expensive. Convenience sampling is least time consuming. In convenience sampling the sampling units are accessible easily. In this kind of sampling the sampling units are easy to measure and cooperative.

3.7 Sample size and Design

Sample size- A sample 54 employees have responded for the questionnaire. There

after respondents were contacted again telephonically and through e mails to understand the design elements of their organization. The actual employees were contacted on the basis of convenience sampling.
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Data collection mode- Online questionnaire and Telephonic Interview. Research period- Research work is carried out for a period of 10 -12 days. Research Instrument- The research work is carried out through self-administered

questionnaires and Structured Telephonic Interview.

4. Data Analysis
As the study is more of exploratory than descriptive qualitative Data analysis techniques were employed to analyzed the data, rather than using quantitative techniques. Analysis tools used for the study are, Single frequency tabulations, Joint Frequency Tabulations, Custom Tables using SPSS and Pie charts. Initially Data was collected by administering structured online questionnaire composed of Job satisfaction questionnaire sourced from www.salisbury.edu/careerservices to support the findings and strengthen the study respondents were contacted again using telephonic method and E mails and were asked to describe whether their organization is Mechanistic or Organic after making the respondents understand the difference. Then the responses were recorded using dichotomous questions. Composition of Employees: In telephonic interview the respondents were asked following questions. 1. 2. 3. 4. 5. Whether their organization is Centralized or Decentralized? Whether they have specialized Tasks or Empowered roles? Whether their systems are Formal or Informal? Whether they have vertical or horizontal communication in place? Whether they have hierarchy of authority or Collaborative team work?

Based on the responses to these questions the respondents were categorized into mechanistic organization design structure organizations and organic organization design structure organizations. From the respondents studied 43 % of the respondents are categorized into mechanistic structure organizations and rest 57 % of the respondents were categorized into organic design organizations.

5. SAMPLE PROFILE

The data has been collected from a sample of 54 people covering organizations such as CTS, TCS, Infosys, L&T and BHEL. The major percentage of the sample is from IT systems profile constituting 35% of the sampled data. These 54 samples are spread across various levels of management from Entry level management to senior level management. While a majority of 35% belongs to entry level management there is a considerable response from senior management of about 9%.

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The table no 1: The data collected from the respondents on the various parameters relating to job satisfaction. (Data in percentages) 1 ( Very 2 3 4 5 (Very Satisfied) Working Hours Relationship with coworkers/Superiors Opportunity to utilize your skills and talents Salary Growth/Opportunities from promotion Variety of Job responsibilities Recognition and Rewards Participation in decision making Motivation from Superiors 7.4 22.2 22.2 38.9 9.3 9.3 7.4 27.8 25.9 29.6 25.9 25.9 35.2 7.4 5.6 7.4 29.6 13.0 37.0 13.0 13.0 7.4 22.2 42.6 31.5 25.9 20.4 18.5 13.0 5.6 18.5 20.4 22.2 29.6 9.3 9.3 1.9 13.0 11.1 24.1 13.0 22.2 44.4 31.5 29.6

Dissatisfied) (Dissatisfied) (Neutral) (Satisfied)

The various parameters on which the data was collected were working hours, relationship with co-workers and superiors, independence given to utilize their talents, satisfaction with respect to salary, career growth, diversity in the work, rewards and recognition, participatory decision making and motivation from the superiors. Most of the responses were skewed towards the neutral point in all aspects. One of the striking inference from the data collected was that majority of the people (about 35%) are very satisfied with the working hours. Also the data shows that there is a considerable percentage of people (about 18.5%) think that they were not given opportunities to use their skills and talents.

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6. DATA ANALYSIS
Table no 2: Frequency tabulation showing the relationship between Job satisfaction &

Organizational Design Type of Organization structure Mechanistic structure HD Working Hours Relationship with coworkers/Superiors Opportunity to utilize your skills and talents Salary Growth/Opportunities from promotion Variety of Job responsibilities Rewards and Recognition Participation in decision making Motivation from Superiors HD Highly dissatisfied D Dissatisfied N Neutral S Satisfied HS Highly Satisfied 13 4 D 13 17 N 13 4 S 17 35 HS 43 39 HD 6 0 Organic structure D 13 6 N 32 19 S 26 52 HS 23 23

26 13 9

17 17 43

22 26 26

30 26 17

4 17 4

13 13 6

23 26 42

23 35 26

29 16 19

13 10 6

13

35

30

17

26

19

42

10

13

30

26

26

26

32

26

10

30

17

39

23

32

32

13

22

22

30

13

23

23

45

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Findings: In this table we tabulated the relationship between different variables pertaining to job satisfaction on the kind of organization design where the employee is working. As part of Job satisfaction, different elements were measured on a scale starting from highly dissatisfied with 1 point to highly satisfied with 5 points. Coming to the findings;

6.1 Satisfaction pertaining to Working hours

60% of the employees from Mechanistic structure and 49% of the employees from organic structures are satisfied with their working hours. 13% from the Mechanistic organizations and 32 % from the organic organizations are neutral about their working hours, where as 26% of the employees from the mechanistic design structures and 19% of the employees from the Organic structures are dissatisfied with their working hours. Inference: Employees are satisfied with working hours of Mechanistic designs than with the Organic structures as they work for fixed working hours in Mechanistic structures unlike Organic structures.

6.2 Satisfaction pertaining to Relationship with co-workers/Superiors

74% of the employees from Mechanistic structure and 74% of the employees from organic structures are satisfied with their Relationship with co-workers/Superiors. 4% from the Mechanistic organizations and 19 % from the organic organizations are neutral about their Relationship with co-workers/Superiors, where as 22% of the employees from the mechanistic design structures and 6% of the employees from the Organic structures are dissatisfied with their Relationship with co-workers/Superiors. Inference: satisfaction level of the employees pertaining to relationship with co workers and superiors is similar for mechanistic structures and organic structures but dissatisfaction levels are higher in mechanistic structures.

6.3 Satisfaction pertaining to Opportunity to utilize your skills and talents

35% of the employees from Mechanistic structure and 42% of the employees from organic structures are satisfied with their Opportunity to utilize your skills and talents. 22% from the Mechanistic organizations and 23 % from the organic organizations are neutral about their Opportunity to utilize your skills and talents, where as 43% of the employees from the

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mechanistic design structures and 35% of the employees from the Organic structures are dissatisfied with their Opportunity to utilize your skills and talents. Inference: satisfaction level of employees pertaining to utilize skills and talents is lesser in mechanistic organization as they have little scope for creativity in their specialized tasks. With reference to this aspect very good percentage of respondents from organic designs are satisfied comparatively.

6.4 Satisfaction pertaining to Salary

43% of the employees from Mechanistic structure and 26% of the employees from organic structures are satisfied with their salary. 26% from the Mechanistic organizations and 35 % from the organic organizations are neutral about their salary, where as 30% of the employees from the mechanistic design structures and 39% of the employees from the Organic structures are dissatisfied with their salary. Inference: coming to satisfaction pertaining to salary mechanistic structure employee are more sissified and less dissatisfied compared to organic structure designs. Here the jobs are evolving and employees take more responsibility, hence they expect better salary than mechanistic structures.

6.5 Satisfaction pertaining to Growth/Opportunities for promotion

22% of the employees from Mechanistic structure and 26% of the employees from organic structures are satisfied with their Growth/Opportunities for promotion. 26% from the Mechanistic organizations and 26 % from the organic organizations are neutral about their Growth/Opportunities for promotion, where as 52% of the employees from the mechanistic design structures and 48% of the employees from the Organic structures are dissatisfied with their Growth/Opportunities for promotion. Inference: satisfaction levels in organic structures are higher and dissatisfaction levels are lower compared to mechanistic structures in case of growth/opportunities for promotions. Though organic structures have lesser levels they do go for job enlargement and helps employee growing along the organization, this results in higher satisfaction compared to mechanistic structures where growth opportunities are lesser.

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6.6 Satisfaction pertaining to variety of Job responsibilities

48% of the employees from Mechanistic structure and 52% of the employees from organic structures are satisfied with their variety of Job responsibilities. 4% from the Mechanistic organizations and 19 % from the organic organizations are neutral about their variety of Job responsibilities, where as 48% of the employees from the mechanistic design structures and 29% of the employees from the Organic structures are dissatisfied with their variety of Job responsibilities. Inference: though satisfaction levels are similar and higher in both the structures with respect to variety of job responsibilities, dissatisfaction levels are varying. Almost half of the mechanistic structure respondents are dissatisfied with respect to variety of job responsibilities, where as organic structures have a much lower dissatisfaction on this factor.

6.7 Satisfaction pertaining to Recognition and rewards

30% of the employees from Mechanistic structure and 35% of the employees from organic structures are satisfied with their Recognition and rewards. 26% from the Mechanistic organizations and 32 % from the organic organizations are neutral about their Recognition and rewards, where as 43% of the employees from the mechanistic design structures and 32% of the employees from the Organic structures are dissatisfied with their Recognition and rewards. Inference: though satisfaction levels are similar in both the structures with respect to recognition and rewards, dissatisfaction levels are varying. Almost half of the mechanistic structure respondents are dissatisfied with respect to recognition and rewards, where as organic structures have a lower dissatisfaction on this factor compared to mechanistic structures. .

6.8 Satisfaction pertaining to Participation in decision making

30% of the employees from Mechanistic structure and 35% of the employees from organic structures are satisfied with their Participation in decision making. 17% from the Mechanistic organizations and 32 % from the organic organizations are neutral about their Participation in decision making, where as 39% of the employees from the mechanistic design structures and 29% of the employees from the Organic structures are dissatisfied with their Participation in decision making.
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Inference: satisfaction levels in organic structures are higher and dissatisfaction levels are lower compared to mechanistic structures in case of Participation in decision making. As is evident from the results organic structures support Participation in decision making where as mechanistic structures follows centralized decision making system.

6.9 Satisfaction pertaining to Motivation from superiors

43% of the employees from Mechanistic structure and 52% of the employees from organic structures are satisfied with their Motivation from superiors. 22% from the Mechanistic organizations and 23 % from the organic organizations are neutral about their Motivation from superiors, where as 35% of the employees from the mechanistic design structures and 26% of the employees from the Organic structures are dissatisfied with their Motivation from superiors. Inference: in general both the categories of employees are satisfied with the motivation they receive from the super visors, with a positive bent from organic structures. The same way higher level of dissatisfaction is recorded in mechanistic structures than in organic structures on this element.

7. Recommendations
With mechanistic design structure, albeit there are numerous rules and regulations, the standard working conditions influence the workers more than organic structure. Particularly, standard working hour is one of the factors which satisfy the workers more. Based on Inference 2, the relationship between co-workers in mechanistic and organic structures is of no big different. However, it is good to have a situation where everybody in the organization is easily approachable any time. In the aspects of utilizing the skills of workers, mechanistic design needs to improve its ways to utilize the skills of workers which serve better for improvement of the firm. In the purview of salary packages, organic structure organizations need to improve as they expect a lot different responsibilities from their employees. As the satisfaction levels of organic structure are higher in terms of career growth indicates that mechanistic structure design needs to assign more responsibilities to workers rather than having monotonous work. This improves the morale of the workers leads to development of
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the company which in turn, generates more rewards and recognition to the workers. The feeling of job satisfaction takes multiple folds when it is clubbed with high responsibility with deserved rewards and recognition. This may be lacking in mechanistic design firms but it is not something which could not be improved. Though, organic structure firms take the upper hand when compared with mechanistic firms, the latter has its own merits which could not be quantifiable by the former.

8. Conclusion
As they say, every coin has its flip side, both organic and mechanistic design structures possess certain positives which are missing in the other design. However, these positives could be developed in any kind of firm and at the end of the day, it is all about taking the firm and its employees in the right direction towards growth. Now, the balance may look heavier towards organic design structure but nevertheless, mechanistic design structure, developing its certain aspects, takes its weight and makes the balance even.

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REFERENCES
[1]. Alexander Nikolenko, Brian H. Kleiner, (1996) "Global trends in organizational

design", Work Study, Vol. 45 Iss: 7, pp.23 26 [2]. Rachid Zeffane, (1992) "Organizational Structures: Design in the Nineties", Leadership & Organization Development Journal, Vol. 13 Iss: 6, pp.18 23 [3]. Michael W. Stebbins, Abraham B. Shani, (1995) "Organization design and the

knowledge worker", Leadership & Organization Development Journal, Vol. 16 Iss: 1, pp.23 30 [4]. Richard A. Yoder, Scott L. Eby, Participation, job satisfaction and decentralization: The case of Swaziland, Public Administration and Development, Volume 10, Issue 2, pages 153163, April/June 1990. [5]. Acorn S et al, Decentralization as a determinant of autonomy, job satisfaction, and organizational commitment among nurse managers, Nurs Res.1997, Jan-Feb; 46(1): 52-8. [6]. Daulatram B. Lund, (2003) "Organizational culture and job satisfaction", Journal of Business & Industrial Marketing, Vol. 18 Iss: 3, pp.219 236 [7]. Mary S. Thibodeaux, Sandy K. Faden, (1994) "Organizational Design for Self-

managed Teams", Industrial Management & Data Systems, Vol. 94 Iss: 10, pp.20 - 25

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APPENDIX

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