2.3.1 Differentiation and integration
An organisation needs to find ways of dividing up the various tasks it must achieve in order to fulfil its main purposes without losing overall coordination and integration.
Differentiation is about this ‘dividing up’ in organisations; as a concept it works much as it does in biology. Single-celled species have no differentiation – or specialised organs – to perform particular tasks (although they still need to fulfil many of them, such as digestion and excretion). As animal species become more complex, they have to differentiate their cells to take on some specialist tasks. Some cells specialise and become the brain to deal with control and information, some form the blood to transmit nutrients around the organism, some form eyes to observe the environment and so on. In organisations, a similar process occurs. As an organisation becomes more complex, one person can no longer carry out all the work, so there is a need to divide up tasks among people, and thus specialisms emerge. For example, a fashion manufacturer may require specialised sections to acquire resources, to transform inputs into output and to deliver these to customers, as well as people to manage these specialised sections.
However, as organisations grow, it becomes harder for people in different specialised sections to keep in contact with one another. This creates pressure for integrative mechanisms, such as a senior management group or interdepartmental meetings to ensure that those in charge of distinct functions are aware of issues for and from other parts of the organisation. However, this in turn adds another layer of complexity to the organisation.
This theme of ‘differentiation and integration’ was developed by Lawrence and Lorsch (1967). Although their examples draw on manufacturing, similar issues arise in all kinds of organisations. They found that differences in the structures of successful firms in the food and plastics industries were related to the amount of differentiation required by the environments in which they operated. They posed the question: why do people seek to build organisations? The answer they reached was that organisations enable people to find better solutions to the challenges posed by their environment.
This answer led them to three conclusions about organisational behaviour:
- People have purposes or goals, not organisations.
- People have to come together to coordinate their different activities and thus create an organisation.
- The effectiveness of an organisation depends on how well people’s needs are satisfied by their planned transactions with their particular environment.
As they grow, organisations develop specialised units to deal with segments of their external environment. This differentiation of function and task within an organisation will be matched by different priorities, values and structures in the different units. For instance, a research and development department may have a long-term horizon and a very informal structure, whereas a production department may be dealing with day-to-day problems in a more formal system.
These differentiated tasks and sections need to connect with one another. This is the required integration and it too is affected by the nature of the external conditions.
Lawrence and Lorsch found that the firms they studied differentiated their functions into sub-units which dealt with a market environment (the task of sales), a techno-economic environment (the task of manufacturing) and a scientific environment (the task of research and development). Their findings are described by Pugh and Hickson:
The greater the degree of uncertainty within each sub-environment and the greater the diversity between them, the greater was the need of the firms to differentiate between their sub-units … in order to be effective in each sub-environment …
But greater differentiation brings with it potential for increased interdepartmental conflict as the specialist groups develop their own ways of dealing with the particular uncertainties of their particular environment. These differences are not just minor variations in outlook but may involve fundamental ways of thinking and behaving. In the plastics industry a sales manager may be discussing a potential new product in terms of whether it will perform in the customers’ machinery, whether they will pay the cost and whether it can be got on to the market in three months’ time. The research scientist at the same meeting may be thinking about whether the molecular structure of the material could be changed without affecting its stability and whether doing this would open out a line of research for the next two years which would be more interesting than other projects. These two specialists not only think differently, they dress differently, they have different habits of punctuality and so on. It therefore becomes crucial that a highly differentiated firm should have appropriate methods of integration … to perform well in the environment.
Although people often imagine that their organisation would be more effective if only everyone else thought as they did, Lawrence and Lorsch’s analysis suggests that quite the opposite is true. If everyone thought as the production staff (or the administrators, or the sales people) do, organisations would be thoroughly ineffective. They need to incorporate very different perspectives and concerns even if this causes integration problems. Some of the problems of integration in a hospital are illustrated in the following example.
A case for more integration
After several months in his job as a junior hospital manager, Thomas began to see that how you viewed management processes very much depended on where you were working and for whom you were working. He had a friend who worked in one of the clinical departments looking after patients undergoing surgery. She saw things very differently. Whereas he was forever worrying about balancing the books, she thought much more about how her own department could get a larger slice of the cake. It did not seem to matter to her that others would have to make do with less. All she was concerned about was getting more for her own patients. Thomas felt she was taking the side of the clinicians, who did not seem to accept that they were part of a larger organisation. Then there were departments like Pathology, who just did everything their own way – well, he supposed they were the experts in their own field – but they did not seem to have much of a service ethos. Not like his department, which managed all the facilities – although you would think they never got anything right, judging by some of the complaints from the wards. The trouble was the ward managers had no idea about his own priorities.
Such variety – such differentiation – does not apply only to large organisations (although the problems are usually more obvious in them). In a small project of two or three people trying to work cooperatively, tensions and arguments may arise not so much from poor personal relationships as from the need to cope with conflicting environmental demands and pressures. In larger organisations these tensions would be experienced more impersonally, in interdepartmental or policy arguments, but the origin is the same in both cases.
The challenge facing organisations, therefore, is how to achieve integration in an increasingly differentiated environment. One response has been the delayering of management and the creation of self-managing teams. For example, in a large organisation catering may be done by a subcontractor who is responsible for ensuring that a quality product is delivered. Thus, the parent organisation is relieved of the need to manage that process. In a manufacturing concern, small teams may be made responsible for producing a whole product rather than having a production line with all its attendant management problems. This approach has the merit of implying that integration in organisations is not simply a matter of structure but in fact a responsibility of everyone in the organisation.