Jay R. Galbraith's (1974) information processing view on the design of organizational structures proposes that each organization must build an organizational structure that can handle and process the different uncertainties, which the organization is facing. This could e.g. be changing consumer trends, new regulations etc. Furthermore, the tasks of organizations will also create different needs for the processing of information, where different kinds of organizational tasks will require different needs for the processing of information. Companies that face a high degree of task uncertainty could e.g. be high-tech companies, who will potentially have a high rate of product innovation and relatively short product life-cycles.
Put briefly, each organization must match its information processing capabilities with the organization's need for handling and processing information. An organization will have a greater need for information processing, when the tasks of the organization and surrounding environment is uncertain in nature. Thus, the organizational structure should reflect the information processing needs of the organization, so that the organization can remain efficient and viable.
If the information processing capability is too small, the organization will not be efficient, and will not be able to preplan or to make viable decisions before the execution of given tasks. However, if the information processing capability is too great, the organization can be seen as too bureaucratic, and thus wasting its resources on information processing capabilities not needed to process the uncertainties the organization is facing.
Jay R. Galbraith puts forward 4 different strategies for obtaining the needed information processing capabilities. The 4 strategies are grouped into 2 overall categories: 1) Reduce the need for information processing and 2) Increase the capacity to process information.
These strategies are listed below.
Reduce the need for information processing:
Creation of slack resources.
The creation of buffers such as buffer inventories, extension of deadlines and the raising of budget targets can potentially reduce unforeseen uncertainties, and thereby reduce the need for adjustment and processing of information.
Creation of self-contained tasks.
Creating autonomous units that can initiate and fulfill tasks autonomously without coordination with other teams or groups, will reduce the need for coordination and integration within different elements of the company, and can thus reduce the need for information processing. This is e.g. used, when a traditional functional structure is replaced by e.g. a product division.
Increase the capacity to process information:
Investment in vertical information systems.
The processing of information can be increased with e.g. computers and mechanisms that can efficiently plan for uncertainties, and distribute the information upwards without overloading the top of the organizational hierarchy. The easier information is transmitted up the hierarchy, the better the capability of handling information will become.
Creation of lateral relations.
The creation of liaison roles, direct contacts between departments, task forces, teams, integrating roles and managerial linking roles can potentially increase the information processing capacity. This is e.g. also seen by the establishment of a matrix structure.
There can also be proposed yet another strategy, which was not included in the early work of James R. Galbraith (1974).
Reduction of uncertainty
An organization can try to reduce the uncertainties found in the environment and tasks performed. This could e.g. be done by reducing the number of products supplied, reduction of suppliers and a reduction of the customer base etc.
By using the five strategies, organizations can work with balancing the information processing needs and capabilities, so that the company can make efficient and viable decisions when encountering uncertainties and organizational problems.