Organizational structure and control systems

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Organizational structure and control systems

• Session 19

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Unfortunately, there may be no long-term
sustainable advantage other than the ability to
organize and manage.
- J. Galbraith E. Lawler
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NYSE and NasdaqNonprofit to for-profit
institutions?
Source NY Times, NYSE, NASDAQ
websites
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Organizational Design

• Organization Structure
• Planning and control systems
• Human resource management
• Culture and style

Source Collis Montgomery
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Organizational Structure

• Control systems
• Co-ordination
• Motivation
• Differentiation
• Integration
• Bureaucratic costs

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Differentiation

• Vertical
• Levels of hierarchy
• Principle of minimum chain of command
• Span of control
• Centralization v/s decentralization

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Horizontal differentiation

• Based on
• Common tasks - Functional
• Products - Multidivisional
• National/ regional markets - Geographic
• Process
• Product-team
• Communities of practice
• Combination - Matrix

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Project teams
TI Trying to superimpose an integrated process
on a fragmented organization
Source Hammer Stanton, 1999
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Communities of practice
Source HBR 2000
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Rationale for differentiation

• Economies of scale
• Economies of utilization
• Learning
• Standardization of control systems

Source Grant
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Changing structures

• CompUSA re-organization
• Decentralized structure to regional sales
  structure
• Reduce duplication of sales and support staff
• Centralizing support functions

Source NYTimes, CompUSA website
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Integration

• Co-ordination of activities
• Mechanisms
• Direct contact
• Liaison roles
• Task forces
• Teams
• Integrating roles
• Integrating departments
• Matrix structure

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Strategic Control

• Building blocks of competitive advantage
• Balanced scorecard model
• Levels of control
• Types of control systems

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Empowerment
Employees won't feel internally committed if
someone is always controlling them from the top
down.
Source Argyris 1998
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Organizational culture

• Strategic leadership
• CEO/ Founder
• Top management team
• Mechanisms for transmission
• Adaptive v/s inert cultures

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Organizational culture
In three different organizations, Sears, Shell
and the U.S. Army, the 800 pound gorilla that
impaired performance and stifled change
was culture
Source HBR, 1997
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Reward systems

• Individual
• Piecework
• Commission systems
• Bonus plans
• Promotion

• Group
• Bonus systems
• Profit sharing
• Employee stock option plans
• Organization bonus

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Balanced scorecards

• Link corporate goals to specific strategic and
  operating targets
• How do we look to shareholders?
• How do customers see us?
• What must we excel at?
• Can we continue to improve and create value?

Source Kaplan Norton