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ORGANIZATIONAL STRUCTURE SIX DIMENSIONS

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ORGANIZATIONAL STRUCTURE SIX DIMENSIONS WORK SPECIALIZATION (Division of Labor) To what degree are activities subdivided into separate jobs? DEPARTMENTALIZATION – PowerPoint PPT presentation

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Title: ORGANIZATIONAL STRUCTURE SIX DIMENSIONS


1
ORGANIZATIONAL STRUCTURE SIX DIMENSIONS
  • WORK SPECIALIZATION (Division of Labor)
  • To what degree are activities subdivided into
    separate jobs?
  • DEPARTMENTALIZATION
  • On what basis are jobs grouped together?
  • CHAIN OF COMMAND (Hierarchy of Authority)
  • To whom do individuals and groups report?
  • SPAN OF CONTROL
  • How many workers can a manager efficiently
    effectively direct?
  • CENTRALIZATION / DECENTRALIZATION
  • Where does discretionary (exceptional) decision
    making authority lie?
  • FORMALIZATION
  • To what degree are written rules, regulations
    procedures established?

2
WEBERS BUREAUCRACY
  • DIVISION OF LABOR
  • HORIZONTAL SPECIALIZATION
  • HIRARCHY OF AUTHORITY
  • VERTICAL SPECIALIZATION
  • RULES PROCEDURES
  • ESTABLISHED ENFORCED
  • TECHNICAL COMPETENCE
  • SELECTION PROMOTION CRITERIA
  • IMPERSONAL TREATMENT
  • NO FAVORITISM
  • CENTRALIZED DECISION-MAKING
  • UNIFORM CONTROL
  • FORMALIZATION

3
PRINCIPLES BASED ON AUTHORITY (FAYOL)
  • PARITY PRINCIPLE
  • Authority and Responsibility must coincide
  • UNITY OF COMMAND
  • Workers should have only one immediate
    supervisor to report to
  • SCALAR PRINCIPLE (Chain of Command)
  • When exceptions are encountered, one should
    communicate through the chain of command, one
    link (level) at a time
  • SPAN OF CONTROL
  • The number of subordinates a manager can
    effectively supervise
  • FACTORS WHICH AFFECT THE SPAN OF CONTROL
  • JOB COMPLEXITY NARROWS SPAN
  • VARIETY OF TASKS NARROWS SPAN
  • PROXIMITY WIDENS SPAN
  • QUALITY OF SUBORDINATES WIDENS SPAN
  • ABILITY OF THE MANAGER WIDENS SPAN

4
WORK DESIGN DECISIONS
  • WHAT ARE THE TASKS TO BE PERFORMED?
  • HOW SHOULD THEY BE COMBINED INTO JOBS?
  • HOW SHOULD THE JOBS BE PERFORMED?
  • ANALYSIS DESIGN OF WORK METHODS
  • STANDARDS OF PERFORMANCE
  • HOW SHOULD PEOPLE RESPOND TO THE JOB?
  • ATTITUDES
  • JOB SATISFACTION
  • MOTIVATION
  • HOW TO STRUCTURE THE JOBS TO BE EFFICIENT
    SATISFYING?

5
JOB REDESIGN POSSIBILITIES
  • MAKING THE WORK LESS BORING MORE INTERESTING
  • JOB DESIGN JOB SCOPE JOB DEPTH
  • APPROACH (VARIETY) (AUTONOMY)
  • JOB SPECIALIZATION LOW LOW
  • JOB ROTATION INCREASES LOW
  • JOB ENLARGEMENT INCREASES LOW
  • AUTOMATION LOW INCREASES
  • JOB ENRICHMENT INCREASES INCREASES
  • - - - - - - - - - - - - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
    - - - - - - -
  • WALKER GUEST (52) SATISFACTION ON THE
    ASSEMBLY LINE
  • SATISFIED WITH DISSATISFIED WITH
  • PAY MECHANICAL PACING OF THE LINE
  • WORKING CONDITIONS REPETITIVE NATURE OF THE
    WORK
  • QUALITY OF SUPERVISION LOW SKILL REQMTS
    DEMANDS
  • LIMITED SOCIAL INTERACTION

6
SPECIALIZATION (Division of Labor)
  • ADVANTAGES
  • FEWER SKILLS REQUIRED PER PERSON
  • EASIER TO STAFF POSITIONS TRAIN WORKERS
  • JOBS CAN BE MASTERED IN LESS TIME
  • PRODUCTIVITY WORK OUTCOMES CAN BE INCREASED
  • PRODUCTS SERVICES ARE MORE UNIFORM
  • MANAGERS CAN SUPERVISE A LARGER NUMBER OF
    WORKERS
  • DISADVANTAGES
  • OVERSIMPLIFIED JOBS ARE REPETITIVE, BORING,
    STRESSFUL, FRUSTRATING
  • SKILL DEVELOPMENT IS NOT ENHANCED --- NO
    CHALLENGES
  • LEADS TO PRODUCTIVITY DECLINES, ABSENTEEISM,
    POOR QUALITY WORK

7
ALTERNATIVES TO JOB SPECIALIZATION
  • Job Rotation
  • Systematically moving employees from one job to
    another. Most frequent use today is as a training
    device for skills and flexibility.
  • Job Enlargement
  • An increase in the total number of tasks
    performed.
  • Increases training costs, unions want workers
    paid more pay for doing more tasks, and work may
    still be dull and routine.
  • Job Enrichment
  • Increasing both the number of tasks the worker
    does and the control the worker has over the job.

8
ALTERNATIVES TO SPECIALIZATION - 2
  • Job Characteristics Approach (HACKMAN OLDHAM,
    76)
  • Core Dimensions
  • Skill varietythe number of tasks a person does
    in a job.
  • Task identitythe extent to which the worker does
    a complete or identifiable portion of the total
    job.
  • Task significancethe perceived importance of the
    task.
  • Autonomythe degree of control the worker has
    over how the work is performed.
  • Feedback the extent to which the worker knows
    how well the job is being performed.
  • Growth-Need Strength
  • The desire of some people to grow, develop, and
    expand their capabilities that is their response
    to the core dimensions.
  • Autonomous Work Teams
  • An alternative to job specialization that allows
    the entire group to design the work system it
    will use.

9
TWO-FACTOR THEORY HERZBERG (59)
  • ASSUMPTIONS
  • TWO DIFFERENT TYPES OF FACTORS INFLUENCE
    USHYGIENES MOTIVATORS
  • THE OPPOSITE OF SATISFACTION IS NO
    SATISFACTION
  • THE OPPOSITE OF DISSATISFACTION IS NO
    DISSATISFACTION
  • ONLY MOTIVATING FACTORS LEAD TO SATISFACTION
  • HYGIENES AT BEST LEAD TO NO DISSATISFACTION
  • HYGIENES (EXTRINSIC) MOTIVATORS (INTRINSIC)
  • WORKING CONDITIONS RESPONSIBILITY
  • COMPANY POLICIES CHALLENGE OF WORK
  • SUPERVISIOR MEANINGFUL WORK
  • COWORKERS ACHIEVEMENT
  • SALARY BENEFITS ACCOMPLISHMENT
  • STATUS SYMBOLS GROWTH OPPORTUNITIES
  • IMPLICATIONS
  • ABUNDANT HYGIENES DO NOT MOTIVATE WORKERS, THEY
    ONLY PREVENT DISSATISFACTION
  • ENRICH JOBS TO PROVIDE MOTIVATING, CHALLENGING
    WORK AND HIGH SATISFACTION

10
JOB DESIGN THEORY HACKMAN OLDHAM (76)
  • JOB CHARACTERISTICS MODEL
  • FIVE JOB DIMENSIONS PSYCHOLOGICAL STATES
  • SKILL VARIETY
  • TASK IDENTITY ? MEANINGFULNESS
  • TASK SIGNIFICANCE (Leads to high internal work
    motivation)
  • AUTONOMY ? PERSONAL RESPONSIBILITY
  • (Leads to high quality work satisfaction)
  • FEEDBACK ? KNOWLEDGE OF RESULTS
  • (Leads to high satisfaction low turnover)
  • - - - - - - - - - - - - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
    - - - - - - - -
  • EFFECTIVENESS IS MODERATED BY EMPLOYEE
    GROWTH-NEED STRENGTH
  • CALCULATE THE MOTIVATING POTENTIAL SCORE TO
    DETERMINE IF THE JOB NEEDS TO BE REDESIGNED
  • ARE YOUR WORKERS MOTIVATED BY INTRINSIC WORK
    FACTORS AND A STRONG NEED FOR ACHIEVEMENT (AN
    ENRICHED JOB)?

11
  • HERZBERGS VERTICAL LOADING FACTORS
  • (ACHIEVEMENT, GROWTH, RECOGNITION,
    RESPONSIBILITY)
  • ACCOUNTABILITYHeld responsible for performance
  • ACHIEVEMENT---Doing something worthwhile
    (Meaningful)
  • FEEDBACK---Gets direct performance information
  • WORK PACE---Able to set own work speed and rhythm
  • CONTROL OVER RESOURCES---Controls how and when to
    do the job
  • PERSONAL GROWTH DEVELOPMENT---Opportunity to
    learn new skills
  • HACKMANS IMPLEMENTING CONCEPTS
  • (Create a sense of MEANINGFULNESS,
    RESPONSIBILITY, KNOWLEDGE)
  • COMBINE TASKS SKILL VARIETY
  • FORM NATURAL WORK UNITS TASK IDENTITY
  • ESTABLISH CLIENT RELATIONSHIPS TASK SIGNIFICANCE
  • VERTICAL LOADING AUTONOMY
  • OPEN FEEDBACK CHANNELS FEEDBACK

12
CRITICISMS OF JOB ENRICHMENT (JOB REDESIGN)
  • HIGH COSTS
  • TRAINING, DUPLICATE EQUIPMENT, PLANT REDESIGN
  • SOME JOBS ARE ELIMINATED
  • FEWER OPERATIVES, SUPERVISORS NEEDED
  • ASSUMES WORKERS WANT RESPONSIBILITY, ETC.
  • WHAT ABOUT WORKERS WITH LOW N-ACH?
  • ENRICHMENT IS RELATIVE--EFFECTS MAY BE TEMPORARY
  • DO WE NEED OCCASIONAL BOOSTER SHOTS TO KEEP
    GOING?
  • SOME JOBS CANT BE ENRICHED
  • WHAT DO WE DO TO AVOID JEALOUSY?
  • USED AS A QUICK FIX FOR IMMEDIATE PROBLEMS
  • HAVE WE REALLY CHANGED OUR PHILOSOPHY OF MGMT?
  • IMPLEMENTED CHANGES ARE OFTEN WEAK MODEST
  • COMPROMISES FROM WHAT WAS PLANNED
  • INNOVATIONS ARE ERODED VANISH OVER TIME

13
WHEN MIGHT REDESIGN WORK?
  • WHEN NEW UNITS ARE FIRST ESTABLISHED
  • NO PAST HISTORY TO DEAL WITH
  • NEW FACILITIES AND WORKERS
  • WHEN THE SYSTEM BECOMES UNSTABLE
  • (Seizing the opportunity!)
  • TECHNOLOGICAL CHANGE
  • CHANGE IN SENIOR MANAGEMENT
  • NEW PRODUCT OR SERVICE INTRODUCED
  • LEGISLATIVE OR REGULATORY CHANGES
  • FLUCTUATIONS IN THE ECONOMY OR ENVIRONMENT
  • 3. WHEN THE IMMEDIATE MANAGER WANTS IT
  • LOCAL CHANGES (JUST WITHIN THE DEPARTMENT)
  • MICRO REDESIGN
  • MANAGEMENT MUST BE COMMITTED TO A NEW PHILOSOPHY

14
FLEXIBILITY WORKER CONTROL
  • WORK SCHEDULE FLEXIBILITY
  • 1. COMPRESSED WORK WEEK
  • WORKER FATIGUE
  • ISSUE OF OVERTIME
  • DIFFICULTIES IN WORK SCHEDULING
  • 2. FLEXTIME
  • SUPERVISION COORDINATION IS MORE DIFFICULT
  • ADEQUATE COVERATE OF WORK---HOW TO SCHEDULE?
  • JOBS THAT REQUIRE ALL TO BE PRESENT
  • 3. JOB SHARING / PART-TIME WORK
  • COORDINATING WITH OTHER WORKERS
  • INCREASED COST OF BENEFITS
  • 4. TELECOMMUTING
  • NO CONTACTS WITH OTHER WORKERSNO COORDINATION
  • NO SUPERVISIONNOT EASY TO GET HELP WHEN
    NEEDED
  • HOW PRODUCTIVE ARE YOU WHEN WORKING AT HOME?
  • ISSUE OF LIABILITY WHEN WORK IS DONE AT HOME

15
DEPARTMENTALIZATION
  • HOW TO GROUP JOBS TOGETHER SO THE TASKS CAN BE
    COORDINATED
  • BY FUNCTION (or TASK)
  • MANUFACTURING, MARKETING, HUMAN RESOURCES,
    ACCOUNTING
  • BY GEOGRAPHY OR TERRITORY
  • WESTERN DIVISION, CANADIAN DIVISION, EUROPEAN
    DIVISION
  • BY PRODUCT OR BUSINESS LINE
  • BICYCLES, MUSICAL INSTRUMENTS, TABLEWARE,
    BUILDING SUPPLIES
  • BY PROCESS (Sequential)
  • CASTING, GRINDING, SANDING, FINISHING, PACKING
  • BY CUSTOMER
  • RETAIL, WHOLESALE, GOVERNMENT, INDUSTRIAL
  • WITHIN A SINGLE COMPANY, SEVERAL DIFFERENT
    APPROACHES TO DEPARTMENTALIZATION MAY
    CO-EXISTFOR EXAMPLE
  • Accounting is functionally organized, Marketing
    is by customer within territory, Manufacturing is
    by process, and Research Development is by
    product.

16
CENTRALIZED DECISION MAKING DISCRETIONARY
AUTHORITY ONLY AT THE TOP
  • ADVANTAGES
  • UNIFORM POLICIES ACTIONS ARE MAINTAINED
  • TOP MANAGEMENT KNOWS EVERYTHING THATS GOING ON
    (Awareness)
  • CONTROL IS MAINTAINED OVER COSTLY/RISKY
    DECISIONS
  • ENVIRONMENTAL THREATS ARE HANDLED BY EXPERIENCED
    MANAGERS
  • STAFF EXPERTS ARE NEEDED TO ADVISE TOP
    MANAGEMENT
  • DISADVANTAGES
  • DECISIONS MAY BE SLOW IN COMING MUST WAIT FOR
    AN ANSWER
  • TOP MANAGEMENT TOO INVOLVED IN DAY-TO-DAY
    DECISIONS
  • LOWER-LEVEL MANAGERS ARE NOT LEARNING HOW TO
    MAKE DECISIONS
  • INFLEXIBILITY CHANGE IS VERY DIFFICULT AND SLOW

17
DELEGATION OF RESPONSIBILITY AND AUTHORITY
  • ADVANTAGES
  • Communication time is shortened faster company
    decisions and reactions
  • Decision makers are now closer to the action,
    thus better decisions result
  • Frees up top managements time allows them to
    focus on strategic matters
  • Develops skills of lower-level managers and
    personnel
  • CAUTIONS
  • Are levels of responsibility and authority
    clearly defined?
  • Is a reliable and accurate feedback system in
    place? Does the person have the ability and
    skills necessary to make these decisions?
  • Does the level of responsibility come with an
    appropriate level of authority to act?
  • Have exceptional situations been clarified as to
    how they are to be handled?

18
WHY DO MANAGERS RESIST DELEGATION?
  • FEAR THAT SUBORDINATES WILL FAIL
  • If you want something done right --- do it
    yourself!!
  • BELIEF THAT ITS EASIER TO DO THE TASK YOURSELF
  • Its too time consuming to teach others how to do
    this task correctly
  • A FEAR THAT SUBORDINATES WILL LOOK TOO GOOD
  • The manager is insecure --- afraid the
    subordinate may take his/her job
  • MANAGERS LIKE THE POWER THEY WIELD
  • I enjoy the influencewhen others must come to me
    for advice or help
  • WE LIKE DOING THE TASKS OURSELVES
  • The work itself is enjoyableits fun for me!!

19
SIMPLE STRUCTURES
  • STRUCTURAL CHARACTERISTICS
  • Low specialization and departmentalization
  • Wide span of control and a flat structure
  • Centralized authority with little formalization
  • ADVANTAGES
  • Fast, flexible, inexpensive to maintain
  • Accountability is clear
  • Workers are generalists
  • DISADVANTAGES
  • Workers require guidance on a regular basis
  • No specialists or experts
  • Owner can become overloadedtoo many things to
    decide daily
  • Works best if the firm is small --- and stays
    that way

20
Functional Design for a Small Manufacturing
Company
21
FUNCTIONAL ORGANIZATION
  • CHARACTERISTICS
  • Specialization and formalized rules and
    regulations
  • A tall structure, grouped functionally, with
    narrow spans of control
  • Centralized authority and decision making that
    follows the chain
  • ADVANTAGES
  • Highly efficient and effective in a predictable,
    routine environment
  • Promotes skill specialization career
    development within departments
  • Rules and procedures maintain consistency, only
    exceptions referred up
  • DISADVANTAGES
  • Develops experts (managers) in narrow fields,
    not generalist managers
  • If theres no rule to follow, we dont know what
    to do! (No discretion)
  • Doesnt adapt well to change, or unexpected
    events in the environment

22
DIVISIONALIZED BY GEOGRAPHY OR TERRITORY
  • DIVISIONALIZED BY TERRITORY OR LOCATION
  • ADVANTAGES
  • A branch location means faster, convenient
    service to customers
  • Each branch location is identical to the others
    each has full service
  • De-emphasizes expertise specialization makes
    generalist managers
  • DISADVANTAGES
  • All functions are duplicated at each location
    (inefficient?)
  • Conflicts may arise between local and corporate
    objectives
  • Discretionary decisions may vary at each
    location how to maintain uniform policies and
    actions?

23
DIVISIONALIZED BY PRODUCT, SERVICE OR CUSTOMER
  • DIVISIONALIZED BY PRODUCT OR SERVICE
  • ADVANTAGES
  • Allows greater product / service visibility and
    customer sensitivity
  • Develops managers who can think across
    functional lines
  • DISADVANTAGES
  • Difficult to coordinate across product or
    service lines (no similarity)
  • Resource allocation decisions become more
    political
  • DIVISIONALIZED BY CUSTOMER
  • ADVANTAGES
  • Skilled specialists can deal with unique
    customers or customer groups.
  • DISADVANTAGES
  • The number of salespeople appears to be
    excessive (inefficient)
  • A large administrative staff is needed to
    integrate activities of the various departments.

24
A Matrix Organization
25
MATRIX STRUCTURES
  • ADVANTAGES
  • Uses functional experts on special projects (
    both function product)
  • Very flexible, adaptable to environmental
    changes
  • Emphasizes cooperation and coordination to get
    the job done
  • Reduces the amount of vertical communication
    needed within the firm
  • DISADVANTAGES
  • Violates the Unity of Command principle (one
    boss)
  • A costly, inefficient structure with overlap,
    duplication and waste
  • Conflict potential is high due to power
    struggles between units
  • Workers can experience much stress with dual
    assignments overloads

26
NETWORK (VIRTUAL) STRUCTURES
  • CHARACTERISTICS
  • HIGHLY CENTRALIZED
  • LITTLE OR NO DEPARTMENTALIZATION
  • ADVANTAGES
  • Dont have to actually own or operate all
    business functions
  • Outsources (contracts) with experts to provide
    cutting-edge services
  • Can focus your energy and capital at what you do
    best
  • Very flexible, can get in and /or out of
    business quickly
  • Can be very sensitive to cost and quality
  • DISADVANTAGES
  • No ability to expedite or control many of the
    key operations
  • Contracts must be negotiated terms are not
    permanent
  • No managerial expertise is developed in managing
    contracted areas
  • Hard to identify where the organization is
    located

27
TEAM STRUCTURES HORIZONTAL, CROSS-FUNCTIONAL TEAMS
  • ADVANTAGES
  • Experts from several areas assembled into one
    autonomous team
  • Able to respond quickly to customers fast
    service (one-stop?)
  • Team selects its leader, delegates roles and
    makes its own decisions
  • Participative, free communication within, no
    hierarchies to follow
  • Strong sense of ownership, commitment
  • DISADVANTAGES
  • Specialists are cut off from their peers
    (isolated)
  • Inconsistencies in actions and policies across
    teams (no uniformity)
  • Difficult to coordinate and control from the top
  • ARE COORDINATING MECHANISMS NEEDED?
  • LIAISON ROLES -- informal contacts v. contact
    managers
  • TASK FORCES -- temporary problem-solving
    groups
  • COMMITTEES -- Ad Hoc v. Permanent standing
    committees

28
THE NEED FOR COORDINATION
  • If departments and work groups are
    interdependent the greater the need for
    coordinationespecially if the departments are
    decentralized.
  • Pooled interdependence
  • When units operate with little interaction their
    output is simply pooled at the organizational
    level.
  • Sequential interdependence
  • When the output of one unit becomes the input of
    another unit in sequential fashion.
  • Reciprocal interdependence
  • When activities flow both ways between units.
  • ARE STRUCTURAL COORDINATING MECHANISMS NEEDED?
  • Can we rely on the hierarchy, rules and
    procedures, and an occasional committee meeting
    to coordinate across these boundaries?

29
STRUCTURAL COORDINATING MECHANISMS
  • The Managerial Hierarchy
  • Going up the hierarchy (chain of command) to find
    a manager with the authority to make the
    decisions that affect the interdependent units.
  • Rules and Procedures
  • Coordinating routine activities via rules and
    procedures that set priorities and guidelines for
    actions.
  • Liaison Roles
  • Designating a specific manager who will
    facilitate the flow of information to the
    interdependent units by acting as a common point
    of contact.
  • Task Forces (Temporary problem-solving groups)
  • Used with multiple units when coordination is
    complex requiring more than one individual and
    the need for coordination is acute.
  • Committees disbanded when the need for
    coordination has been met.
  • Integrating Departments (Permanent structures)
  • Permanent organizational units that maintain
    internal integration and coordination on an
    ongoing basis.
  • May have authority and budgetary controls.

30
ORGANIZATIONAL STRUCTURE IS STRONGLY INFLUENCED
BY
  • ENVIRONMENTAL UNCERTAINTY
  • BURNS STALKER (61)
  • THOMPSON (67)
  • DUNCAN (72)
  • ORGANIZATIONAL TECHNOLOGY
  • WOODWARD (65)
  • THOMPSON (67)
  • PERROW (67)
  • INTERNAL INFORMATION-PROCESSING NEEDS
  • LAWRENCE LORSH (67)
  • GALBRAITH (73)
  • MANAGERIAL STRATEGY
  • CHANDLER (62)
  • ORGANIZATIONAL HISTORY MATURITY
  • GREINER (72)
  • SCHWARTZ DAVIS (81)

31
MECHANISTIC v. ORGANIC STRUCTURES BURNS STALKER
(61)
  • IF ENVIRONMENT IS ? STABLE DYNAMIC
  • TASKS SPECIALIZED SHARED
  • INTEGRATING ROLES FEW MANY
  • AUTHORITY HIERARCHICAL EXPERTISE
  • RULES PROCEDURES MANY, WRITTEN FEW
  • COMMUNICATION VERTICAL HORIZONTAL
  • CHAIN OF COMMAND CLEAR FREE
  • SPAN OF CONTROL NARROW WIDE
  • DECISION MAKING CENTRALIZED DECENTRALIZED
  • FORMALIZATION HIGH LOW
  • PRIMARY OBJECTIVE EFFICIENCY ADAPTABILITY
  • IDEAL STRUCTURE IS MECHANISTIC ORGANIC
  • MAJOR PROBLEMS CANT ADAPT QUICKLY NOT EFFICIENT
  • NONPARTICIPATIVE HARD TO COORDINATE

32
ORGANIZATIONAL RATIONALITY THOMPSON (67)
  • Seal off (protect) the core technology from
    environmental influences
  • REDUCE UNCERTAINTY -- PROTECT THE CORE
  • Buffer the core technology by surrounding it with
    specialized input and output components
  • FORM DEPARTMENTS TO INTERFACE WITH THE
    ENVIRONMENT
  • (SO THE CORE DOESNT HAVE TO DEAL WITH THE
    ENVIRONMENT)
  • Smooth out the input and output transactions
  • THE MORE INDEPENDENT THESE BUFFERS BECOME, THE
    GREATER THE
  • NEED TO DEVELOP COORDINATING MECHANISMS ACROSS
    DEPARTMENTS
  • Anticipate and adapt to environmental changes
  • THE ORGANIZATION MUST BE FLEXIBLE AND ADAPTABLE
    TO SURVIVE

33
THE MACRO ENVIRONMENT
  • POLITICAL
  • Supports
  • Controls
  • Pending Legislation
  • ECONOMIC
  • Inflation
  • Unemployment
  • Productivity
  • Growth
  • SOCIO-CULTURAL
  • Geographic Location
  • Customs Values
  • Demographics
  • TECHNOLOGICAL
  • Basic Research, New Knowledge
  • New Products, Processes, Services

34
THE TASK ENVIRONMENT INDUSTRY
  • THE SPECIFIC ENVIRONMENT OF THE FIRM
  • THIS FIRMS
  • CUSTOMERS
  • SUPPLIERS
  • CREDITORS
  • COMPETITORS
  • GOVERNMENT AGENCIES
  • UNIONS
  • STOCKHOLDERS
  • COMMUNITIES
  • SPECIAL INTEREST GROUPS

35
ENVIRONMENTAL UNCERTAINTY DUNCAN (72)
  • COMPLEXITY
  • SIMPLE COMPLEX
  • STATIC - - - - - - - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
  • LOW MODERATELY
  • UNCERTAINTY LOW
  • UNCERTAINTY
  • DYNAMISM - - - - - - - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
  • (CHANGE)
  • MODERATELY HIGH
  • HIGH UNCERTAINTY
  • UNCERTAINTY
  • DYNAMIC - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
    - - - - - -
  • COMPLEXITY of Entities the Firm must deal
    with?
  • DYNAMISM How Frequently do these entities (or
    their demands) change?

36
ENVIRONMENTAL UNCERTAINTY SCHWAB (80)
  • THREE ISSUES TO ADDRESS
  • IMPORTANCE (Significance)
  • What is the impact of this environmental
    segment on the firm?
  • PREDICTABILITY
  • Can the firm anticipate pending shifts and
    changes in this segment?
  • CONTROL (Influence)
  • Can the firm manipulate or control this
    segment?
  • PREDICTABILITY
  • HIGH LOW
  • HIGH - - - - - - - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
  • LOW MODERATELY
  • UNCERTAINTY LOW
  • UNCERTAINTY
  • CONTROL - - - - - - - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
  • (INFLUENCE) MODERATELY HIGH
  • HIGH UNCERTAINTY
  • UNCERTAINTY
  • LOW - - - - - - - - - - - - - -
    - - - - - - - - - - - - - - - - - - - - - - - - -
    - - - - - -

37
ENVIRONMENTAL UNCERTAINTY AND STRUCTURE
  • POSSIBLE FITS BETWEEN ENVIRONMENT AND STRUCTURE
  • LOW UNCERTAINTY MOD LOW UNCERTAINTY
  • SIMPLE FUNCTIONAL
  • FUNCTIONAL MECHANISTIC
  • MECHANISTIC DIVISIONALIZED
  • MOD HIGH UNCERTAINTY HIGH UNCERTAINTY
  • Mechanistic/Functional DIVISIONALIZED
  • DIVISIONALIZED MATRIX
  • MATRIX ORGANIC
  • ORGANIC

38
TECHNOLOGICAL DETERMINISM
  • CAPITAL INTENSITY
  • WOODWARD (65) UNIT MASS PROCESS
  • HIERARCHICAL LEVELS 3 4 6
  • RATIO OF WORKERS/ADMINISTRATORS 9/1 4/1 1/1
  • NUMBER OF RULES Few Many Few
  • FIRST-LINE SPAN OF CONTROL 23 48 15
  • EXECUTIVE SPAN OF CONTROL 4 7 10
  • LABOR COSTS AS OF TOTAL High Medium Low
  • CAPITAL INVESTMENT IN EQUIPMENT Low Medium High
  • OPTIMAL STRUCTURE ORG MECH ORG
  • INTERDEPENDENCE
  • THOMPSON (67)
  • LONG-LINKED (Serial) -- Assembly Line X1 ?
    X2 ? X3 ? X4 ? X5
  • MEDIATING (Pooled) -- Bank C1 ? B ? C2
  • INTENSIVE (Reciprocal) -- Hospital (Phase
    1) T ? X1 ? Dr
  • (Phase 2 ) T ? X1 ? Dr

39
TECHNOLOGY PERROW (67)
  • KNOWLEDGE OR INFORMATION USED IN THE CONVERSION
    PROCESS
  • DIMENSIONS
  • 1. NUMBER OF UNFORSEEN PROBLEMS ENCOUNTERED
    (EXCEPTIONS)
  • 2. AVAILABILITY OF READY ANSWERS OR SOLUTIONS
    (ANALYZABILITY)
  • OF UNFORSEEN PROBLEMS
  • FEW MANY
  • ----------------------------------------------
    -------------------------------------------------
  • DIFFICULT
  • EASE OF LOCATING CRAFT NON-ROUTINE
  • AN ACCEPTABLE ------------------------------------
    ----------------------------------------------
  • SOLUTION ROUTINE ENGINEERING
  • EASY
  • ----------------------------------------------
    ------------------------------------------------
  • TECHNOLOGICAL DETERMINISM TECHNOLOGY DETERMINES
    STRUCTURE

40
INFORMATION PROCESSING GALBRAITH (73)
  • TRADITIONAL COORDINATING MECHANISMS
  • INFORMAL CONTACT
  • RULES PROCEDURES (Standard Operating
    Procedures)
  • HIERARCHY (Exceptions)
  • GOALS TARGETS (Specify outcomes, not
    behaviors)
  • AS INFORMATION PROCESSING NEEDS INCREASE, THE
    ORGANIZATION MUST WORK HARDER TO STAY IN CONTACT
    WITH ITS VARIOUS UNITS.
  • STRATEGY 1 -- REDUCE THE AMOUNT OF INFORMATION
    PROCESSED
  • RELY ON SLACK
  • ESTABLISH SELF-CONTAINED UNITS
  • STRATEGY 2 -- INCREASE CAPACITY TO HANDLE MORE
    INFORMATION
  • INSTALL MORE VERTICAL INFORMATION SYSTEMS
  • STRUCTURE MORE LATERAL RELATIONSHIPS
  • SOME LATERAL COORDINATING MECHANISMS
  • LIAISON ROLES, TASK FORCES, STANDING COMMITTEES,
  • CROSS-FUNCTIONAL TEAMS, MATRIX STRUCTURES

41
FACTORS THAT AFFECT THE DIFFICULTY OF ACHIEVING
INTEGRATION LORSCH (77)
  • THE DEGREE OF DIFFERENTIATION
  • THE NUMBER OF UNITS REQUIRING INTEGRATION
  • PATTERNS OF INTERDEPENDENCE BETWEEN THE UNITS
  • SEQUENTIAL
  • POOLED
  • RECIPROCAL
  • THE FREQUENCY OF INTERACTION REQUIRED AMONG THE
    UNITS
  • THE COMPLEXITY AND IMPORTANCE OF THE INFORMATION
    SHARED

42
STRATEGY DETERMINES STRUCTURE CHANDLER (62)
  • STRUCTURES ARE ENACTED BY MANAGEMENT
  • WHAT IS YOUR STRATEGIC OBJECTIVE?
  • INNOVATION
  • You need a loose structure, with low
    specialization, low formalization and
    decentralized decision making. ORGANIC
    STRUCTURE
  • COST MINIMIZATION
  • You need tight control, extensive work
    specialization, high formalization and high
    centralization. MECHANISTIC STRUCTURE
  • IMITATION
  • You need tight controls over current activities
    and looser controls for new undertakings. COMBINA
    TION STRUCTURE

43
FORCES THAT SHAPE THE ORGANIZATION GREINER (72)
  • ORGANIZATIONAL AGE
  • ORGANIZATIONAL SIZE
  • GROWTH RATE OF THE INDUSTRY
  • STAGE OF EVOLUTION
  • CREATIVITY
  • DIRECTION
  • DELEGATION
  • COORDINATION
  • STAGE OF REVOLUTION (Current Crisis)
  • LEADERSHIP
  • AUTONOMY
  • CONTROL
  • RED TAPE

44
ORGANIZATIONAL LIFE CYCLE STAGES TANSIK (80)
  • STAGE STRATEGY STRUCTURE
  • BIRTH CONCENTRATION SIMPLE
  • GROWTH INTEGRATION FUNCTIONAL
  • MATURITY DIVERSIFICATION DIVISIONAL
  • DECLINE RETRENCHMENT CONSOLIDATION
  • DEATH LIQUIDATION DISMEMBERMENT
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