Organizational Design

1
Chapter 11

• Organizational Design
• Work Process

2
Planning Ahead Chapter 11

• What are the essentials of organizational design?
• How do contingency factors influence organization
  design?
• What are the major issues in subsystems design?
• How can work processes be reengineered?

3
What is Organizational Design?

• Process of creating structures that accomplish
  Mission Objectives

• Ultimate goal should be to achieve organizational
  effectivenesssustainable high performance in
  using resources

4
Contingencies in Organizational Design
Environment
Organizational design aligns structures with
situational contingencies
Strategy
People
Size Life Cycle
Technology
5
Organizational Design Choices

• Mechanistic Designs
• Bureaucratic Organizations
• Organic Designs
• Adaptive Organizations

6
Organizational Design Choices
Mechanistic Designs

• Work efforts centrally coordinated.
• Standard interactions in well-defined
• jobs.
• Limited information-processing
• capability.
• Best at simple and repetitive tasks.
• Good for production efficiency.

7
Organizational Design Choices
Organic Designs

• Work Efforts highly interdependent.
• Intense interactions in self-defined jobs.
• Expanded Information-processing
• capability.
• More effective at complex and unique
• tasks.
• Good for innovation and creativity.

8
Organizational Design Alternatives
Mechanistic designs Bureaucratic Organizations
Organic designs Adaptive Organizations
Predictability
Adaptability
Goal
Centralized
Decentralized
Authority
Many
Few
Rules Procedures
Narrow
Wide
Spans of Control
Specialized
Tasks
Shared
Few
Teams Task Forces
Many
Formal Impersonal
Coordination
Informal Personal
9
Contingencies in Organization Design
Environment
Organization design aligns structures with
situational contingencies
Strategy
People
Size Life Cycle
Technology
10
Environment

• Certain Environment
• Composed of relatively stable and predictable
  elements
• Uncertain Environment
• Has more dynamic and less predictable elements

11
Strategy

• Stability-oriented strategies
• More successful when supported by bureaucratic
  organizations using mechanistic designs
• Growth-oriented strategies
• More successful when supported by adaptive
  organizations using organic designs

12
Technology

• Combination of knowledge, skills, equipment,
  computers, and work methods used to transform
  resource inputs into organizational outputs.

13
Technology

• Types of Production
• Small-Batch
• Mass
• Continuous-process

• Structures
• Flexible organic
• Rigid mechanistic
• Flexible organic

14
Size Life Cycle

• Four Stages in the Organizational Life Cycle
• Birth Stage
• Youth Stage
• Midlife Stage
• Maturity Stage

15
People

• A good organizational design provides people with
  the supporting structures they need to achieve
  both high performance and satisfaction in their
  work.

16
Contingencies in Organization Design
Environment
Organization design aligns structures with
situational contingencies
Strategy
People
Size Life Cycle
Technology
17
Organizational Design Checklist

• Check 1 -- Does the design fit well with the
  major problems and opportunities of the external
  environment?
• Check 2 -- Does the design support the
  implementation of strategies and the
  accomplishment of key operating objectives?
• Check 3 -- Does the design support core
  technologies and allow them to be used to best
  advantage?
• Check 4 -- Can the design handle changes in
  organizational size and different stages in the
  organizational life cycle?
• Check 5 -- Does the design support and empower
  workers and allow their talents to be used to
  best advantage?

11.1
18
Major Issues in Subsystems Design

• Basics of subsystem design
• Subsystem
• A department or work unit headed by a manager.
• Operates as a smaller part of the larger
  organization.
• Ideally, each subsystem supports other
  subsystems, working toward interests of entire
  organization.

19
Subsystem Differences

• Time Orientation
• Planning action horizons of managers vary from
  short to long term
• Objectives
• Different tasks assigned to work units may also
  result in difference in objectives
• Interpersonal Orientation
• Harder for personnel from different subsystems to
  work together
• Formal Structure
• Differences in working in an organic versus
  mechanistic setting

20
Subsystems Design Integration
Sales Division
R D Division
Manufacturing Division
deals with
deals with
deals with
Scientific subenvironment
Manufacturing subenvironment
Marketing subenvironment
and emphasizes
and emphasizes
and emphasizes

• Cost efficiency
• Short time horizons
• Mechanistic
• structures

• Product quality
• Longtime horizons
• Organic structures

• Customer satisfaction
• Short time horizons
• Mechanistic structures

21
How to Improve Subsystems Integration

• Rules and procedures -- Clearly specify required
  activities.
• Hierarchical referral -- Refer problems to a
  common superior.
• Planning -- Set targets that keep everyone headed
  in the same direction.
• Direct contact -- Have subunit managers
  coordinate directly.
• Liaison roles -- Assign coordinators to link
  subunits together.
• Task forces -- Form temporary task forces to
  coordinate activities and solve problems on a
  timetable.
• Teams -- Form permanent teams with the authority
  to coordinate and solve problems over time.
• Matrix organizations -- Create a matrix structure
  to improve coordination on specific programs.

11.2
22
Work Process Design

• A work process is a related group of tasks that
  together create value for the customer

23
How to Reengineer the Core Process

• Identify the core processes
• Map the core processes in respect to workflows.
• Evaluate all tasks for the core processes.
• Search for ways to eliminate unnecessary tasks or
  work.
• Search for ways to eliminate delays, errors and
  misunderstandings.
• Search for efficiencies in how work is shared and
  transferred among people and departments.

24
Managing the Tight / Loose Dilemma
Organizations must be Tight and focused around
objectives and values.
Organizations must also be Loose but
disciplined in actions and contributions .
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High Performance Organizational Designs
Objectives Values
TIGHT and Focused

• What it takes
• shared purpose
• clear goals
• talent
• accountability

26
High PerformanceOrganizational Designs

• Support needed
• teamwork
• participation
• decentralization
• freedom
• accountability

Actions Contributions
LOOSE but Disciplined
27
High PerformanceOrganizational Designs
Objectives Values
TIGHT and Focused
Actions Contributions
LOOSE but Disciplined
28
Chapter 11 Review

• What are the essentials of organizational design?
• How do contingency factors influence organization
  design?
• What are the major issues in subsystems design?
• How can work processes be reengineered?