Organizational Design

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Organizational Design

• Ch. 9

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Topics

• What are the basic building blocks of
  organizational design?
• What are the different ways we can design overall
  organizational structures?
• What are the different ways that we can think
  about organizational processes (how work flows
  within and between organizations)?
• Intra-organizational Processes (within the
  company)
• Inter-organizational Processes (between companies)

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Basic Building Blocks

• Departmentalization
• Authority
• Chain of command
• Line and staff authority
• Delegation of authority
• Centralization/decentralization of decision
  making
• Job design

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Departmentalization
Subdividing work and workers into separate
organizational units that take responsibility
for completing particular tasks
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Functional Departmentalization
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Functional Departmentalization

• Work done by highly skilled specialists
• Lowers costs through reduced duplication
• Communication and coordination problems are
  lessened

• Cross-department coordination can be difficult
• May lead to slower decision making
• Produces managers with narrow experiences

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Product Departmentalization
(Partial Listing of Products)
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Product Departmentalization

• Duplication of activities
• Difficult to coordinate across product departments

• Managers specialize, but have broader
  experiences
• Easier to assess work-unit performance
• Decision-making is faster

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Customer Departmentalization
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Customer Departmentalization

• Focuses on customer needs
• Products and services tailored to customer needs

• Duplication of resources
• Difficult to coordinate across customer
  departments
• Efforts to please customers may hurt the company

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Geographic Departmentalization
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Geographic Departmentalization

• Responsive to the demands of different market
  areas
• Unique resources located close to the customer

• Duplication of resources
• Difficult to coordinate across geographic
  departments

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Matrix Departmentalization
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Matrix Departmentalization

• Requires high levels of coordination
• Conflict between bosses
• Requires high levels of management skills

• Efficiently manage large, complex tasks
• Effectively carry out large, complex tasks

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Modular Organizations
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Modular Organizations

• can cost less to run thantraditional
  organizations
• lets organizations focuson core competencies

• loss of control from outsourcing
• may reduce their competitive advantage

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Virtual Organizations
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Virtual Organizations

• let companies share costs
• fast and flexible
• being the best shouldprovide better products

• difficult to control the quality of partners
• requires tremendous management skills

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Ruth needs to re-organize her research staff.
She is considering using ____________ because it
lowers costs by reducing duplication.

• Product
• Geographic
• Matrix
• Customer
• Process

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Organizational Authority
Brightcove LA Cops
Authority is the right to give commands, take
action, and make decisions to achieve
organizational objectives.
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(No Transcript)
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Chain of Command

• The vertical line of authority in an organization
• Clarifies who reports to whom
• Unity of command
• workers report to only one boss
• prevents confusion
• matrix organizations violate this principle

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Line versus Staff Authority

• Line authority
• the right to command immediate subordinates in
  the chain of command
• an activity that contributes directly to profit
  generation
• Example Plant manager
• Staff authority
• the right to advise but not command others
• an activity that supports profit generation
• Example Assistant Strategic Planning Manager

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Microsoft, 2005
Chairman Bill Gates
Technical Strategy SVP Eric Rudder
CEO Steve Ballmer
Network Distribution SVP Ray Ozzie
Platform Products Services President Jim
Allchin Kevin Johnson
Business Division President Jeff Raikes
Entertainment Devices President Robbie Bach
Horizontal coordination
Vertical chain of command
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Delegation of Authority

• The assignment of direct authority and
  responsibility to a subordinate

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How to Delegate Better

• Trust your staff to be a good job
• Avoid seeking perfection
• Give effective job instructions
• Know your true interests
• Follow up on progress.
• Praise the efforts of your staff.
• Dont wait to the last minute to delegate.
• Ask questions, expect answers, assist employees.
• Provide the resources you would provide if doing
  assignment yourself.
• Delegate to the lowest possible level.

Theory Y managers will delegate Theory X
managers will not delegate
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Degree of Centralization

• Centralization of authority
• primary authority is held by upper management
• Decentralization
• significant authority is found in lower levels of
  the organization

Centralization of decision making determines the
level at which significant organizational
decisions are made
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Which of the following is a mistake in delegating
responsibilities?

• Having trust in ones staff
• Giving clear instructions on the delegated
  activity
• Giving staff complete freedom with the task and
  not requiring progress reports
• Provide all the resources you would have yourself
  to do the job
• All of the above are mistakes.

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Job Design

• Job design is the number, kind, and variety of
  tasks that individual workers perform in doing
  their jobs

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Different Ways to Design Jobs

• Job Specialization
• Breaking jobs into small tasks
• Jobs are simple, easy to learn, and economical
• Job Rotation
• Periodically moving workers from one specialized
  job to another
• Job Enlargement
• Increasing the number of tasks performed by a
  worker
• Job Enrichment
• Adding more tasks and authority to an employees
  job

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Job Characteristics Model

• A job redesign approach that seeks to increase
  employee motivation
• Emphasizes internal motivation
• experience work as meaningful
• experience responsibility for work outcomes
• knowledge of results

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Job Design Techniques that Increase Motivation
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Job Characteristics Model
High Internal Work Motivation High-quality Work
Performance High Satisfaction with Work Low
Absenteeism Turnover
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Which of the following is a good way to enrich a
job?

• Develop specialized tasks for only one employee
  to do
• Have employees deal directly with the clients
• Change employees schedules
• Pay more money to employees for doing routine
  tasks
• Allow employees to take time off for personal
  activities

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Reengineering Jobs

• The fundamental rethinking and radical redesign
  of business processes
• Intended to achieve dramatic improvements in
  performance
• Change the orientation from taking orders to
  satisfying the customer (internal or external)
• Changes focus from job to work flow
• Understanding how work flows uncovers how tasks
  are interdependent

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Reengineering and Task Interdependence
Example How does work flow in team projects?
Pooled Interdependence
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Reengineering and Task Interdependence
Sequential Interdependence
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Reengineering and Task Interdependence
Reciprocal Interdependence
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How has your BUS 340 team operated in terms of
work flow?

• Pooled interdependence
• Sequential interdependence
• Reciprocal interdependence
• Independent