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ORGANIZATIONAL

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Title: ORGANIZATIONAL


1
ORGANIZATIONAL THEORY DESIGN
?
?
?
?
?
?
2
Why Do We Have Organizations?
To Accomplish Something Goal
1.
It Takes More Than 1 Person
2.
3
Organizations
A system of roles and stream of activities to
accomplish shared purposes
Reason for existence
Produce something
Customers
4
Organizations
A system of roles and stream of activities to
accomplish shared purposes
We will start here
System of roles describes the structure
Stream of activities describes the process
5
Organizations
Designed and structured to coordinate activity
systems
  • Product of social action
  • Goal oriented
  • People system
  • Cultural system (values)
  • Information/Message processing system
  • Changing System

Linked to Environment
6
PERIODS OF HUMAN CULTURE
Agricultural 3,000BC - 1700AD
Industrial 1700 -present
Nomadic -3,000 BC
Third Wave 1960 - ?
Mechanical
Non-renewable Coal, Oil Electrical
Renewable People Animals Wood
Renewable
Energy Sources
Scientific Method Technology Electrical
Biology Social Sciences Genome
Science- Technology
Little Natural
None
Animals Wild Grains Fruit
?
Cultivation Domestication
Scientific Farming
Food Sources
Biological Foods
Large Industry Specialization Urban Societal
Interdependence
Settlements Self contained Centralized
Govt Church Distrib. systems
Work Ind. World Govt Information Net
Organization Culture
Nomadic unstable Family/Tribal Barter
Dr. Lee Jacokes Aquinas College
7
MANAGEMENT IDEAS
1961 Burns Stalker
1900-10 Taylor,Gilbreth
WW II
1965 Woodward
1938 Barnards Functions of the Executive
1967 Lawrence Lorsch
Contingency Theory
1925 Fayol
Administrative
1900 1920 1940 1960
1980 2000
Scientific Management
Management Science
Organizational Theory
Organizational Behavior
1927 Hawthorne
1960 McGregor
March and Simons Organization
Systems
Rational
Behavioral
8
SYSTEMS
  • A system can be conceived as a collection of
    individual parts which collectively relate
    together in some manner to accomplish some
    objective(s) or tasks(s) which could not be
    accomplished by the individual elements working
    separately

Any Level
Quantum Atomic Molecular Biological
Organic Social Cosmological ????
9
The Basic Elements of a System
Environment
Transformation Process
Outputs
Inputs
Feedback
10
SIMPLE SYSTEM
Closed System
wires (communication network)
Open System
Battery
11
BASIC COMPONENTS OF ANY SYSTEM
System has an objective which can be accomplished
by interaction of the system sub-units
An energy source to drive system
An energy conversion process to produce the
objective
Transformation Process
A communication network between system units
12
ADDITIONAL CHARACTERISTICS
Time
  • Cycle of Events

Patterns
Repeat
  • Entropy

Loss of energy
Movement toward disorganization death
  • Information input

Feedback/Inputs Coding process
13
ADDITIONAL CHARACTERISTICS
  • The Steady State Dynamic Homeostasis

Consistent energy exchange
System will attempt to maintain/restore steady
state
But constantly changing in reaction to
environment
Driving Forces
Growth - quantitative qualitative
Adaptation to environment
Acquisition from environment
14
ADDITIONAL CHARACTERISTICS
  • Differentiation

Movement toward increasing complexity and
specialization
  • Integration coordination

Norms Values
Differentiation countered by process to unify
system
  • Equifinality

Multiple paths from initial conditions to final
objective
15
Thats it for today
On to groups
16
ORGANIZATIONAL THEORY DESIGN
?
?
?
?
?
?
17
The Basic Elements of a System
Environment
Transformation Process
Outputs
Inputs
Feedback
18
Basic Process of Open Systems

Throughput
Transformation Process
Secure input
Distribute output
(Energy
19
Subsystems of Organizations

Task accomplishment energy transformation with
in the organization
Production Subsystem
Secure input
Distribute output
(Energy
20
Subsystems of Organizations
Marketing Public relations Sales Govt

Major focus Transactional exchanges at system
boundaries
Procurement Waste disposal
Boundary spanning
Boundary spanning
Production Subsystem
Secure input
Distribute output
(Energy
21
Subsystems of Organizations
Intelligence R D Planning

Adaptive Subsystems Monitor Feedback
Boundary spanning
Boundary spanning
Production Subsystem
Secure input
Distribute output
(Energy
22
Subsystems of Organizations

Adaptive Subsystems Monitor Feedback
Primary Systems
Boundary spanning
Boundary spanning
Production Subsystem
Secure input
Distribute output
(Energy
23
Subsystems of Organizations
Planning Organizing Leading Controlling

Management Subsystem
Adaptive Subsystems Monitor Feedback
Primary Systems
Boundary spanning
Boundary spanning
Production Subsystem
Secure input
Distribute output
(Energy
24
Subsystems of Organizations
Mediating demands to keep structure operating

Management Subsystem
Adaptive Subsystems Monitor Feedback
Maintenance Subsystem
Primary Systems
Boundary spanning
Boundary spanning
Production Subsystem
Secure input
Distribute output
(Energy
25
Subsystems of Organizations
Assess Markets

Assess Technology
Management Subsystem
Adaptive Subsystems Monitor Feedback
Maintenance Subsystem
Etc.
Collateral Subsystems
Primary Systems
Boundary spanning
Boundary spanning
Production Subsystem
Secure input
Distribute output
(Energy
26
Subsystems of Organizations
Assess Markets
Primary Subsystems
Management Subsystem
Assess Technology
Adaptive Subsystems Monitor and Feedback
Maintenance Subsystem
Etc.
Collateral Subsystems
Boundary spanning
Boundary spanning
Production Subsystem
Secure Inputs
Distribute outputs
(Energy
27
Social Systems
  • Human beings tied into roles which lead to some
    defined objectives or purpose
  • The structuring of events or happenings rather
    than physical parts
  • Contrived systems of complex social behaviors
    (roles)
  • Held together by Psychological Cement
  • attitudes, beliefs, motivations, habits,
    expectations.etc.

28
Chapter Two
  • Strategy,
  • Organization Design,
  • and Effectiveness

29
STRATEGY
  • Insight into
  • how to
  • create value

30
STRATEGIC MANAGEMENT
  • managerial decisions and actions that determine
    the long-run performance of a corporation

Emphasizes monitoring and evaluating environment
(external)
(external)
31
STRATEGIC MANAGEMENT MODEL
Environmental Scanning Strategy Formulation
Strategy Implementation Evaluation and
Control
32
Strategic Management Process
  • Evaluate
  • Current
  • Mission
  • Goals
  • Strategies

33
Scan External Environment
  • Evaluate
  • Current
  • Mission
  • Goals
  • Strategies

Scan Internal Environment
34
(No Transcript)
35
  • Identify
  • Strategic
  • Factors
  • Opportunities
  • Threats

Scan External Environment
SWOT Analysis
  • Evaluate
  • Current
  • Mission
  • Goals
  • Strategies
  • Identify
  • Strategic
  • Factors
  • Strengths
  • Weaknesses

Scan Internal Environment
36
SWOT ANALYSIS
STRENGTHS WEAKNESSES
are within the organization itself and not
usually within the short run control of
management
37
SWOT ANALYSIS
STRENGTHS WEAKNESSES
are within the organization itself and not
usually within the short run control of
management
OPPROTUNITIES THREATS
are outside the organization, general factors
and trends in the societal environmental and
specific factors in the task/industry
environment
38
SWOT ANALYSIS
Internal
STRENGTHS WEAKNESSES
are within the organization itself and not
usually within the short run control of
management
4-6 of each
OPPROTUNITIES THREATS
External
are outside the organization, general factors
and trends in the societal environmental and
specific factors in the task/industry
environment
39
  • Identify
  • Strategic
  • Factors
  • Opportunities
  • Threats

Scan External Environment
  • Formulate
  • Strategy
  • Corporate
  • Business
  • Evaluate
  • Current
  • Mission
  • Goals
  • Strategies
  • Define New
  • Mission
  • Goals
  • Identify
  • Strategic
  • Factors
  • Strengths
  • Weaknesses

Scan Internal Environment
40
Formulating Corporate Strategy
What Business Should We Be IN?
41
GENERIC CORPORATE STRATEGIES
GROWTH STABILITY RETRENCHMENT
42
GENERIC CORPORATE STRATEGIES
GROWTH (p. 134) Vertical Integration Horizon
tal Integration Related Diversification
(Concentric) Unrelated Diversification
(Conglomerate)
43
GENERIC CORPORATE STRATEGIES
STABILITY(p.143) Pause/ Proceed with Caution No
Change RETRENCHMENT(p. 185-188) Turnaround Divestm
ent Liquidation
44
Formulating Business/Competitive Strategy
How Will We Compete?
45
Porter's Competitive Strategies
  • Differentiation
  • Cost Leadership
  • Focus.

46
Porters Competitive Strategies
47
Porters Competitive Strategies
48
Porters Competitive Strategies
49
Porters Competitive Strategies
Competitive advantage
Differentiation
Low Cost
Low-cost Leadership
Differentiation
Broad
Competitive Scope
GoFly Ltd.
Starbucks.
Focused Differentiation
Focused Low-cost Leadership
Narrow
Enterprise Rent-a-car
Edward Jones Investments
50
  • Identify
  • Strategic
  • Factors
  • Opportunities
  • Threats

Scan External Environment
  • Implement
  • Strategy via
  • Changes in
  • Structure
  • Culture
  • Leadership
  • Human
  • Resources
  • Information
  • and Control
  • Systems
  • Formulate
  • Strategy
  • Corporate
  • Business
  • Evaluate
  • Current
  • Mission
  • Goals
  • Strategies
  • Define New
  • Mission
  • Goals
  • Identify
  • Strategic
  • Factors
  • Strengths
  • Weaknesses

Scan Internal Environment
51
Top Management Role in Organization Direction,
Design, and Effectiveness
External Environment
Organization Design
Opportunities Threats Uncertainty Resource
Availability
Structural Form learning vs.
efficiency Information and control
systems Production technology Human resource
policies, incentives Organizational
culture Interorganizational linkages
Effectiveness Outcomes
Strategic Management
CEO, Top Management Team
Define mission, official goals
Select operational goals, collaborative strategies
Resources Efficiency Goal attainment Stakeholders
Competing values
Internal Environment
Strengths Weaknesses Distinctive
competence Leadership Style Past Performance
52
Approaches to the Measurement of Organizational
Effectiveness
External Environment
Organization Internal activities and processes
Resource Inputs
Product and Service Outputs
System resource approach
Internal process approach
Goal approach
53
Four Models ofEffectiveness Values
STRUCTURE
Flexibility
Human Relations Model Goal values human
resource
development Subgoals cohesion, morale,
training
Open Systems Model Goal values growth,
resource
acquisition Subgoals flexibility, readiness,
external evaluation
F O C U S
Internal
External
Internal Process Model Goal values stability,
equilibrium Subgoals information management,
communication
Rational Goal Model Goal values growth,
resource
acquisition Subgoals flexibility, readiness,
external evaluation
Control
54
Effectiveness Valuesfor Two Organizations
STRUCTURE
Goal values growth,
resource acquisition Subgoals flexibility,
readiness, external
evaluation
FLEXIBILITY
Human Relations Model
Open Systems Model
Goal values human resource
development Subgoals
cohesion, morale, training
F O C U S
INTERNAL
EXTERNAL
Internal Process Model
Rational Goal Model
Goal values productivity, efficiency,
profit
Subgoals planning, goal setting
Goal values stability, equilibrium Subgoals
information management,
communication
CONTROL
55
Reported Goalsof U.S. Corporations
Goal Corporations
Profitability 89 Growth 82 Market
Share 66 Social Responsibility 65 Employee
welfare 62 Product quality and
service 60 Research and development 54 Diversifica
tion 51 Efficiency 50 Financial
stability 49 Resource conservation 39 Management
development 35
Source Adapted from Y. K. Shetty, New Look at
Corporate Goals, California Management Review
22, no. 2 (1979), pp. 71-19.
56
FactorsAffecting Organization Design
Technology

57
FactorsAffecting Organization Design
Technology

58
FactorsAffecting Organization Design
Technology

59
(No Transcript)
60
Culture
  • The pattern of basic assumptions that a given
    group has invented, discovered or developed in
    learning to cope with external adaptation or
    internal integration

61
Culture
  • The pattern of basic assumptions that a given
    group has invented, discovered or developed in
    learning to cope with external adaptation or
    internal integration

62
Culture
  • The pattern of basic assumptions that a given
    group has invented, discovered or developed in
    learning to cope with external adaptation or
    internal integration

63
Culture
  • The pattern of basic assumptions that a given
    group has invented, discovered or developed in
    learning to cope with external adaptation or
    internal integration

64
Culture
  • The pattern of basic assumptions that a given
    group has invented, discovered or developed in
    learning to cope with external adaptation or
    internal integration

65
Culture
Shared
Unwritten
Taught
  • The pattern of basic assumptions that a given
    group has invented, discovered or developed in
    learning to cope with external adaptation or
    internal integration

Thought Process
Held deeply, can be hard to determine
66
Organizational Culture
  • Some of the Definitions of Culture
  • Symbols, language, ideologies, rituals, and
    myths.
  • Organizational scripts derived from the personal
    scripts of the organizations founder(s) or
    dominant leader(s).
  • Is a product is historical is based upon
    symbols and is an abstraction from behavior and
    the products of behavior.

67
Organizational Culture and its Effects
Since organizational culture involves shared
expectations, values, and attitudes, it exerts
influence on individuals, groups, and
organizational processes.
Huge
68
Levels of Corporate Culture
Observable Symbols Ceremonies, Stories,
Slogans, Behaviors, Dress, Physical Settings
Underlying Values, Assumptions, Beliefs,
Attitudes, Feelings
69
Levels of Corporate Culture
Visible but often not decipherable
Artifacts - Observables architecture, behavior,
slogans, logos
Surface
Rites, Stories
Greater level of awareness
Values - shared by members,
reflected symbol-language
Loyalty
Subsurface
Purpose of life
Deep below surface
Basic Assumptions hard even for
members to detect without focus inquiry
Taken for granted invisible preconscious
70
Scheins Three-Layer Organizational Model
Surface
- Technology - Art - Visible and audible
behavior patterns
Examples of Cultural Attributes
I Artifacts and Creations
- Documents - Physical layouts - Furnishings -
Language - Jargon - Work ethic and practice -
Loyalty - Commitment - Helping others
Subsurface
- Testable in the physical environment -
Testable by social consensus
II Values
Deep below surface
- Relationship to environment - Nature of
reality, time, and space - Nature of human
nature, activity, relations
III Basic Assumptions
71
Artifacts and Creations, Values, and Basic
Assumptions
I - Artifacts and Creations
II - Values
III - Basic Assumptions
- Relationship to environment - Nature of
reality, time, and space - Nature of human
nature - Nature of human activity - Nature of
human relations
- Technology - Art - Visible and audible
behavior patterns
- Testable in the physical environment -
Testable by social consensus
72
Visible Manifestations
  • Symbols
  • Stories
  • Heroes
  • Slogans
  • Ceremonies

73
Values and Norms That Govern Behavior
  • Symbols are objects, acts, or events that convey
    meaning
  • Stories are narratives based on true events that
    are repeated and shared
  • Hero is a figure who exemplifies the deeds,
    character, and attributes of the organization

74
Values and Norms That Govern Behavior
  • Slogan a phrase or sentence that expresses a
    key organizational value
  • Ceremony planned activity that makes up a
    special event and is conducted for the benefit of
    an audience on special occasions.

75
Ceremonies
  • Reinforce valued accomplishments
  • Create a bond among participants by sharing an
    important event
  • Anoint and celebrate heroes.

76
Characteristics of Culture at Walt Disney
Disney uniforms
Shared Things
Shared Sayings
Good Mickey
Disney Culture
Smiling
Pride
Shared Behavior
Shared Feelings
77
Relationship of Environment and Strategy to
Corporate Culture
Needs of the Environment
Flexibility
Stability
External
Adaptability/ Entrepreneurial Culture
Mission Culture
Strategic Focus
Clan Culture
Bureaucratic Culture
Internal
78
Changing Culture Intervention Points
Hiring and socialization of members who fit in
with the culture
Removal of members who deviate from the culture
Culture
Behavior
Cultural communication
Justification of behavior
Managers seeking to create culture change must
intervene at these points
79
Socialization and Culture
  • Socialization
  • Socialization is the process by which
    organizations bring new employees into the
    culture.
  • Mentoring

80
Symbolic Leaders Influences
  • Articulates a vision for organization culture.
  • Heeds the day-to-day activities that reinforce
    the cultural vision.

81
Symbolic Leadership Works Because
  • Employees learn what is valued most in a company
    by the attitudes and behaviors of management.
  • Simply stated, executives are watched by
    employees.

82
  • Heroes, Rituals Stories Examples, purpose
  • Culture is pervasive, it is the expression of the
    real values of the organization and is
    represented in the stories they tell to the
    public, and more importantly, to each other. The
    heroes the organization chooses to create and the
    rituals (formal and informal) it maintains can
    illustrate both the formal culture (that which
    management would like to exist) and the informal
    culture (what actually exists in employees mind
    and behavior) and "fit. How well they support
    each other or clash.
  • When the informal culture supports and is in sync
    with the formal culture, there is a benefit to
    all parties. A clash can cause problems,
    sometimes severe at the individual and
    organizational levels.
  • Practice application Your Organization (25 min
    reflection time optional)
  • 1. Brainstorm the heroes (past 18 months)
    acknowledged, celebrated (5 min)
  • 2. Brainstorm "rituals" (past 18 months) (5
    min)
  • 3. Reflection In your groups, how does or
    doesnt it reflect the attitudes and behaviors
    your org. is trying to promulgate (15 min)

83
  • Heroes, Rituals Stories Examples, purpose
  • 1. Brainstorm the heroes (past 18 months)
  • acknowledged, celebrated (5 min)
  • 2. Brainstorm "rituals" (past 18 months) (5 min)
  • 3. Reflection In your groups, how does or
    doesnt it reflect
  • the attitudes and behaviors your org. is
    trying to
  • promulgate (15 min)

84
Thats it for today
On to groups
85
Fundamentals ofOrganization Structure

86
What a Difference a Century Can MakeContrasting
views of the corporation
  • CHARACTERISTIC 20TH CENTURY 21ST CENTURY
  • ORGANIZATION The Pyramid The Web / Network
  • FOCUS Internal External
  • STYLE Structured Flexible
  • SOURCE OF STRENGHT Stability Change
  • STRUCTURE Self-sufficiency Interdependencies
  • RESOUCES Atoms-physical assets Bits-information
  • OPERATIONS Vertical integration Virtual
    integration
  • PRODUCTS Mass production Mass customization
  • REACH Domestic Global

DATA BUSINESS WEEK
87
What a Difference a Century Can MakeContrasting
views of the corporation
  • CHARACTERISTIC 20TH CENTURY 21ST CENTURY
  • FINANCIALS Quarterly Real time
  • INVENTORIES Months Hours
  • STRATEGY Top-down Bottom-up
  • LEADERSHIP Dogmatic Inspirational
  • WORKERS Employees Employees/free agents
  • JOB EXPECTIONS Security Personal growth
  • MOTIVATION To compete To build
  • IMPROVEMENTS Incremental Revolutionary
  • QUALITY Affordable best No compromise

DATA BUSINESS WEEK
88
Approaches to Organizational Design Process
  • Emergent process

Catching the Jellyfish
Partial control, Multiple participants, Dynamic
Timing critical
Proactive, Rational
Do it as we planned
Control, Reengineering
Reactive, Constrained
When forced to
Organizational and Environmental constraints
determine design
89
Organizational Departments Differentiate to Meet
Needs of Sub-environments
President
R D Division
Sales Division
Manufacturing Division
Market Sub-environment Customers
Advertising Competitors agencies Distribution sys
tem
Manufacturing Sub-environment Labor Raw
Suppliers materials Production equipment
Scientific Sub-environment Scientific
Research journals centers Professional a
ssociations
90
Differences in Goals and Orientations Among
Organizational Departments
Characteristic R D Department Manufacturing Department Sales Department
Goals New developments, quality Efficient production Customer satisfaction
Time Horizon Long Short Short
Interpersonal Orientation Mostly task Task Social
Formality of Structure Low High High
Source Based on Paul R. Lawrence and Jay W.
Lorsch, Organization and Environment (Homewood,
Ill. Irwin, 1969), pp. 23-29.
91
The External Environment
  • All elements existing outside the organizations
    boundaries that have potential to affect the
    organization

92
(No Transcript)
93
An Organizations Environment
International Context
  • (a) Competitors, industry size and
  • competitiveness, related issues
  • (b) Suppliers,
  • manufacturers, real
  • estate, services
  • (c) Labor market,
  • employment agencies,
  • universities, training
  • schools, employees
  • in other companies,
  • unions
  • (d) Stock markets,
  • banks, savings and
  • loans, private
  • investors
  • (e) Customers, clients,
  • potential users of products
  • and services
  • (f) Techniques of production, science,

(g) Recession, unemployment rate, inflation rate,
rate of investment, economics, growth (h) City,
state, federal laws and regulations,
taxes, services, court system, political
processes (i) Age, values, beliefs, education,
religion, work ethic, consumer and
green movements (j) Competition from and
acquisition by foreign firms, entry into
overseas markets, foreign customs,
regulations, exchange rates
(j) International Sector
(a) Industry Sector
DOMAIN
(b) Raw Materials Sector
(i) Socio-cultural Sector
(h) Government Sector
(c) Human Resources Sector
ORGANIZATION
(d) Financial Resources Sector
(g) Economic Conditions Sector
(e) Market Sector
(f) Technology Sector
94
  • The environment

creates uncertainty for organizational managers
95
External Environment and Uncertainty

High Uncertainty
High
Rate of Change in Factors in Environment
Low Uncertainty
Low
High
Number of Factors in Environment
96
Two Strategies for Coping with High Uncertainty
  • 1. Adapt the organization to the changes in the
    environment
  • 2. Influence the environment to make it more
    compatible with organizational needs.

97
Forces Reducing Organization Variability
  • Environmental Pressures
  • Shared values and expectations (Culture)
  • Rules / Procedures
  • Rewards
  • Intrinsic rewards-- receives from the
    process of performing an action.
  • Extrinsic rewards--given by another person

Internal
Doing
External
98
Adapting to the Environment
  • Boundary-Spanning
  • detect process information about changes in the
    environment
  • represent the organizations interest
  • Forecasting Planning
  • effort to spot trends
  • techniques used range from quantitative to
    newspapers
  • Flexible Structure
  • loose flexible structure works best when risk of
    uncertainty is great
  • Mergers Joint Ventures

Preparing the organization for the environment
99
Classical Principles 0f Organizational Structure
FIGURE 4-3
  • 1. Division of Labor. Classical theory prescribed
    narrowly specialized jobs to increase economic
    efficiency. Narrow specialization enables persons
    performing a task to become experts in a
    relatively short time, thus reducing training and
    recruiting costs.
  • 2. Standardization of Tasks. Defining task
    methods standardizes performance, thereby
    improving coordination and making the flow of
    work between specialized tasks more predictable.
  • 3. Hierarchy of Authority. In classical theory,
    exceptional cases that are not covered by
    standardized rules are handled by a hierarchy of
    authority. A pyramid of supervisory positions,
    with each higher level becoming responsible for
    coordinating the activities beneath it, is
    created to resolve conflicts, reallocate work,
    and discipline uncooperative workers.
  • 4. Equal Authority and Responsibility. Classical
    theory states that no manager should be held
    responsible for accomplishing a task unless he or
    she is given the authority to see that it gets
    done. Granting managers the authority to make
    decisions on certain matters justifies holding
    them responsible for achieving results in those
    areas.
  • 5. Unity of Command. No employee shall report to
    more than one supervisor. Adherence to this
    design principle assures unbroken lines of
    authority and a pyramidal shape to organization
    charts. Unity of command eliminates the
    possibility of conflicting orders from different
    supervisors.
  • 6. Limited Span of Control. In a hierarchical
    organization, the number of persons reporting to
    a supervisor is called the span of control. By
    limiting the span of control to relatively small
    numbers, usually not exceeding seven, the
    classical school prescribed close supervision and
    tight coordination of lower-level activities.
  • 7. Separation of Line and Staff. Classical theory
    recognized that supervisors do not always have
    the information needed to resolve exceptional
    cases coming to their attention. To deal with
    this problem, classical theory prescribed making
    expert "staff advice available to the manager. A
    staff position in classical theory is defined as
    one that can only give advice to a "line"
    manager. The line manager retains the formal
    authority to decide what to do with staffs
    advice.
  • 8. Decentralization. The principle of
    decentralization is to locate decision authority
    at as low a level as possible without losing
    control. In practice this means delegation of
    routine matters and the centralization of more
    important decisions.

100
Mechanistic Structure
  • Tasks are broken down into specialized, separate
    parts.
  • Tasks are rigidly defined.
  • There is a strict hierarchy of authority and
    control, and there are many rules.
  • Knowledge and control of tasks are centralized at
    the top of the organization.
  • Communication is vertical.

101
Organic Structure
  • Employees contribute to the common task of the
    department.
  • Tasks are adjusted and redefined through
    teamwork.
  • There is less hierarchy of authority and control,
    and there are few rules.
  • Knowledge and control of tasks are located
    anywhere in the organization.
  • Communication is horizontal.

102
Environmental Uncertainty and Organizational
Responses
UNSTABLE
High-Moderate Uncertainty
High Uncertainty
1. Organic structure, teamwork
participative, decentralized 2. Few departments,
much boundary spanning 3. Few integrating
roles 4. Planning orientation
1. Organic structure, teamwork
participative, decentralized 2. Many departments
differentiated, extensive boundary
spanning 3. Many integrating roles 4.
Extensive planning, forecasting
ENVIRONMENTAL CHANGE
Uncertainty
Low Uncertainty
Low-Moderate Uncertainty
1. Mechanistic structure formal,
centralized 2. Few departments 3. No
integrating roles 4. Current operations
orientation
1. Mechanistic structure formal,
centralized 2. Many departments, some boundary
spanning 3. Few integrating roles 4. Some
Planning
STABLE
SIMPLE
COMPLEX

ENVIRONMENTAL COMPLEXITY
103
Governing PrinciplesW.L. Gore Associates
Everyone will
  • 1. Try to be fair .Sincerely strive to be fair
    with each other, our suppliers, our customers,
    and all persons with whom we carry out
    transactions.
  • 2. Allow, help and encourage his associates to
    grow in knowledge, skill, scope of
    responsibility, and range of activities.
  • 3. Make his own commitments -and keep them.
  • 4. Consult with his Associates before taking
    actions that might be below the waterline" and
    cause serious damage to the Enterprise.

104
Four Points Aboutthe Organization Chart
Visual representation
Set of formal tasks
Formal reporting relationships
Framework for vertical control
105
A Sample Organization Chart
106
The Relationship of Organization Design to
Efficiency vs. Learning Outcomes
Horizontal Organization Designed for Learning
  • Horizontal structure is dominant
  • Shared tasks, empowerment
  • Relaxed hierarchy, few rules
  • Horizontal, face-to-face communication
  • Many teams and task forces
  • Decentralized decision making

Dominant Structural Approach
  • Vertical structure is dominant
  • Specialized tasks
  • Strict hierarchy, many rules
  • Vertical communication and reporting systems
  • Few teams, task forces or integrators
  • Centralized decision making

Vertical Organization Designed for Efficiency
107
Organization Chart
Workbook Activity
108
DepartmentalizationThe basis on which
individuals are grouped into departments
  • Five structural alternatives
  • Vertical functional approach. People are grouped
    together in departments by common skills.
  • Divisional approach. Grouped together based on a
    common product, program, or geographical region.
  • Horizontal matrix approach. Functional and
    divisional chains of command. Some employees
    report to two bosses.
  • Team-based approach. Created to accomplish
    specific tasks.
  • Network approach. Small, central hub
    electronically connected to their other
    organizations that perform vital functions.
    Departments are independent, and can be located
    anywhere.

109
The Relationship of Organization Design to
Efficiency vs. Learning Outcomes
Horizontal Organization Designed for Learning
  • Horizontal structure is dominant
  • Shared tasks, empowerment
  • Relaxed hierarchy, few rules
  • Horizontal, face-to-face communication
  • Many teams and task forces
  • Decentralized decision making

Dominant Structural Approach
  • Vertical structure is dominant
  • Specialized tasks
  • Strict hierarchy, many rules
  • Vertical communication and reporting systems
  • Few teams, task forces or integrators
  • Centralized decision making

Vertical Organization Designed for Efficiency
110
Approaches To Structural Design
111
Approaches To Structural Design
112
Approaches To Structural Design
113
Functional
Departments based on similar skills and resource
use.
President CEO
Deep expertise
Efficiency
Manufacturing
Accounting
Human Resources
Lack of innovation
Lack of communication
114
Strengths and Weaknesses of Functional
Organization Structure
  • WEAKNESSES
  • Slow response time to environmental changes
  • May cause decisions to pile on top, hierarchy
    overload
  • Leads to poor horizontal coordination among
    departments
  • Results in less innovation
  • Involves restricted view of organizational goals
  • STRENGTHS
  • Allows economies of scale within functional
    departments
  • Enables in-depth knowledge and skill development
  • Enables organization to accomplish functional
    goals
  • Is best with only one or few products

115
A Sample Organization Chart
116
Reorganization from Functional Structure to
Divisional Structure at Info-Tech
Functional Structure
Divisional Structure
117
Divisional
Self contained
Encourages decentralization
President CEO
Focus
Product Program Geography
Division 1
Division 2
HR
Man
Acct
HR
Man
Acct
Redundancy
118
Strengths and Weaknesses of Divisional
Organization Structure
  • STRENGTHS
  • Suited to fast change in unstable environment
  • Leads to client satisfaction because product
    responsibility and contact points are clear
  • Involves high coordination across functions
  • Allows units to adapt to differences in products,
    regions, clients
  • Best in large organizations with several products
  • Decentralizes decision-making
  • WEAKNESSES
  • Eliminates economies of scale in functional
    departments
  • Leads to poor coordination across product lines
  • Eliminates in-depth competence and technical
    specialization
  • Makes integration and standardization across
    product lines difficult

119
Structural Design Options for Grouping Employees
(Continued)
120
Structural Design Options for Grouping Employees
(Continued)
Horizontal Grouping
CEO
Finance
Human Resources
Core Process 1
Core Process 2
121
Geographical Structurefor Apple Computer
CEO Steve Jobs
122
A Horizontal Structure
Flexibility changes rapidly
Requires changes in culture
Directs the attention
Limits in-depth skill
Promotes a focus
Top Management Team
Determining core processes
Team 3
Team 2
Team 1
Process Owner
Customer
Testing
Product Planning
Research
Market Analysis
New Product Development Process
Reengineering Process
Team 3
Team 2
Team 1
Process Owner
Customer
Distrib.
Material Flow
Purchasing
Analysis
Procurement and Logistics Process
123
Teams Used for Horizontal Coordination at Rodney
Hunt Company
President
Engineering Vice Pres
Manufacturing Vice Pres
Marketing Vice Pres.
Water Control Equip. Chief Engineer
Water Control Equip. Sales Manager
Foundry General Supervisor
Machine Shop General Supervisor
Water Control Product Team
Textile Machinery Chief Engineer
Stainless Steel General Supervisor
Textile Machinery Domestic Sales Manager
Textile Product Team
Textile Machinery Export Manager
Customer Service, Purchasing, Production Manager
Shipping and Yard Supervisor
Advertising Manager
124
Strengths and Weaknesses of Horizontal Structure
  • STRENGTHS
  • Flexibility and rapid response to changes in
    customer needs
  • Directs the attention of everyone toward the
    production and delivery of value to the customer
  • Each employee has a broader view of
    organizational goals
  • Promotes a focus on teamwork and
    collaborationcommon commitment to meeting
    objectives
  • Improves quality of life for employees by
    offering them the opportunity to share
    responsibility, make decisions, and be
    accountable for outcomes
  • WEAKNESSES
  • Determining core processed to organize around is
    difficult and time-consuming
  • Requires changes in culture, job design,
    management philosophy, and information and reward
    systems
  • Traditional managers may balk when they have to
    give up power and authority
  • Requires significant training of employees to
    work effectively in a horizontal team environment
  • Can limit in-depth skill development

125
Matrix
One employee reports to 2 bosses at same time
Cross functional Teams
Innovative Creative
President CEO
Human Resources
Manufacturing
Accounting
Employee caught in Middle
Product 1
Product 2
Conflicting demands
Time
126
Matrix Structure forWorldwide Steel Company
Vertical Functions
Horizontal Functions
127
Project Manager Locationin the Structure
President
Finance Department Financial Accountant Budget A
nalyst Management Accountant
Engineering Department Product Designer Draftsp
erson Electrical Designer
Marketing Department Market Researcher Adverti
sing Specialist Market Planner
Purchasing Department Buyer Buyer Buyer
Project Manager New Product A
Project Manager New Product B
Project Manager New Product C
128
Matrix Approach
  • Functional and divisional chains of command
    simultaneously.
  • Dual lines of authority.
  • Functional hierarchy of authority runs
    vertically.
  • Divisional hierarchy runs laterally.
  • Violates the unity of command concept.

129
Strengths and Weaknesses of Matrix Organization
Structure
  • STRENGTHS
  • Achieves coordination necessary to meet dual
    demands from customers
  • Flexible sharing of human resources across
    products
  • Suited to complex decisions and frequent changes
    in unstable environment
  • Provides opportunity for both functional and
    product skill development
  • Best in medium-sized organizations with multiple
    products
  • WEAKNESSES
  • Causes participants to experience dual authority,
    which can be frustrating and confusing
  • Means participants need good interpersonal skills
    and extensive training
  • Is time consuming involves frequent meetings and
    conflict resolution sessions
  • Will not work unless participants understand it
    and adopt collegial rather than vertical-type
    relationships
  • Requires great effort to maintain power balance

130
Team
interacting closely shared commitment
Cross functional
True team mutual accountability
Faster response to change
Creativity
Time
High Maintenance
131
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132
Team Approach
  • Cross-functional teams consist of employees from
    various functional departments.
  • Interdisciplinary approach to management.
  • Permanent team solve ongoing problems.
  • Reengineering radical redesign for improvements
    in cost, quality, service and speed.

133
Linking Pin
134
Network
Subcontracts many functions to other companies
Virtual organization
Designer
Manufacturing
Best of the Breed
Changed quickly
Hub
Give up control
Human Resources
Marketing
135
Network Approach
  • Organization divides major functions into
    separate companies brokered by a small
    headquarters organization.
  • "Where is the organization?"
  • Especially appropriate for international
    operations.
  • Held together with phones, faxes, and other
    electronic technology.

136
Ladder of Mechanisms for Horizontal Linkage and
Coordination
Teams
H IGH
Full-time Integrators
Task Forces
Amount of Horizontal Coordination Required
Direct Contact
LOW
Information Systems
HIGH
LOW
Cost of Coordination in Time and Human Resources
137
Symptoms of Structural Deficiency
  • Decision making is delayed or lacking in quality
  • The organization does not respond innovatively to
    a changing environment
  • Too much conflict from departments being at cross
    purposes is evident

138
Task
20 min. For your groups assigned structure type
develop a list of the advantages and
disadvantages Under what conditions would it work
well Report responses back to class.
139
Hybrid StructurePart 1. Sun Petrochemical
Products
President
Technology Vice President
Financial Services Vice Pres.
Human Resources Director
Chief Counsel
Chemicals Vice President
Lubricants Vice President
Fuels Vice President
Sources Based on Linda S. Ackerman, Transition
Management An In-Depth Look at Managing
Complex Change, Organizational Dynamics (Summer
1982) 46-66 and Frank Ostroff, The Horizontal
Organization, (New York Oxford University
Press, 1999), Fig. 2.1, 34.
140
Hybrid StructurePart 2. Ford Customer Service
Division
Vice President and General Manager
Functional Structure
Human Resources
Strategy and Communication
Finance
Director and Process Owner
Teams
Teams
Parts Supply / Logistics Group
Director and Process Owner
Horizontal Structure
Teams
Teams
Vehicle Service and Programs Group
Director and Process Owner
Teams
Technical Support Group
Sources Based on Linda S. Ackerman, Transition
Management An In-Depth Look at Managing Complex
Change, Organizational Dynamics (Summer 1982)
46-66 and Frank Ostroff, The Horizontal
Organization, (New York Oxford University
Press, 1999), Fig. 2.1, 34.
141
The Relationship of Structure to Organizations
Need for Efficiency vs. Learning
Horizontal Structure
Matrix Structure
Divisional Structure
Functional with cross-functional teams,
integrators
Functional Structure
  • Horizontal
  • Coordination
  • Change
  • Learning
  • Innovation
  • Flexibility

Dominant Structural Approach
  • Vertical
  • Control
  • Efficiency
  • Stability
  • Reliability

142
Organization Contextual Variables that Influence
Structure
143
Organization StructureEvolution
144
Chapter Five
  • Interorganizational Relationships

145
Organizational Ecosystem
146
Changing Characteristics of Interorganizational
Relationships
Transparency
Traditional Orientation Adversarial
New Orientation Partnership
Trust, addition of value to both sides, high
commitment
Suspicion, competition, arms length
Equity, fair dealing, all profit
Price, efficiency, own profits
Electronic linkages to share key information,
problem feedback and discussion
Limited information and feedback
Mechanisms for close coordination, people on-site
Legal resolution of conflict
Involvement in partners product design and
production
Minimal involvement and up-front investment
Long-term contracts
Short-term contracts
Business assistance beyond the contract
Contract limiting the relationship
147
Key Characteristics of Traditional vs. Emerging
Inter-organizational Relationships
Transparency
Traditional
Emerging
Arms-length relationship Use of telephone,
mail, some EDI for ordering, invoicing, payments
Interactive, electronic relationship Electronic
ordering, invoicing, payments
Suppliers
Direct access to manufacturer, real-time
information exchange Electronic access to
product information, consumer ratings, customer
service data
Limited communication with manufacturer Mix of
phone response, mail hard copy information
Customers
148
Interorganizational Relationships
Organization Type
Dissimilar
Similar
Minimize dependence
Find Niche
Competitive
Resource Dependence
Population Ecology
Organization Relationship
Traditional
Sharing risks
Institutionalism
Collaborative Network
Cooperative
Legitimacy from environment
New Alternative
149
Elements in the Population Ecology Model of
Organizations
Variation
Selection
Retention
Large number of variations
Some organizations find a niche and survive
A few grow large become institutionalized
Experiments Mutations
Expand Ossification
Successful Thrive
150
Three Mechanisms for Institutional Adaptation
Professional standards
Copy
Normative
Coercive
Mimetic
External
Source Adapted from W. Richard
Scott, Institutions and Organizations (Thousand
Oaks, Calif. Sage, 1995).
151
Differences Between Large and Small Organizations
  • LARGE
  • Economies of scale
  • Global reach
  • Vertical hierarchy
  • Mechanistic
  • Complex
  • Stable market
  • Organization men
  • SMALL
  • Responsive
  • Flexible
  • Regional reach
  • Flat structure
  • Organic
  • Simple
  • Niche finding
  • Entrepreneurs

Source Based on John A. Byrne, Is Your Company
Too Big? Business Week, 27 March 1989, 84-94.
152
Approaches To Structural Design
ADVANTAGES PROBLEMS
Brazil
Russia
Japan
India
153
  • GOOD LUCK WITH
  • THE TEST

154
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