Management Ch. 15
Contextual Variables: Envrionment
- Anything outside the boundaries of an organizaiton - Task environment: part of the environment that is directly relevant to the organizaiton. -Environmental uncertainty: Amount and rate of change in the organizaiton's environment (semi-permeable nature of environment from Open-Systems view of firm from Ch. 1)
Ways to Approach the Organizational Design Process
- Establish desired level of each structural dimension on a high-to-low continuum. > Develop a structure that meets desired configuration - Describe what is or is not important to the success of the organization
Structural Dimensions
- Formalization: Degree to which the organizaiton has official rules, regulations, and procedures. - Centralization: Degree to which decisions are made at the top of the organization. - Specialization: Degree to which jobs are narrowly defined and depend on unique expertise. - Standardization: Degree to which work activities are accomplished in a routine fashion. - Complexity: Degree to which many different types of activities orrur in the organization. - Hierarchy of authority: Degree of vertical differentiation across levels of management. Note: some of these change as the organizaiton grows
Types of differentiation
- Horizontal: Degree of differentiation between organizational subunits. - Vertical: Differnece in authority and responsibility in the organizaitonal hierarchy. - Spatial: Geographical dispersion of an organization's offices, plants, and personnel.
Contextual Variables: Size
- Measured in number of employees. - Influences design options. - Formalizaiton, specialization, and standardizaiton are greater in larger organizations. > Formalization and specialization help large and growing organizaitions decentralize decision making. - As size increases, complexity increases.
Forces Reshaping Organizations: organizational life cycle, globalization, changes in information processing technologies, and high-performance work systems.
- Organizational Life Cycles (the differing stages of an organization's life from birth to death): {birth, growth, maturity, decline, death or revival}. As industries innovate or products become obsolete the organizaitonal structure must respond. - Globalizaiton: adds to the complexity of the organization due to differing cultures and complexity in the 3-forms of differentiation. - Changes in Information Processing: can result in flatter organization hierarchies, more decentralization, less specialization and standardization (i.e. more sophisticated jobs) - High-Performance Work Systems: the alignment of Human Resource practices that support evolving and dynamic organizational structures (ex: individual and team rewards systems that are flexible for those workers whose roles are variable across departments and work teams)
Key Organizational Design Processes: Integration
- Process of coordinating the different parts of an organization. - Effective integration helps keep the organization in a state of dynamic equilibrium. > Dynamic equilibrium is when all prats of an organization are interrelated and balanced. -Structural devices that can be used to achieve vertial linkages. > Hierarchical referral > Rules and procedures > Plans and schedules > Positions added to the organization structure > Management information systems - Horizontal integration mechanisms > Liaison roles > Task forces > Integrator positions > Teams
Contextual Variables: Strategy and Goals
- Provide: > Legitimacy to the organization > Employee direction > Decision guidelines > Criteria for performance - Help the organization fit into its environment through alignment of inputs, transformations, and outputs
Contectual Variables
- Set of four characteristics that influence the success of an organization's design. > Size, technology, environment, and strategy and goals - Provide a manager with key considerations for the right organizational design. - Do not determine the structure
Adhocracy: a selectively decentralized form of organization that emphasizes the support staff and mutual adjustment among people.
- Structural Configuration: Adhocracy - Prime Coordinating Mechanism: Mutual adjustment - Key Part of Organizaiton: Support staff - Type of Decentralization: Selective decentralization
Divisionalized form: a loosely coupled, composite structural configuration composed of divisions, each of which may have its own structural configuration.
- Structural Configuration: Divisionalized form - Prime Coordinating Mechanism: Standardization of outputs - Key Part of Organizaiton: Middle level - Type of Decentralization: Limited vertical decentralization
Machine bureaucracy: a moderately decentralized form of organizaiton that emphasized support staff differentiated from the line orperations of the organization, limited horizontal decentralization of decisionmaking, and a well-defined hierarchy of authority.
- Structural Configuration: Machine bureaucracy - Prime Coordinating Mechanism: Standardization of work processes - Key Part of Organizaiton: Technical staff - Type of Decentralization: Limited horizontal decentralization
Professional bureaucracy: a decentralized form of organization that emphasizes the expertise of the professionals in the operating core of the organization
- Structural Configuration: Professional bureaucracy - Prime Coordinating Mechanism: Standarization of skills - Key Part of Organizaiton: Operating level - Type of Decentralization: Vertial and horizontal decentralization
Simple structure: a centralized form of organization that emphasizes a small technical and support staff, strong centralization of decisionmaking in the upper echelon, and a minimal middle level.
- Structural Configuration: Simple structure - Prime Coordinating Mechanism: Direct supervision - Key Part of Organizaiton: Upper echelon - Type of Decentralization: Centralization
Factors That Adversly Affect the Organizational Structure
- Structural weakness caused by misalignment of open-systems components: > Delay in decision making due to information being funneled through too few channels. > Poor quality of decision making because the right people are not getting the right information. > Lack of innovative response to changing environment due to lack of coordination across departments. - Personality of chief executive > Dysfunctional combinations of personality and organization include paranoid, dramatic, depressive, compulsive, and schizoid.
Contextual Variables: Technology
- Tools, techiques, and actions used by an organization to transform inputs into outputs. - Main focus is on interdependence of organizational units, autonomy of workers, coordination of feedback, technology used by a group to control their strategy and goals (transformations from Open-Systems view of firm in Ch. 1)
Key Organizational Design Processes: Differentiation
-Deciding how to divide the work in an organization -Dimensions of differentiation: >Manager's goal orientation >Time orientation >Interpersonal orientation >Formality of structure
Define differentiation and integration as organizational design processes.
-Differentiation is the design process of breaking the organizational goals into tasks. Three different forms of differentiation are horizontal, vertical, and spatial. -Integration is the design process of linking the tasks together to form a structure that supports goal accomplishment. -Vertical linkage devices include hierarchical referral, rules and procedures, plans and scheduals, added positions, and management information systems. -The horizontal linkages are liaison roles, task forces, integrator positions, and teams.
Discuss the basic design dimensions managers must consider in structuring an organization.
Basic design dimensions combine to yield various structual configurations. Structure dimensions include the following: formalization, centralization, specialization, standardization, complexity, and hierarchy of authority. Levels of structural dimensions determine bureaucratic (high) or flexible and loose (low) organizations. Henry Mintsberg's alternative approach is to describe what is and is not important to the sucess of the organization;s unique set of circumstances.
Describe four contextual variables that influence organizational structure.
Four variables influence the success of an organization's design: size, technology, environment, and strategy and goals. These variables provide a manager with key considerations for the right organizational design. The amount of change in the contextual variables thorughout the life of the organization influences the amount of change needed in the basic dimensions of the organization's structure.
Describe five structural configurations for organizations.
Henry Mintsberg proposed five structural configurations: the simple structure, the machine bureaucracy, the professional bureaucracy, the divisionalized form, and the adhocracy. The five basic parts of the organizaiton, for Mintzberg, are the upper echelon, and/or strategic apex; the middle level, or middle line; the operation core; the technical staff, or technostructure; and the support staff. The organizaiton's goals and levels of differentiation, integration, and formalization determine the structural configuration.
Identify factors that can adversely affect organizatonal structure.
If organizational structure is out of alignment with its contextual variables, one or more of the following symptoms appears: delayed decision making, low quality decison making, non-response to changing environment, and interdepartmental conflict. Also, managers' perosnal cognitive biases and political ideologies affect their good judgment and decision-making abilities and may adversely affect the structure of the organization.
Identify and describe emerging organizational structures.
Network organizations are weblike structures that contract some or all of their operating functions to other organizations and then coordinate their activities through managers and other employees at their headquarters. Virtual organizations are temporary network organizations consisting of independent enterprises. The circle organization, crafted by Harley-Davidson in its drive to achieve teamwork without teams, is a more open system and an organic structure for customer responsiveness.
Explain the forces reshaping organizaitons
Several forces reshaping organizations are causing managers to go beyond the traditional frameworks and to examine ways to make organizations more responsive to customer needs. Some of these forces include shorter organizational life cycles, globalization, and rapid changes in information technology. These forces together increase the demands on process capabilities within the organization and emerging organizational structures. To successfully retain their health and vitality, organizations must function as open systems that are responsive to their task environment.
mechanistic structure
an organizational design that emphasizes structured activities, specialized tasks, and centralized decision making
environment
anything outside the boundaries of an organization.
technological interdependence
the degree of interrelatedness of the organization's various technological elements.
business model innovation
the innovative processes and rationale for how an organization ccreates, delivers, and captures value.
Organizational structure
the linking of departments and jobs within an organization
Organizational design
the process of constructing and adjusting an organization's structure to achieve its business strategy and goals.
Integration
the process of coordinating the different parts of an organization
Differentiation
the process of deciding how to divide the work in an organization
