Chapter 12 - Organizational design

Integration

Degree sub units work together in a coordinated fashion

Differentiation

Extent to which the organization is broken down into sub units.

Max Weber

Pioneer of organizational theory. Bureaucratic model.

System 4 design

Similar to behavioral model

System 1 design

Similar to the bureaucratic model

Organizational size

Total number of full time or full time equivalent employees.

Functional or U form design

U for unitary Williamson - members and units grouped into functional departments - used in small organizations.

Hybrid design

Use 2 of more designs

Organizational size

# of full time and full time equivalent employees

Discuss how an organizations strategy and its design are interrelated

1. An organizations strategy also helps shape its design. 2. In various ways, corporate and business level strategies both affect organization design. 3. Basic organizational functions liek marketing adn finance also play a role in shaping design

Organization life cycle

1. Birth of the organization 2. Youth - growth and expansion 3. Midlife 4. Maturity

Universal perspectives on organizational design and foundation about organizational design

1. Bureaucratic model 2. Behavioral model.

Generic competitive strategy

1. Differentiation strategy - basis for differentiation 2. Cost leadership - strong commitment to efficiency and control 3. Focus - direction of it's focus

Ideal bureaucracy?

1. Distinct division of labor each position filled by an expert 2. Consistent set of rules to ensure task performance. 3. Hierarchy of positions creates chain of command. 4. Business impersonal and maintain social distance. 5. Employment and advancement based on technical expertise 6. Protected from arbitrary dismissal.

Primary advantages

1. Enhance flexibility 2. Highly motivated 3. Considerable opportunity to learn new skills. 4. Efficient use of human resources. 5. Remain members of functional units and can bridge. 6. Useful vehicle for decentralization

Corporate staff?

1. Evaluated performance of each business 2. Allocates corporate resources 3. Shapes decisions about buying and selling

System 1

1. Leadership process includes no perceived confidence and trust 2. Motivational processes taps only physical, security and economic motives 3. Communication process is information flows downward 4. Interaction process is closed and restricted. 5. Decision process only at the top 6. Goal setting is located at the top 7. Control process is centralized and emphasizing fixing blame 8. Performance goals are low and passively sought by managers

Divisional or M Form

1. Product form of organization 2. Divisions are related 3. Multiple businesses in related areas

Advantages of U form

1. Staff important positions w/functional experts 2. Promotes functional, rather than organizational focus and tends to promote centralization

When is matrix used.

1. Strong pressure from the environment 2. Large amounts of information need to be processed. 3. Pressure for shared resources.

Emerging issues in organization design

1. Team organization relies almost exclusively on project type teams. 2. Virtual organization - Little or no formal structure, higher temps, lease facilities 3. Learning organization - facilitates lifelong learning and personal development

What influences forms of organizational design

1. Technology 2. Environment 3. Size 4. Life cycle 5. Strategy

Four basic situational factors

1. Technology 2. Environment 3. Size 4. Organizational life style.

Identify and explain several situational influences on organization design

1. The situational view or organization design is based on the assumption that the optimal organization design is a function of situational factors. 2. For important situational factors are: a. technology b. environment c. size d. organizational life cycle

Identify and explain the two basic universal perspectives on organization design

1. Two early universal models or organization design were the bureaucratic model and the behavioral model. 2. these models attempted to prescribe how all organizations should be designed.

Matrix disadvantages

1. Uncertainty of reporting relationships. 2. Some managers see the matrix as a form of anarchy in which they have unlimited freedom. 3. Dynamics of group behavior a. Longer to make decisions b. Dominated by one member. c. Bogged down in discussions. d. More time to plan activities.

Woodward 3 basic forms of technology

1. Unit or small batch technology 2. Long batch or mass producing technology assembly line fashion. 3. Continuous process technology oil refining

Conglomerate (H form) design

1. Used by an organization made up of unrelated businesses

Behavioral model

A model of organization design consistent with the human relations movement, stressing attention to developing work groups and concern with interpersonal processes

Bureaucracy

A model or organization design based on a legitimate and formal system of authority

Team organization

An approach to organization design that relies almost exclusively on project type teams with little or no underlying functional hierarchy

Divisional M form design

Based on multiple businesses in related areas operating within a larger organizational framework

Situational view or organization design

Based on the assumption that the optimal design for any given organization depends on a set of relevant situational factors

Functional u design

Based on the functional approach to departmentalization

Matrix design

Based on two overlapping bases of departmentalization

Disadvantage

Complexity and weak financial performance

Core technology

Conversion processes used to transform inputs into outputs

Technology

Conversion processes used to transform inputs into outputs.

Strategy and Organization design

Corporate level strategy Single product, functional departmentalization Mechanistic Related diversification, high level or coordination Unrelated diversification, Strong hierarchical systems.

Business level strategy

Defender - 1. somewhat tall and centralized 2. Narrow spans of management. 3. Functional approach to departmentalization Prospecting 1. Flatter and decentralized. 2. Wider spans of management Analyzer - between the extremes Reactor - failure

Integration

Degree to which the various sub units must work together in a coordinated fashion.

Situational Influences on Organization design

Design depends on relevant situations factors.

Differentiation

Extent which organizations is broken into sub units.

Matrix design

Foundation functional department Groups or temporary departments superimposed.

Describe emerging issues in organization design

Four emerging issues in organization design are: 1. Team organization 2. Virtual organization 3. Learning organization 4. International business organization

Describe the basic forms of orgnaization design.

Many organizations today adopt one of four basic organization designs: 1. Functional U form 2. Conglomerate H form 3. Divisional M form 4. Matrix Other organizations use a hybrid design derived from tow or more of these basic designs.

Environment

Mechanistic or organic Mechanistic - stable environment bureaucratic Organic, unstable and unpredictable

Virtual organization

One that has little or no formal structure

Learning organization

One that works to facilitate the lifelong learning and personal development of all its employees while continually transforming itself to respond to changing demands and needs.

M form biggest advantage

Opportunities for coordination and shared resources Basic objective, optimize internal competition and cooperation.

Describe the basic nature or organization design.

Organization design is the overall set of structalr elements and the relationships among those elements used to manage th etotal organization

Organizational life cycle

Progression through which organizations evolve as they grow and mature

Behavioral Model

Rensis Likert 1. Leadership 2. Motivation 3. Communication 4. Interactions 5. Decision making 6. Goal setting 7. Control 8. Performance goals

Mechanistic organization

Similar to the bureaucratic or system 1 model, most frequently found in stable environments.

Behavioral model strength

Stresses the value of organizational employees.

System 4

System 4 1. Leadership process includes confidences and trust 2. Motivational process taps a full range of motives 3. Communication flows freely 4. Interaction process is open and extensive 5. Decision process happens at all levels 6. Goal setting encourages group participation in setting high realistic objectives 7. Control process is dispersed throughout the organization and emphasizes self-control and problem solving 8. Performance goals are high and actively sought by superiors who recognize the necessity for making a full commitment to developing through training human resources.

Organization design

The overall set of structural elements and the relationships among those elements used to manage the total organization

Conglomerate H form design

Used by an organization made up of a set of unrelated businesses.

Organic organization

Very flexible and informal model of organization design, most often found in unstable and unpredictable environments