Organizational Design    and Structure
Organizational DesignOrganizational Design – the process ofconstructing and adjusting anorganization’s structure to achiev...
Key Organizational Design       Processes
The process of deciding                   how to divide the work                   in an organizationFour Dimensions• Mana...
Horizontal                     Differentiation• The degree of differentiation  between organizational  subunits• Based on ...
Vertical                        Differentiation• The difference in authority  and responsibility in the  organizational hi...
Spatial                     Differentiation• Geographic dispersion of  an organization’s offices,  plants, and personnel• ...
Differentiation Between     Marketing and EngineeringBasis for Difference   Marketing      EngineeringGoal orientation    ...
The process of coordinating               the different parts               of an organization• Designed to achieve  unity...
Vertical                      Integration• Hierarchical referral• Rules and procedures• Plans and schedules• Positions add...
Horizontal                       Integration•   Liaison roles•   Task forces•   Integrator positions•   Teams
Formalization – the degree      Centralization – the degree  to which the organization       to which decisions are      h...
Machine Bureaucracy –         Simple Structure – a                                               a moderately          cen...
Five Structural Configurations of Organization Structural          Prime                                      Key Part of ...
Mintzberg’s    Five Basic    Parts of an                                                              Strategic           ...
Size                            Technology          Contextual Variables –         a set of characteristics that        in...
Strategic Dimension          Predicted Structural                                Characteristics   Innovation—to understan...
The Relationship among Key Organizational              Design Elements          Context of the organization          Corre...
Which characterize the organizational processes        Differentiation and IntegrationWhich influence how well the structu...
Forces Reshaping         Organizations• Organization Life Cycle – the differing  stages of an organization’s life from  bi...
Structural Roles of ManagersRoles of Managers Today             Roles of Future Managers1. Strictly adhering to boss–     ...
Four Symptoms of Structural        Weakness                  Overloaded hierarchy;• Delay in        information funneling ...
Group Activity• Design an organizational structure  for a startup departmental store• Make the necessary realistic  assump...
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Org. structure and design3

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  • Org. structure and design3

    1. 1. Organizational Design and Structure
    2. 2. Organizational DesignOrganizational Design – the process ofconstructing and adjusting anorganization’s structure to achieve itsgoals. the linking of departments and jobs within an organization
    3. 3. Key Organizational Design Processes
    4. 4. The process of deciding how to divide the work in an organizationFour Dimensions• Manager’s goal orientation• Time orientation• Interpersonal orientation• Formality of structure
    5. 5. Horizontal Differentiation• The degree of differentiation between organizational subunits• Based on employee’s specialized knowledge, education, or training
    6. 6. Vertical Differentiation• The difference in authority and responsibility in the organizational hierarchy• Greater in tall, narrow organizations than in flat, wide organizations
    7. 7. Spatial Differentiation• Geographic dispersion of an organization’s offices, plants, and personnel• Complicates organizational design, but may simplify goal achievement or protection
    8. 8. Differentiation Between Marketing and EngineeringBasis for Difference Marketing EngineeringGoal orientation Sales volume DesignTime orientation Long run Medium runInterpersonal People Task orientation oriented orientedStructure Less formal More formal
    9. 9. The process of coordinating the different parts of an organization• Designed to achieve unity among individuals and groups• Supports a state of dynamic equilibrium – elements of organization are integrated, balanced
    10. 10. Vertical Integration• Hierarchical referral• Rules and procedures• Plans and schedules• Positions added to the organization structure• Management information systems
    11. 11. Horizontal Integration• Liaison roles• Task forces• Integrator positions• Teams
    12. 12. Formalization – the degree Centralization – the degree to which the organization to which decisions are has official rules, made at the top of theregulations, and procedures organizationHierarchy of Specialization – Authority – the degree tothe degree of which jobs are vertical Basic narrowlydifferentiation Design defined and across Dimensions depend on levels of uniquemanagement expertise Complexity – the degree to Standardization – the which many different types degree to which work of activities occur in the activities are accomplished organization in a routine fashion
    13. 13. Machine Bureaucracy – Simple Structure – a a moderately centralized form of decentralized form of organization that organization that emphasizes the upper emphasizes the echelon and direct technical staff and supervision standardization of Structural work processes Adhocracy – a Configurations selectively of Professional decentralized Organizations Bureaucracy – form of a decentralizedorganization that form of emphasizes the Divisional Form – a organization thatsupport staff and moderately decentralized emphasizes themutual adjustment form of organization operating level among people that emphasizes the and standardization middle level and of skills standardization of outputs
    14. 14. Five Structural Configurations of Organization Structural Prime Key Part of Type ofConfiguration Coordinating Organization Decentralization Mechanism Simple Direct Upper Structure Centralization Supervision Echelon Limited Machine Standardization of Technical HorizontalBureaucracy Work Processes Staff Decentralization Vertical and Professional Standardization Operating Horizontal Bureaucracy of Skills Level DecentralizationDivisionalized Standardization Middle Limited Vertical Form of Outputs Level Decentralization Adhocracy Mutual Support Selective Adjustment Staff Decentralization
    15. 15. Mintzberg’s Five Basic Parts of an Strategic Strategic Organization Apex Apex Tecc Te hno hno o tt orr ssrru t tucc -- Supp upp fff S ta turre tu e Middle Sta S Line Operating Core Operating CoreFrom H. Mintzberg, The Structuring of Organizations (Upper SaddleRiver, N.J.: Prentice-Hall, 1979): 20. Reprinted with permission.
    16. 16. Size Technology Contextual Variables – a set of characteristics that influences the organization’s design processesStrategyand Goals Environment
    17. 17. Strategic Dimension Predicted Structural Characteristics Innovation—to understand Low formalization and manage new processes Decentralization and technologies Flat hierarchy Market differentiation—to Moderate to high complexity specialize in customer Moderate to high preferences formalization Moderate centralization Cost control—to produce High formalization standardized products High centralization efficiently High standardization Low complexity Miller’s IntegrativeStrategy Framework ofStrategy& Goals Structural & Strategic Dimensionsand Goals D. Miller, “The Structural and Environmental Correlates of Business Strategy,” Strategic Management Journal 8 (1987): 55-76. Copyright @ John Wiley & Sons Limited. Reproduced with permission.
    18. 18. The Relationship among Key Organizational Design Elements Context of the organization Correct size Current technology Perceived environment Current strategy and goalsInfluences how manager perceive structural needs Structural dimensions Level of formalization Level of centralization Level of specialization Level of standardization Level of complexity Hierarchy of authority
    19. 19. Which characterize the organizational processes Differentiation and IntegrationWhich influence how well the structure meets its Purposes Designate formal lines of authority Designate formal information- processing patterns Which influence how well the structure fits the Context of the organization
    20. 20. Forces Reshaping Organizations• Organization Life Cycle – the differing stages of an organization’s life from birth to death• Globalization• Changes in Information-Processing Technologies• Demands on Organizational Processes• Emerging Organizational Structures
    21. 21. Structural Roles of ManagersRoles of Managers Today Roles of Future Managers1. Strictly adhering to boss– 1. Having hierarchical employee relationships relationships subordinated2. Getting things done by 2. Getting things done by giving orders negotiating3. Carrying messages up 3. Solving problems and and down the hierarchy making decisions4. Performing a set of tasks 4. Creating the job through according to a job description entrepreneurial projects5. Having a narrow functional 5. Having a broad cross- focus functional collaboration6. Going through channels, 6. Emphasizing speed and one by one by one flexibility7. Controlling subordinates 7. Coaching one’s workers Management Review, January 1991, Thomas R. Horton.
    22. 22. Four Symptoms of Structural Weakness Overloaded hierarchy;• Delay in information funneling limited decision making to too few channels• Poor quality Right information not reaching right people in decision making right format• Lack of innovative No coordinating response to changing effort environment• High level of Departments work against each other, not for conflict organizational goals
    23. 23. Group Activity• Design an organizational structure for a startup departmental store• Make the necessary realistic assumptions

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