Designing Effective Organizations


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Organizational structure & design is the key point for effective organizations.

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Designing Effective Organizations

  1. 1. Chapter 7 Ready Notes Designing Effective Organizations For in-class note taking, choose Handouts or Notes Pages from the print options, with three slides per page.
  2. 2. Chapter Objectives <ul><li>Identify and describe four characteristics common to all organizations, and explain the time dimension of organizational effectiveness. </li></ul><ul><li>Explain the concept of contingency organization design, distinguish between mechanistic and organic organizations, and summarize Burns and Stalker’s findings. </li></ul><ul><li>Identify and briefly describe the five basic departmentalization formats, and distinguish between centralized and decentralized organizations. </li></ul>
  3. 3. Chapter Objectives (cont’d) <ul><li>Define the term delegation and list at least five common barriers to delegation. </li></ul><ul><li>Explain how the traditional pyramid organization is being reshaped. </li></ul><ul><li>Describe at least three characteristics of organizational culture and explain the cultural significance of stories. </li></ul>
  4. 4. What is an Organization? <ul><li>An Organization </li></ul><ul><ul><li>A cooperative and coordinated social system of two or more people with a common purpose. </li></ul></ul><ul><ul><li>When people gather and formally agree to combine their efforts for a common purpose. </li></ul></ul>
  5. 5. What is an Organization? (cont’d) <ul><li>Common Characteristics of Organizations </li></ul><ul><ul><li>Coordination of effort: multiplying individual contributions to achieve results greater than those possible by individuals working alone. </li></ul></ul><ul><ul><li>Common goal or purpose: having a focus to strive for something of mutual interest. </li></ul></ul><ul><ul><li>Division of labor: dividing tasks into specialized jobs that use human resources efficiently. </li></ul></ul><ul><ul><li>Hierarchy of authority: using a chain of command to control and direct the actions of others. </li></ul></ul>
  6. 6. Organization Charts <ul><li>Organization Chart (Table) </li></ul><ul><ul><li>A visual display of an organization’s positions and lines of authority that is useful as a blueprint for deploying human resources. </li></ul></ul><ul><li>Vertical and Horizontal Dimensions </li></ul><ul><ul><li>Vertical hierarchy establishes the chain of command which coordinates the efforts of the organization. </li></ul></ul><ul><ul><li>Horizontal specialization denotes the division of labor. </li></ul></ul><ul><ul><li>A balance between hierarchy and specialization is necessary if the organization is to be effective. </li></ul></ul>
  7. 7. Organizational Effectiveness <ul><li>Evaluation of Effectiveness </li></ul><ul><ul><li>There is no single approach to that is appropriate in all circumstances or for all organizational types. </li></ul></ul><ul><li>The Time Dimension of Organizational Effectiveness Involves </li></ul><ul><ul><li>Meeting organizational objectives and prevailing societal expectations in the near future. </li></ul></ul><ul><ul><li>Adapting to environmental demands and developing as a learning organization in the intermediate future. </li></ul></ul><ul><ul><li>Surviving as an effective organization into the future. </li></ul></ul>
  8. 8. Contingency Design <ul><li>Organizing </li></ul><ul><ul><li>The structuring of a coordinated system of authority relationships and task responsibilities. </li></ul></ul><ul><li>Contingency Design </li></ul><ul><ul><li>The process of determining the degree of environmental uncertainty and adapting the organization and its sub units to the situation. </li></ul></ul><ul><ul><ul><li>How much environmental uncertainty is there? </li></ul></ul></ul><ul><ul><ul><li>What combination of structural characteristics is most appropriate? </li></ul></ul></ul><ul><ul><li>There is no single best organization design. </li></ul></ul>
  9. 9. Contingency Design (cont’d) <ul><li>The Burns and Stalker Model </li></ul><ul><ul><li>Mechanistic organizations </li></ul></ul><ul><ul><ul><li>Are rigid in design, rely on formal communications, and have strong bureaucratic qualities best suited to operating in relatively stable and certain environments. </li></ul></ul></ul><ul><ul><li>Organic organizations </li></ul></ul><ul><ul><ul><li>Have flexible structures, participative communication patterns and are successful in adapting to change in unstable and uncertain environments. </li></ul></ul></ul>
  10. 10. Contingency Design Alternatives <ul><li>Departmentalization </li></ul><ul><ul><li>The grouping of related jobs or processes into major organizational units. </li></ul></ul><ul><ul><ul><li>Overcomes some of the effect of fragmentation caused by differentiation (job specialization). </li></ul></ul></ul><ul><ul><ul><li>Permits coordination (integration) to be handled in the least costly manner. </li></ul></ul></ul><ul><ul><li>Sometimes refers to division , group , or unit in large organizations. </li></ul></ul>
  11. 11. Basic Structural Formats <ul><li>Functional Departments </li></ul><ul><ul><li>Categorizing jobs according to the activity performed. </li></ul></ul><ul><li>Product-Service Departments </li></ul><ul><ul><li>Grouping jobs around a specific product or service. </li></ul></ul><ul><li>Geographic Location Departments </li></ul><ul><ul><li>Adopting a structural format based on the physical dispersion of assets, resources, and customers. </li></ul></ul><ul><li>Customer Classification Departments </li></ul><ul><ul><li>Creating a structural format centered on various customer categories. </li></ul></ul>
  12. 12. Figure 7.2 Alternative Departmentalization Formats
  13. 13. Figure 7.2 Alternative Departmentalization Formats (cont’d)
  14. 14. Basic Structural Formats (cont’d) <ul><li>Reengineering into Cross-Functional Teams </li></ul><ul><ul><li>Lowering costs, improving quality, increasing speed, incorporating IT, and improving customer satisfaction </li></ul></ul><ul><li>Work Flow Process Departments in Reengineered Organizations </li></ul><ul><ul><li>Creating horizontal organizations that emphasize speedy work flow between two key points: </li></ul></ul><ul><ul><ul><li>Identifying customer needs </li></ul></ul></ul><ul><ul><ul><li>Satisfying customer needs </li></ul></ul></ul><ul><ul><li>Focus is outward rather than inward. </li></ul></ul>
  15. 15. Contingency Design Alternatives <ul><li>Span of Control (Management) </li></ul><ul><ul><li>The number of people who report to a manager. </li></ul></ul><ul><ul><ul><li>Narrow spans of control foster tall organizations with many organizational/managerial layers. </li></ul></ul></ul><ul><ul><ul><li>Flat organizations have wider spans of control. </li></ul></ul></ul><ul><li>Is There an Ideal Span of Control? </li></ul><ul><ul><li>The right span of control efficiently balances too little and too much supervision. </li></ul></ul>
  16. 16. Figure 7.3 Narrow and Wide Spans of Control
  17. 17. Contingency Design Alternatives (cont’d) <ul><li>The Contingency Approach to Spans of Control </li></ul><ul><ul><li>Both overly narrow and overly wide spans of control are counterproductive. </li></ul></ul><ul><ul><li>Situational factors dictate the width of spans of control. </li></ul></ul><ul><ul><ul><li>Wide spans of control are appropriate for departments where many workers work close together and do the same job. </li></ul></ul></ul><ul><ul><ul><li>Narrow spans of control are best suited for departments where the work is complex and/or the workers are widely dispersed. </li></ul></ul></ul>
  18. 18. Contingency Design Alternatives (cont’d) <ul><li>Centralization </li></ul><ul><ul><li>The retention of decision-making authority by top management. </li></ul></ul><ul><li>Decentralization </li></ul><ul><ul><li>The sharing of decision-making authority by management with lower-level employees. </li></ul></ul><ul><li>The Need for Balance </li></ul><ul><ul><li>The challenge is to balance the need for responsiveness to changing conditions (decentralization) with the need to create low-cost shared resources (centralization). </li></ul></ul>
  19. 19. Effective Delegation <ul><li>Delegation </li></ul><ul><ul><li>Assigning various degrees of decision-making authority to lower-level employees. </li></ul></ul><ul><li>The Advantages of Delegation </li></ul><ul><ul><li>Frees up managerial time for other important tasks. </li></ul></ul><ul><ul><li>Serves as a training and development tool for lower-level managers. </li></ul></ul><ul><ul><li>Increases subordinates’ commitment by giving them challenging assignments. </li></ul></ul>
  20. 20. Effective Delegation (cont’d) <ul><li>Barriers to Delegation </li></ul><ul><ul><li>Belief that only you can do the job right. </li></ul></ul><ul><ul><li>Lack of confidence and trust in subordinates. </li></ul></ul><ul><ul><li>Low self-confidence. </li></ul></ul><ul><ul><li>Fear of being called lazy. </li></ul></ul><ul><ul><li>Vague job definition. </li></ul></ul><ul><ul><li>Fear of competition from subordinates. </li></ul></ul><ul><ul><li>Reluctance to take risks that depend on others. </li></ul></ul><ul><ul><li>Lack of early warning controls. </li></ul></ul><ul><ul><li>Poor example of bosses who do not delegate. </li></ul></ul>
  21. 21. The Changing Shape of Organizations <ul><li>Characteristics of New Organizations </li></ul><ul><ul><li>Fewer organizational layers </li></ul></ul><ul><ul><li>More teams </li></ul></ul><ul><ul><li>Smallness within bigness </li></ul></ul><ul><li>New Organizational Configurations </li></ul><ul><ul><li>Hourglass organization: a three-layer structure with constricted middle (management) layer. </li></ul></ul><ul><ul><li>Cluster organization: collaborative structure in which teams are the primary unit. </li></ul></ul><ul><ul><li>Virtual organizations: internet-linked networks of value-adding subcontractors. </li></ul></ul>
  22. 22. Organizational Cultures <ul><li>Organizational Culture </li></ul><ul><ul><li>The collection of shared beliefs, values, rituals, stories, myths, and specialized language that creates a common identity and sense of community. </li></ul></ul><ul><ul><li>The “social glue” that binds an organization’s members together. </li></ul></ul>
  23. 23. Organizational Cultures (cont’d) <ul><li>Characteristics of Organizational Cultures </li></ul><ul><ul><li>Collective: organizations are social entities. </li></ul></ul><ul><ul><li>Emotionally charged: the organization’s culture serves as a security blanket to its members. </li></ul></ul><ul><ul><li>Historically based: trust and loyalty result from long-term organizational associations. </li></ul></ul><ul><ul><li>Inherently symbolic: actions often speak louder than words. </li></ul></ul><ul><ul><li>Dynamic: culture promotes stability and control. </li></ul></ul><ul><ul><li>Inherently fuzzy: ambiguity, contradictions, and multiple meanings are part of culture. </li></ul></ul>
  24. 24. Organizational Cultures (cont’d) <ul><li>Forms and Consequences of Organizational Cultures </li></ul><ul><ul><li>Organizational values: shared beliefs about what the organization stands for. </li></ul></ul><ul><ul><ul><li>The degree of sharing and intensity determine whether an organization’s culture is strong or weak. </li></ul></ul></ul>
  25. 25. Organizational Cultures (cont’d) <ul><li>The Organizational Socialization Process </li></ul><ul><ul><li>Organizational socialization: the process of transforming outsiders into accepted insiders. </li></ul></ul><ul><ul><li>Orientations </li></ul></ul><ul><ul><ul><li>Programs that familiarize new employees with the organization’s history, culture, competitive realities, and compensation and benefits. </li></ul></ul></ul><ul><ul><li>Storytelling </li></ul></ul><ul><ul><ul><li>Recitations of heroic or inspiring deeds provide “social roadmaps” for new employees. </li></ul></ul></ul>
  26. 26. Organizational Cultures (cont’d) <ul><li>Strengthening Organizational Cultures </li></ul><ul><ul><li>Symptoms of a weak organizational culture </li></ul></ul><ul><ul><ul><li>Inward focus </li></ul></ul></ul><ul><ul><ul><li>Morale problems </li></ul></ul></ul><ul><ul><ul><li>Fragmentation/inconsistency </li></ul></ul></ul><ul><ul><ul><li>Ingrown subcultures </li></ul></ul></ul><ul><ul><ul><li>Warfare among subcultures </li></ul></ul></ul><ul><ul><ul><li>Subculture elitism </li></ul></ul></ul>