informative

1. Chapter 15
Organizational Design
& Structure
Nelson & Quick

2. Organizational Design - the process
of constructing and adjusting an
organization’s structure to achieve
its goals.
the linking of
departments and
jobs within an
organization
Organizational Design
H. Mintzberg, The Structuring of Organizations, Prentice Hall, © 1979, 301.
Reprinted by permission of Prentice-Hall, Inc, Upper Saddle River, NJ.

3. Key Organizational Design
Processes

4. Four Dimensions
• Goal orientation
• Time orientation
• Interpersonal orientation
• Formality of structure
The process of deciding
how to divide the work
in an organization

5. Horizontal
Differentiation
• The degree of differentiation
between organizational subunits
• Based on employee’s specialized
knowledge, education, or training

6. Vertical
Differentiation
• The difference in authority and
responsibility in the organizational
hierarchy
• Greater in tall, narrow organizations
than in flat, wide organizations

7. Spatial
Differentiation
• Geographic dispersion of an
organization’s offices, plants and
personnel
• Complicates organizational design,
may simplify goal achievement or
protection

8. • Designed to achieve unity among
individuals and groups
• Supports a state of dynamic
equilibrium - elements of organization
are integrated, balanced
The process of coordinating
the different parts
of an organization

9. Vertical
Integration
• Hierarchical referral
• Rules and procedures
• Plans and schedules
• Positions add to the organization
structure
• Management information system

10. Horizontal
Integration
• Liaison roles
• Task forces
• Integrator positions
• Teams

11. Hierarchy of
Authority -
the degree of
vertical
differentiation
across
levels of
management
Specialization -
the degree to
which jobs are
narrowly
defined and
depend on
unique
expertise
Basic
Design
Dimensions
Formalization - the degree
to which the organization
has official rules,
regulations and procedures
Standardization - the
degree to which work
activities are accomplished
in a routine fashion
Complexity - the degree to
which many different types
of activities occur in the
organization
Centralization - the degree
to which decisions are
made at the top of the
organization

12. Adhocracy - a
selectively
decentralized
form of
organization that
emphasizes the
support staff &
mutual adjustment
among people
Simple Structure - a
centralized form of
organization that
emphasizes the upper
echelon & direct
supervision
Machine Bureaucracy -
a moderately
decentralized form of
organization that
emphasizes the
technical staff &
standardization of
work processes
Divisional Form - a
moderately decentralized
form of organization
that emphasizes the
middle level &
standardization of outputs
Professional
Bureaucracy -
a decentralized
form of
organization that
emphasizes the
operating level
& standardization
of skills
Structural
Configurations
of
Organizations

13. Prime
Coordinating
Mechanism
Direct
Supervision
Standardization
of Work
Processes
Standardization
of Skills
Standardization
of Outputs
Mutual
Adjustment
Key Part of
Organization
Upper
Echelon
Technical
Staff
Operating
Level
Middle
Level
Support
Staff
Type of
Decentralization
Centralization
Limited
Horizontal
Decentralization
Vertical &
Horizontal
Decentralization
Limited Vertical
Decentralization
Selective
Decentralization
Structural
Configuration
Simple
Structure
Machine
Bureaucracy
Professional
Bureaucracy
Divisionalized
Form
Adhocracy
Five Structural Configurations of Organization

14. Contextual Variables -
a set of characteristics that
influences the organization’s
design processes
Size
Environment
Technology
Strategy
& Goals

15. Size
Basic Design Small Large
Dimensions Organizations Organizations
Formalization
Centralization
Specialization
Standardization
Complexity
Hierarchy of authority
Less
High
Low
Low
Low
Flat
More
Low
High
High
High
Tall

16. Technology
Technological
Interdependence -
the degree of interrelatedness
of the organization’s various
technological elements

17. Relationship Between
Technology and Basic
Design Dimensions
Key
1 Formalization 4 Standardization
2 Centralization 5 Complexity
3 Specialization 6 Hierarchy-Authority
Craft
1. Moderate
2. Moderate
3. Moderate
4. Low moderate
5. High
6. Low
Routine
1. High
2. High
3. Moderate
4. High
5. Low
6. High
Nonroutine
1. Low
2. Low
3. Low
4. Low
5. High
6. Low
Engineering
1. Moderate
2. Moderate
3. High
4. Moderate
5. Moderate
6. Moderate
Few Exceptions Many Exceptions
Task Variability
Ill-defined &
Unanalyzable
Well-defined &
Analyzable
Problem
Analyzability
Built from C. Perrow, “A Framework for the Comparative Analysis of Organization,” American Sociological Review, April 1967, 194-208

18. Environment
Environment - anything outside the boundaries
of an organization
Task environment - the elements of an
organization’s environment that are related to
its goal attainment
Environmental uncertainty - the
amount and rate of change
in the organization’s
environment

19. 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
formalization Moderate centralization
preferences
Cost control--to produce High formalization
standardized products High centralization
efficiently High standardization
Low complexity
Strategy
& Goals
Integrative Framework of
Structural & Strategic Dimensions

20. Context of the organization
Correct size
Current technology
Perceived environment
Current strategy & goals
Structural dimensions
Level of formalization
Level of centralization
Level of specialization
Level of standardization
Level of complexity
Hierarchy of authority
Influences how manager perceive structural needs
The Relationship
among Key
Organizational
Design
Elements

21. Differentiation & Integration
Purposes
Designate formal
lines of authority
Designate formal
information-
processing patterns
Which characterize the organizational processes
Which influence how well the structure meets its
Which influence how well the structure fits the
Context of the organization

22. Forces Reshaping Organizations
• Life cycles in organizations - 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

23. Structural Roles of Managers Today
versus Managers of the Future
Roles of Managers Today
1. Strictly adhering to boss
-employer relationships
2. Getting things done by
giving orders
3. Carrying messages up
and down the hierarchy
4. Performing a set of tasks
according to a job description
5. Having a narrow functional
focus
6. Going through channels,
one by one by one
7. Controlling subordinates
Roles of Future Managers
1. Having hierarchical
relationships subordinate
2. Getting things done by
negotiating
3. Solving problems and
making decisions
4. Creating the job through
entrepreneurial projects
5. Having a broad cross-
functional collaboration
6. Emphasizing speed &
flexibility
7. Coaching one’s workers
Management Review, January 1991, Thomas R. Horton.

24. Four Symptoms of Structural
Weakness
• Delay in decision
making
• Poor quality
decision making
• Lack of innovative
response to changing
environment
• High level of conflict
Overloaded hierarchy; information
funneling limited to too few channels
Right information not reaching
right people in right format
No coordinating effort
Departments work against each
other, not for organizational goals

25. Dysfunctional
Personality/Organization
Combinations
Paranoid
Dramatic
Compulsive
Schizoid
Depressive