4. Common Characteristics
Hierarchy Coordination
of of effort
authority
Common
Division of
goal
labor
Krietner/Kinicki, 2009
5. Typical Org Chart
Example of Hospital's Organization Chart
Board of Directors
Strategic Legal Counsel
Chief Executive
Planning Officer
Officer
Cost-Containment
Staff
President
Executive Executive
Administrative Medical
Director Director
Director of Director of Director of Director of Director of Director of Director of Chief
Human Admissions Accounting Nutrition X-Ray and Surgery Pharmacy Physician
Resources and Food Laboratory
Services Services
Director of Director of
Patient and Outpatient
Public Services
Relations
Krietner/Kinicki, 2009
6. Basic Terminology
Span of control
• The number of people reporting
directly to a given manager
Staff Personnel – (dotted lines)
• Provide research, advice, and
recommendations to line managers
Line managers – (solid lines)
• Have authority to make
organizational decisions
Krietner/Kinicki, 2009
7. What Do You Think?
True or False?
1. The ideal span of control is 10.
2. Wider spans of control complement
employee empowerment trends.
3. Narrower spans of control save
costs and are administratively
efficient.
4. With wider spans of control,
inadequate supervision and less
coordination may result Krietner/Kinicki, 2009
8. Closed vs. Open Systems
Closed Systems Open Systems
Krietner/Kinicki, 2009
9. Open System Organization
Outputs
Inputs Goals and Technical • Products
Material Values Subsystem • Services
Money
Subsystem • Human
Human effort satisfaction
Managerial • Organization
Information
Subsystem survival and
growth
• Social
Psychological Structural benefit
Subsystem Subsystem
Feedback
Krietner/Kinicki, 2009
10. Learning Organizations?
Organizations need to develop and become adaptable
The concept of a “learning organization” was made popular in the
„90‟s but many organizations have yet to reach their potential
A new measure assesses the three building blocks:
• A supportive learning environment
• Concrete learning processes and practices
• Leadership that reinforces learning
Companies can be strong in some areas and weak in others
Krietner/Kinicki, 2009
12. Org Learning Building Blocks
Supportive Learning Environment
• Psychological safety
• Appreciation of differences
• Openness to new ideas
• Time for reflection
Concrete Learning Processes and Practices
• Experimentation
• Information Collection
• Analysis
• Education and Training
Leadership that Reinforces Learning
Krietner/Kinicki, 2009
13. Common Structures
Functional
• Organized according to business function (marketing, finance, etc.)
Divisional Structure
• Organized by activities related to outputs (e.g., product or service
type)
Matrix Structure
• Horizontal cooperation necessary as is functional knowledge
• Typically organized by function vertically and product/service
horizontally
Krietner/Kinicki, 2009
14. OD Background
Wealth of Nations, 1776
OD, 1974
The Nature of the Firm, 1937
Krietner/Kinicki, 2009
24. Collaborative Horizontal Designs
Appoint
Organize Provide
Flatten process
around required
hierarchy team Let supplier
complete expertise
and use leaders to and customer
workflow from
teams to manage contact drive
processes outside the
manage internal performance.
rather than team as
everything team
tasks required.
processes.
Krietner/Kinicki, 2009
25. The White Spaces (Rummler/Brache)
CEO
Assistant
“A primary contribution of a VP VP VP
manager at the second level
or above is to manage Line Line Line
interfaces. The boxes Manager Manager Manager
already have managers; the
Senior manager adds value Individual Individual Individual
Contributor Contributor Contributor
by managing the white space
between the boxes.” Individual Individual Individual
Contributor Contributor Contributor
Individual Individual Individual
Contributor Contributor Contributor
Krietner/Kinicki, 2009
26. Open Boundaries
Hollow
• Outsourcing non-core processes to those more able
Modular
• Outsources parts of a product rather than processes
Virtual
• Temporary company created to respond to an
exceptional market opportunity
Krietner/Kinicki, 2009
27. Mechanistic vs. Organic
Characteristic Mechanistic Organic
Task definition & knowledge
Narrow: Technical Broad: General
required
Linkage between individual’s
contribution & organization’s Vague or Indirect Clear or Direct
purpose
Task flexibility Rigid; Routine Flexible, Varied
Specification of techniques,
Specific General
obligations, & rights
Degree of hierarchal control High Low
Primary communication pattern Top-Down Lateral
Primary decision-making style Authoritative Participative
Emphasis on obedience and loyalty High Low
Krietner/Kinicki, 2009
28. What Do You Think?
1. Which decision-making
approach tends to be used in
mechanistic organizations?
a. Decentralized
b. Centralized
2. Which decision-making
approach tends to be used in
unstable and uncertain
environments?
a. Decentralized
b. Centralized
Krietner/Kinicki, 2009
30. Signs of Decline
1. Excess personnel 8. Loss of effective
2. Tolerance of incompetence communication
3. Cumbersome administrative 9. Outdated organizational
procedures structure
4. Disproportionate staff power 10. Increased scapegoating by
leaders
5. Replacement of substance
with form 11. Resistance to change
6. Scarcity of clear goals and 12. Low morale
decision benchmarks 13. Special interest groups are
7. Fear of embarrassment and more vocal
conflict 14. Decreased innovation
Krietner/Kinicki, 2009
32. Seeds of Innovation
1. Hard work in a
specific direction
2. Hard work with
direction change
3. Curiosity
4. Wealth and money
5. Necessity
6. Combination of
seeds
7. Collaboration
Krietner/Kinicki, 2009
33. Breakthrough Innovators
More than 2/3rds of directors at leading global
companies cite innovation as critical for long-term
success
How can we Innovative talent is rare
sustain
innovation?
Be aware of organizational
5-10% of processes and practices that
high
How do we potential
squelch innovation
develop future
leaders who managers Don‟t base promotions on ability to
can facilitate mimic incumbents
this goal?
Krietner/Kinicki, 2009
34. Breakthrough Innovators
What innovators look like
Strong cognitive abilities
Strong analytic skills, can focus on most important
points
Don‟t rely on past successes
Keenly aware of others‟ motivations
and interests when “selling” their idea
Krietner/Kinicki, 2009
35. Innovative Hotspots
The Focused Brute Force Hollyworld Large-Scale
Factory • Apply massive • “Global Ecosystems
• Invest in a amounts of creative class” • End-to-end
handful of low-cost labor • Silicon Valley innovation
industries or to different systems with
research fields innovative government as
• Singapore, projects steward
Denmark • Microsoft in • Finland
Beijing
Krietner/Kinicki, 2009
36. The Design of Business (Martin)
Krietner/Kinicki, 2009
37. The Design of Business (Martin)
Krietner/Kinicki, 2009
OD has evolved through agricultural, craftwork-feudal societies, and the industrial revolution.
An organization is a system of consciously coordinated activities of two or more people.The four factors that make up the organization’s structure are coordination of effort, which is achieved through formulation and enforcement of policies, rules, and regulations; division of labor, where the common goal is pursued by individuals performing separate but related tasks; and hierarchy of authority, which provides a control mechanism dedicated to making sure the right people do the right things at the right time.
False, there is no ideal span of control because it is so dependent on the situation.2. True, as employees become more empowered, less direct day to day supervision is required.3. False, narrower spans of control are more expensive4. True.
A closed system is a relatively self-sufficient entity. Management theorists used to view organizations as being closed systems, operating somewhat like a clock that only needs a battery to function efficiently. More recently, the view has shifted to one that recognizes that organizations are much more like an open system.An open system is an organism that must constantly interact with its environment to survive. For example, the human body is an open system because we need oxygen, food, and shelter for survival so we are very dependent on the environment.Organizations also have permeable boundaries. Let’s look on the next slide at an open system from an organizational perspective.
An extension of the open-system model is the adding of a “brain” to the “living body.” A learning organizationproactively creates, acquires, and transfers knowledge throughout the organizationSource: Garvin, D. A., Edmondson, A.C., & Gino, F. (2008). Is Yours a Learning Organization? Harvard Business Review.This articles discusses the need to diagnose organizations for their ability to truly learn and develop. The authors have developed an assessment tool to measure the key factors for improving knowledge sharing, idea development, and learning from mistakes.There are three major building blocks for creating a Learning Organization. However, they are fairly separate and distinct in that a company can do well on one of the building blocks but not the others. Therefore, building capacity in each one takes a separate set of activities.Building Blocks:A supportive learning environmentConcrete learning processes and practicesLeadership that reinforces learning
An extension of the open-system model is the adding of a “brain” to the “living body.” A learning organizationproactively creates, acquires, and transfers knowledge throughout the organizationThese organizations constantly seek new information from the external environment and seek to develop their employees. They also pursue experts to employ and stay up to date on practices that affect their business.Senge et al. (1994) describe organizational learning as “the continuous testing of experience, and the transformation of that experience into knowledge accessible to the whole organization and relevant to its core purpose” (p. 49).
Source: Garvin, D. A., Edmondson, A.C., & Gino, F. (2008). Is Yours a Learning Organization? Harvard Business Review.Supportive Learning EnvironmentPsychological safety – in order to learn, employees cannot fear being belittled or marginalized when they disagree or own uup to mistakes – they must be able to express their ideas and thoughtsAppreciation of differences – Ee’s need to recognize the value of competing ideas and different worldviewsOpenness to new ideas – crafting novel approachesTime for reflection – people who are busy or stressed by deadlines are not able to think as analytically and creatively as they might. A supportive environment allows time to pause and encourage thoughtful review of the organization’s processesConcrete Learning Processes and PracticesExperimentation – allowing the development and testing of new products and servicesInformation Collection – gathering intelligence regarding competitorsAnalysis – disciplined analysis and interpretation to identify and solve problemsEducation and Training – to both new and established employeesLeadership that Reinforces Learning Leaders who actively listen to their employees prompt dialogue and debate – leaders need to signal the importance of spending time solving problems, transferring knowledge, reflection, and appreciation of different points of view.
Some common organizational structures are depicted here.FunctionalOrganized according to business function (marketing, finance, etc.)Divisional StructureOrganized by activities related to outputs (e.g., product or service type)Matrix StructureHorizontal cooperation necessary as is functional knowledgeTypically organized by function vertically and product/service horizontally
Adam Smith, Ronald Coase, Jay Galbraith
Used as the basis for the majority of US Organizations today.
From Smith, and Coase we get our standard vertical org hierarchies, which over time for many organizations became more lateral, but in many cases that just increased bureaucracies, middle managers and still had some vertical tendencies.
In the 80’s we get the development of teams (highly successful in Europe and in companies like Toyota) and in the 90’s Communities of Practice became popular.
Networked organizations continue to grow, with contributors to the team working in the cloud from across the globe.
The only MS image available for global organizations, which I didn’t like.
So I chose this one which only represents the complexity because at least one of these employees looks confused. Unfortunately none of them appear to be women so it’s still not an accurate reflection.
Graphic Source: Cutter Consortium. Roberts, B. (2010). Holacracy: A complete system for agile organizational governance and steering. Agile Project Management. 7-7.
Economies of scale have mostly been achieved in a global manufacturing environment. Today organizations need Economies of scope to focus energy, intellect and assets quickly and effectively as margins continue to be squeezed.
But what if I don’t work or ever intend to work for a global organization?
More and more organizations are seeing the need for improved collaboration among their organizational members. One approach towards this end is to organize around processes rather than functional areas and create flexible cross-functional teams. Here are five principles for designing horizontal organizations.Organize around complete workflow processes rather than tasksFlatten hierarchy and use teams to manage everythingAppoint process team leaders to manage internal team processes.Let supplier and customer contact drive performance.Provide required expertise from outside the team as required.
In small or new organizations, this vertical view [the traditional organization chart] is not a major problem because everybody in the organization knows each other and needs to understand other functions. However, as time passes and the organization becomes more complex, as the environment changes, and as technology becomes more complicated, this view of the organization becomes a liability.Defining the system and identifying , missing, unnecessary, confusing, or misdirected inputs or outputs that are causing the problem is managing the white space. Figuring out what happens during a process when the baton is passed, not the official transactional view of the organization, is how performance can be improved on all three levels.Rummler G. & Brache A. (1995) Improving Performance: How to Manage the White Space on the Organization Chart.
There are some organizations that seek to break down not only the internal boundaries but also the barriers between organizations in order to better pool their resources towards their own advantage. Examples of these types of structures are:HollowOutsourcing non-core processes to those more able – retain what you do well and outsource functions that others can do faster and cheaperModularOutsources parts of a product rather than processes – ensure quality meets standards from other companies but assemble parts internallyVirtualTemporary company created to respond to an exceptional market opportunity – creates partnerships that help serves customers they wouldn’t be able to without each other
Burns and Stalker drew a distinction between mechanistic and organic organizations.Mechanistic organizations are rigid, command-and-control bureaucracies. These are important when there is a need for uniform product quality, speedy service, and cleanliness, with McDonalds serving as an excellent example of this.Organic organizations are fluid and flexible networks of multitalented people. People in these organizations perform a variety of tasks. Gore is an example of an organic organization because people don’t have job titles, nor do they report to anybody. Gore uses a very team-based structure.
1 – Centralized2 - Decentralized
In order to determine organizational effectiveness, you need to consider a variety of criteria. These four criteria are generic approaches that broadly apply to both for profit and non-profit organizations.Goal Accomplishment the organization achieves its goals—most widely used effectiveness criterionDoes the organizations achieve its publicly stated goals and objectives?Resource acquisition: Does the organization acquire the necessary resources to pursue it’s objectives?Internal Processes the organization functions smoothly with a minimum of internal strainIs the organization a “healthy system” in which information flows freely and employees are loyal, committed, satisfied and trusted.Strategic Constituencies Satisfaction the demands and expectations of key interest groups are at least minimally satisfiedAre people who have a stake in the organization's operation or success satisfied.
It is necessary to have both creativity and invention but need to have a way to transform that into a product or service for a customer in order to have innovation.Therefore you need integration which requires collaboration from multiple people, units, departments, and functions to work together.
Seeds of innovationHard work in a specific direction – most innovations come from dedicated people working hard to solve a well-defined problemHard work with direction change – innovations often occur when people change their approach to solving a problemCuriosity – curiosity spawns experimentation and inventivenessWealth and money – innovations frequently occur because economic viability depends on itNecessity – required to achieve a larger goalCombination of seeds – often innovation is a result of multiple factors
Source: Cohn, J. Katzenback, J. & Vlak, G. Finding and Grooming Breakthrough Innovators, Harvard Business Review, December 2008.This article discusses the strategies companies use to attract and retain true innovators. They discuss a study conducted by Spencer Stuart, an executive search firm, that states that over 2/3rds of directors at the leading global companies it advises cite innovation as critical for long-term success. Members of corporate boards are asking how can we sustain innovation and how do we develop future leaders who can facilitate this goal.Finding and effectively managing innovative talent is difficult. The article estimates that 5-10% of high potential managers have the skills and attributes necessary to become innovators.Then, if you do have them, many companies fail to capitalize on the creative energy and instead may squelch it. In many companies promotions come for people who emulate their superiors in terms of attributes and, therefore, are less likely to think and act differently regarding the business.
Source: Cohn, J. Katzenback, J. & Vlak, G. Finding and Grooming Breakthrough Innovators, Harvard Business Review, December 2008.What innovators look like:Innovators tend to have strong cognitive abilities and analytic skills and can focus on the most important points and ignore all the rest. This is important given the sheer volume of data that is easily accessible today. They have an underlying sense of insecurity and don’t tend to rely on past successes for future progress.They also have an ability to determine the motivations of a diverse audience and speak eloquently about their idea in a way that will resonate with each stakeholder (e.g., vendors, partners, customers, subordinates, bosses, etc.)
Source: Kao, J. Tapping the World’s Innovation Hot Spots, Harvard Business Review, March 2009.This article discusses the different strategies countries are taking with regard to innovation and suggests that new companies can take advantage of the innovative strategies across the globe in forming their own competitive product or service.For example, many countries are putting innovation at the top of their national agenda and investing in education, new research, etc.The authors offer four models of innovation companies are taking.Model 1: The Focused Factory – combines clear strategic intent with a concentration of infrastructure and high-octane talent in an effort to discover and deploy new solutions to big challenges. Countries such as Singapore and Denmark, focus their innovation investments on a handful of industries or research fields.For example Singapore has devoted more resources to life sciences than to any other field and created a world renowned “Biopolis” – biomedical research center that attracts top researchers from around the world. India provides talent management for some of the world’s most sophisticated technology development work and Finland is becoming a global center for innovative design.Model 2: Brute Force – uses the law of large numbers. By applying massive amounts of low-cost labor and capital to a portfolio of innovation opportunities, countries (e.g., China and India) hope that a huge quantity of ideas from a large number of talented people will eventually yield valuable discoveries. For example, Microsoft started a Beijing research center 10 years ago and has found that is allows it to tap expert and junior Chinese talent at a comparatively low price. They partner with academics and scientists and encourage them to publish their work. Microsoft, in return, builds is intellectual property and collaborative relationships.Model 3: Hollyworld – providing opportunities to build a “global creative class”. Using the “law of cool” countries are creating their own Silicon valleys (e.g., Bangalore, Toronto, Helsinki). This strategy involves creating a place where talented innovators want to come to share ideas and collaborate.Model 4: Large-Scale Ecosystems – end-to-end innovation systems combining stewardship mechanisms, funding bodies, research institutions, and structures for business and academic collaboration in support of an overall national strategy. For example, Finland has a well-run innovation system that is guided and funded by the government. The Science and Technology Policy Council is responsible for the country’s overall innovation efforts.