organisational design

1. Organizational Design
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved.
BY: VAISHNAVIKHANDELWAL

2. organization’s structure to
Organizational Design - the process of constructing
and adjusting an organization’s structureachieve 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
 Manager’s goal orientation
 Time orientation
 Interpersonal orientation
 Formality of structure
The process of deciding
how to divide the work
in an organization

5. HorizontalDifferentiation
 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, but may
simplify goal achievement or protection

8. 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

9. Vertical Integration
 Hierarchical referral
 Rules and procedures
 Plans and schedules
 Positions added to the organization structure
 Management information systems

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

14. Middle
Line
Strategic
Apex
Operating Core
Mintzberg’s Five
Basic Parts
of an Organization
From H. Mintzberg, The Structuring of Organizations (Upper Saddle
River, N.J.: Prentice-Hall, 1979): 20. Reprinted with permission.

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

16. 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

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

18. Relationship Between
Technology and Basic
Design Dimensions
Craft
1. Moderate
2. Moderate
3. Moderate
4. Low-moderate
5. High
6. Low
Nonroutine
1. Low
2. Low
3. Low
4. Low
5. High
6. Low
Routine
1. High
2. High
3. Moderate
4. High
5. Low
6. High
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
Key
1 Formalization 4 Standardization
2 Centralization 5 Complexity
3 Specialization 6 Hierarchy of Authority
ProblemAnalyzability
Built from C. Perrow, “A Framework for the Comparative Analysis of Organization,” American Sociological Review, April 1967, 194-208

19. 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
Environment

20. Extremes of Environmental
Uncertainty
Mechanistic Structure - an organizational design that
emphasizes structured activities, specialized tasks,
and centralized decision making
Organic Structure - an organizational design that
emphasizes teamwork, open communication, and
decentralized decision making

21. Strategic Dimension
Innovation—to understand
and manage new processes
and technologies
Market differentiation—to
specialize in customer
preferences
Predicted Structural
Characteristics
Low formalization
Decentralization
Flat hierarchy
Moderate to high complexity
Moderate to high
formalization
Moderate centralization
Cost control—to produce High formalization
standardized products High centralization
efficiently High standardization
Low complexity
Strategy
& Goals
Miller’s Integrative Framework of
Structural & Strategic Dimensions
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.

22. Context of theorganization
Correct size
Current technology
Perceived environment
Current strategy &goals
The Relationship
among Key
Organizational
Design
Elements
Influences 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

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

24. Forces Reshaping
Organizations
 Organizational 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

25. Structural Roles of Managers Today
versus Managers of the Future
Roles of Managers Today Roles of FutureManagers
1. Strictly adhering to boss
–employee relationships
2. Getting things done by
giving orders
3. Carrying messages up
and down thehierarchy
4. Performing a set of tasks
according to a jobdescription
5. Having a narrow functional
focus
6. Going through channels,
one by one by one
7. Controlling subordinates
1. Having hierarchical
relationships subordinated
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.

26. HD’s Circle Organization
From R. Teerlink and L. Ozley, More than a Motorcycle: The Leadership Journey at Harley-Davidson. Boston, MA, 2000. P. 139.
Copyright © 2000 by the Harvard Business School Publishing Corporation; all rights reserved.
Create
Demand
Produce
Product
Provide
Support

27. 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 organizationalgoals

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