© 2013 Cengage Learning Chapter 15 Organizational Design and Structure 1.Define differentiation and integration as organizational design processes. 2.Discuss.

© 2013 Cengage Learning

Chapter 15Organizational Design

and Structure

1. Define differentiation and integration as organizational design processes.

2. Discuss the basic design dimensions managers must consider in structuring an organization.

3. Describe five structural configurations for organizations.

4. Describe four contextual variables that influence organizational structure.

5. Explain the forces reshaping organizations.

6. Identify and describe emerging organizational structures.

7. Identify factors that can adversely affect organizational structure.Lea

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Organizational Design

the process of constructing and adjusting

an organization’s structure to achieve its

business strategy and goals


Organizational Structure

the linking of departments and jobs within

an organization


Learning OutcomeLearning Outcome

Define differentiation and integration as organizational design processes.


1

Key Organizational Design Processes

DifferentiationThe process of deciding how to

divide the work in an organization

• Manager’s goal orientation• Time orientation

• Interpersonal orientation•Formality of structure



DifferentiationHorizontal differentiation

Degree of differentiation between organizational subunits.

Vertical differentiationThe difference in authority and responsibility

in the organizational hierarchy

Spatial differentiationGeographic dispersion of an organization’s offices,

plants and personnel

Beyond the Book:Differntiation at Cisco

• At Cisco, the existence of multiple teams, councils, boards, and working groups within Cisco creates a web of internal integrating structures that lead to fast decisions by the right people to ensure that the company is agile.

• Cisco has a complex organizational structure because it allows the firm to enter into new markets quickly.

• An emphasis on horizontal integration and cross-function teaming allows Cisco to be much more agile than before. A key benefit is speed in decision making.


Key Organizational Design Processes

Integration

The process of coordinating the different parts of an organization

Supports dynamic equilibrium, in which all the parts of an

organization are interrelated and balanced


Integration

Horizontal Integration

•Liaison roles•Task forces•Integrator positions•Teams

Vertical integration•Hierarchical referral•Rules and procedures•Plans and schedules•Positions added to the organization structure•Management information systems



Discuss the basic design dimensions managers must consider in structuring an organization.


2


2 Ways to Approach

Iestablish desired level of each structural dimension on a high-low continuum and develop structure that meets desired configuration

IIdescribe what is

or is not important to the success of the

organization rather than worry

about specific characteristics

The Organizational Design Process

Structural Dimensions

• Formalization: the degree to which the organization has official rules, regulations, and procedures

• Centralization: the degree to which decisions are made at the top of the organization

• Specialization: the degree to which jobs are narrowly defined and depend on unique expertise

• 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

• Hierarchy of Authority: the degree of vertical differentiation across levels of management


Importance-Based

1.How many tasks and how specialized? 2.How standardized?3.What skills are required? 4.Basis for grouping of positions?5.How large should each unit be?6.How much standardization?7.What mechanisms to help individuals?8.How centralized?



Describe five structural configurations for organizations.


3

Structural Configurations

• Simple Structure – a centralized form of organization that emphasizes a small technical and support staff, strong centralization of decision making in the upper echelon, and a minimal middle level

• Machine Bureaucracy – a moderately decentralized form of organization that emphasizes a support staff differentiated from the line operations of the organization, limited horizontal decentralization of decision making, and a well-defined hierarchy of authority

• Professional Bureaucracy – a decentralized form of organization that emphasizes the expertise of the professionals in the operating core of the organization


Structural Configurations

• Divisionalized Form – a loosely coupled, composite structural configuration composed of divisions, each of which may have its own structural configuration

• Adhocracy – a selectively decentralized form of organization that emphasizes the support staff and mutual adjustment among people


Five Structural Configurations of Organization


Five Basic Parts of an Organization

SOURCE: From H. Mintzberg, The Structuring of Organizations, © 1979, 20. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, N.J.



Describe four contextual variables that influence organizational structure.


4

Contextual Variables – a set of characteristics that

influences the organization’s design processes

Size

Environment

Technology

Strategyand Goals


SIZE

• Measured in number of employees

• Formalization, specialization and standardization greater in larger organizations

• As size increases, complexity increases


TECHNOLOGY

•The relationship between technology and structure is complex…•…different departments employ different technologies…


Joan Woodward

Three types of technology:•Unit – small batch manufacturing technology

•Mass – large-batch manufacturing

•Process production – continuous-production process


Charles Perrow


James Thompson

Technological interdependence

the degree of interrelatedness of the organization’s various

technological elements

Greater technological interdependence leads to

greater complexity.



Environment - anything

outside the boundaries of an

organization


Environment

Task Environment – the part of the environment that is directly relevant to the organization

Environmental Uncertainty – the amount and rate of changein the organization’senvironment

TECHNOLOGYEnvironment


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



Provides legitimacy to the organization, employee direction, decision guidelines, and criteria for performance.

TECHNOLOGYStrategy

Relationships Among Organizational Design Elements



Explain the forces reshaping organizations.


5

Forces Reshaping Organizations

• Organizational life cycles

• Globalization

• Changes in Information-Processing Technologies

• Demands on Organizational Processes


Organization Life Cycle

the differing stages of an organization’s

life from birth to death



Identify and discuss emerging organizational structures.


6

Emerging Structures• Network organizations – web-like structures that

contract some or all operations to other organizations, then coordinate activities.

• Virtual organizations – temporary networks of organizations consisting of independent enterprises.

• Circle organizations – open system, organic structure for customer responsiveness


Harley Davidson’s Circle Organization



Identify factors that can adversely affect organizational structure.


7

Four Symptoms of Structural Weakness

• Delay in decision making • Poor quality decision making • Lack of innovative response to

changing environment • High level of conflict


Dysfunctional

Personality/Organization

Combinations

ParanoidParanoid

DramaticDramatic

CompulsiveCompulsive

SchizoidSchizoid

DepressiveDepressive



Rendition

1. Review the section, “Basic Design Dimensions.” Which dimensions does this scene show or imply?

2. Can you sense the division of labor represented by Senator Hawkins and Alan Smith? Corrine Whitman does not appear in this scene but is also part of a division of labor.

3. Review the five structural configurations described in the chapter. Which of those configurations best describes the likely structure of Senator Hawkins’ office? Which configurations do not apply? Why?


http://www.thomsonedu.com/resource_uploads/static_resources/0324595840/17821/ch09.html

Modern Shed

1. How did Ryan Smith determine whether his company needed a mechanistic structure with a tall vertical hierarchy or an organic one involving free-flowing partnerships?

2. What are the advantages and disadvantages of Modern Shed’s organizational structure?

3. Give an example of how Modern Shed’s structure enables fast response to rapidly changing market opportunities.


http://www.cengage.com/management/webtutor/daft_mgt10e/video/ojt/ch10.html

© 2013 Cengage Learning Chapter 15 Organizational Design and Structure 1.Define differentiation and integration as organizational design processes. 2.Discuss.

Documents

cengage learning slide

organizational subunits

cengage learning chapter

learning outcomes

personnel slide

organizations structure

vertical differentiation

organizations offices