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Management 8/e - Chapter 11 2
Study Question 1: What are the essentials of
organizational design?
Organizational design
Choosing and implementing structures that bestarrange resources to serve the organizations
mission and objectives.
A problem-solving activity that should be
approached from a contingency perspective.
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Management 8/e - Chapter 11 3
Study Question 1: What are the essentials of
organizational design?
Organizational effectiveness
Sustainable high performance in using resources to
accomplish mission and objectives.
Approaches:
Systems resource approach focuses on inputs.
Internal process approach focuses on transformation
process.
Internal process approach focuses on outputs.
Internal process approach focuses on environment.
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Management 8/e - Chapter 11 4
Study Question 1: What are the essentials of
organizational design? Short-run, medium-run and long-run criteria for
evaluating organizational effectiveness:
Short-run focus.
Goal accomplishment. Performance efficiency in resource utilization.
Stakeholder satisfaction.
Medium-run focus.
Adaptability in the face of changing environments.
Development of people and systems to meet new challenges.
Long-run focus.
Survival under conditions of uncertainty.
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Management 8/e - Chapter 11 5
Study Question 1: What are the essentials of
organizational design?
Bureaucracy
A form of organization based on logic, order, and the
legitimate use of formal authority.
Bureaucratic designs feature
Clear-cut division of labor.
Strict hierarchy of authority.
Formal rules and procedures.
Promotion based on competency.
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Management 8/e - Chapter 11 6
Study Question 1: What are the essentials of
organizational design?
Contingency perspective on bureaucracy asks thequestions:
When is a bureaucratic form a good choice for anorganization?
What alternatives exist when it is not a good choice?
Environment determines the answers to thesequestions.
A mechanistic design works in a stable environment
An organic design works in a rapidly changing anduncertain environment.
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Management 8/e - Chapter 11 7
Study Question 1: What are the essentials of
organizational design?
Structural characteristics associated with designalternatives:
Goal predictability versus adaptability.
Authority centralized versus decentralized.
Rules and procedures many versus few.
Spans of control narrow versus wide.
Tasks specialized versus shared.
Teams and task forces
few versus many.
Coordination formal and impersonal versus informaland personal.
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Management 8/e - Chapter 11 8
Study Question 1: What are the essentials of
organizational design? Mechanistic Designs
Predictable goals
Centralized authority
Many rules andprocedures
Narrow spans ofcontrol
Specialized tasks
Few teams and taskforces
Formal and impersonalmeans of coordination
Organic Designs Adaptable goals
Decentralized authority
Few rules andprocedures
Wide spans of control
Shared tasks
Many teams and task
forces Informal and personal
means of coordination
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Management 8/e - Chapter 11 9
Study Question 2: How do contingency
factors influence organization design?
Checklist for identifying contingency factors in
organizational design: Does the design fit well with the major problems and opportunities
of the external environment?
Does the design support implementation of strategies and the
accomplishment of key operating objectives?
Does the design support core technologies and allow them to be
used to best advantage?
Can the design handle changes in organizational size and different
stages in the organizational life cycle?
Does the design support and empower workers and allow their
talents to be used to best advantage?
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Management 8/e - Chapter 11 10
Study Question 2: How do contingency
factors influence organization design?
Environment and organizational design
Certain environment
Relatively stable and predictable elements.
Bureaucratic organizations and mechanistic designs
are appropriate.
Uncertain environment
More dynamic and less predictable elements.
Adaptive organizations and organic designs are
appropriate.
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Management 8/e - Chapter 11 11
Study Question 2: How do contingency
factors influence organization design?
Strategy and organizational design
Structure follows strategy.
Stability strategy is supported by:
Bureaucratic organizations using mechanistic
designs.
Growth strategies are is supported by:
Adaptive organizations using organic designs.
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Management 8/e - Chapter 11 12
Study Question 2: How do contingency
factors influence organization design?
Technology
The combination of knowledge, skills,
equipment, computers, and work methods
used to transform resource inputs intoorganization outputs.
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Management 8/e - Chapter 11 13
Study Question 2: How do contingency
factors influence organization design?
Core manufacturing technologies:
Small-batch production.
A variety of custom products are tailor-made to order.
Mass production.
A large number of uniform products are made in an assembly-
line system.
Continuous-process production. A few products are made by continuously feeding raw
materials through a highly automated production system with
largely computerized controls.
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Management 8/e - Chapter 11 14
Study Question 2: How do contingency
factors influence organization design?
Technology and organization design
The technological imperative
Technology is a major influence on organizational
structure.
The best small-batch and continuous process plants
have more flexible organic structures. The best mass-production plants have more rigid
mechanistic structures.
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Management 8/e - Chapter 11 15
Study Question 2: How do contingency
factors influence organization design?
Core service technologies:
Intensive technology
Focuses the efforts of many people with special expertise onthe needs of patients or clients.
Mediating technology
Links together parties seeking a mutually beneficial exchange
of values.
Long-linked technology
Functions like mass production, where a client is passed from
point to point for various aspects of service delivery.
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Management 8/e - Chapter 11 16
Study Question 2: How do contingency
factors influence organization design? Organization size, life cycle, and design
Larger organizations tend to have more mechanistic
designs, but it is not always best. Organizational life cycle:
Birth stage small size, simple structure.
Youth stage rapid growth in size, simple structure
experiences stress.
Midlife stage growing to large size, more complex and
formal structure.
Maturity stage stabilizes at large size, mechanistic structure.
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Management 8/e - Chapter 11 17
Study Question 2: How do contingency
factors influence organization design?
Coping with the disadvantages of large size:
Downsizing.
Reducing the scope of operations and number of employees.
Intrapreneurship.
The pursuit of entrepreneurial behavior by individuals and
subunits within large organizations.
Simultaneous structures.
Organizations that combine mechanistic and organic designs.
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Management 8/e - Chapter 11 18
Study Question 2: How do contingency
factors influence organization design?
Human resources and good organizationdesign
Provides people with supporting structuresneeded for both high performance and worksatisfaction.
Produces a good fit between organization
structures and human resources.Allows the expertise and talents of organization
members to be unlocked and utilized.
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Management 8/e - Chapter 11 19
Study Question 3: What are the major issues
in subsystems design?
Basics of subsystem design
Subsystem
A department or work unit headed by a manager.
Operates as a smaller part of the larger
organization.
Ideally, each subsystem supports othersubsystems, working toward interests of entire
organization.
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Management 8/e - Chapter 11 20
Study Question 3: What are the major issues
in subsystems design?
Lawrence and Lorschs findings onsubsystems design
The total system structures of successful firmsmatch the challenges of their environments.
The subsystems structures of successful firmsmatch the challenges of their respective
subenvironments.Subsystems in successful firms worked well
with each other.
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Management 8/e - Chapter 11 21
Study Question 3: What are the major issues
in subsystems design?
Managing subsystem differentiation:
Differentiation is the degree of difference that
exists among the internal components of anorganization.
Common sources of subsystems differentiation:
Time orientation
Objectives Interpersonal orientation
Formal structure
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Management 8/e - Chapter 11 22
Study Question 3: What are the major issues
in subsystems design?
Managing subsystem integration:
Integration is the level of coordination achieved
among an organizations internal components.
Organization design paradox
Increased differentiation creates the need for greater
integration. Integration is more difficult to achieve as
differentiation increases.
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Management 8/e - Chapter 11 23
Study Question 3: What are the major issues
in subsystems design?
Mechanisms for achieving subsystem integration:
Rules and procedures
Hierarchical referral Planning
Direct contact
Liaison role
Task forces Teams
Matrix organizations
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Management 8/e - Chapter 11 24
Study Question 4: How can work processes be
reengineered?
Process reengineering
Systematic and complete analysis of work processes.
Design of new and better work processes. Work process
A related group of tasks that create a result of value
for the customer. (Michael Hammer)
Workflow Movement of work from one point to another in the
manufacturing or service delivery process.