UGBA105: Organizational Behavior Professor Jim Lincoln Week 3: Lecture on Organizational Design...
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Transcript of UGBA105: Organizational Behavior Professor Jim Lincoln Week 3: Lecture on Organizational Design...
UGBA105: UGBA105: Organizational BehaviorOrganizational Behavior
Professor Jim LincolnProfessor Jim Lincoln
Week 3: Lecture on Week 3: Lecture on
Organizational DesignOrganizational Design
Walter A. Haas School of BusinessUniversity of California, Berkeley
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Organization design: Organization design: Session objectivesSession objectives
• Discuss organization design as case of “manager as engineer” perspective
• Contrast vertical (mechanistic) and horizontal (organic) models of design
• Examine grouping & linking as strategic design decisions
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What exactly What exactly should should
structure do?structure do?
• Increase efficiency
• Allow for flexibility
• Channel individual behavior in desired directions
• Empower people to accomplish tasks
• Enable cooperation• Fit the informal org,
strategy, environment
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What shouldn’t structure do?What shouldn’t structure do?• Create unmanageable
coordination problems
• Balkanize the organization into warring fiefdoms
• Disempower and demotivate people
• Become a weapon in organizational politics
• Become sacred and ceremonial
• Breed “bureaucratic personalities”
• Cause inertia
• Mire the organization in “red tape”
• Divert or smother informal ways of accomplishing tasks
• Provide a safe haven for the incompetent or unmotivated
5Source: S. Adams, Dogbert’s Big Book of Business, DILBERT reprinted by permission of United Features Syndicate, Inc.
It’s easy to rationalize restructuringsIt’s easy to rationalize restructurings
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Two models of structureTwo models of structure
• Mechanistic or vertical• Organic or horizontal
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THE MECHANISTIC or VERTICAL MODEL:THE MECHANISTIC or VERTICAL MODEL: I. SCIENTIFIC MANAGEMENT :I. SCIENTIFIC MANAGEMENT :
“Systems so perfect that no one will need to be good”“Systems so perfect that no one will need to be good”Frederick W. Taylor: The Principles of Scientific Management, 1911. Frank B. Gilbreth: Motion Study, a Method for Increasing the Efficiency of the Workman.
New York, D. Van Nostrand Company, 1911.
Which always brings to mind….
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THE VERTICAL (MECHANISTIC) MODEL:THE VERTICAL (MECHANISTIC) MODEL: II. CLASSICAL ADMINISTRATIVE THEORYII. CLASSICAL ADMINISTRATIVE THEORY
• Horizontal structuring (grouping)– Narrow division of labor – Employees grouped by task similarity
• Vertical structuring (linking)– Coordinate by hierarchy of authority
• Unity of command• Scalar chain• Span of control
• Decision-making– Routinize decisions with rules & SOP’s– Delegate routine decisions; manage exceptions
Henry Fayol: General and Industrial Management, 1949L. Gulick and L. Urwick: Papers on the Science of Administration, 1937J. Mooney: The Principles of Organization, 1947Max Weber: Essays in Sociology. 1948.
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Principles of Vertical Structuring
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CEO
“A”
Principles of vertical organization: Unity of command, scalar chain, span of control
CEO
“A”
Case 1Case 2
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Market-ing
Market-ing
Engineering
Engineering
Manu-facturing
Manu-facturing
Human Resources
Human Resources
Manage-ment
Manage-ment
What’s good about hierarchy as a What’s good about hierarchy as a coordination mode?coordination mode?
Account-ing
Account-ing
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As opposed to.. As opposed to..
Market-ing
Market-ing
Human resources
Human resources
Engin-eering
Engin-eering
Account-ing
Account-ing
Manu-facturing
Manu-facturing
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The horizontal (organic) modelThe horizontal (organic) model• Broad division of labor
– Teams as unit of work • Flat hierarchy
– Communicate laterally– Coordinate with networks, leadership,
and culture • Few formal rules & SOP’s
– Employees make discretionary decisions at point of action
• Focus on outputs & processes– Less on inputs
• Horizontal (zig-zag) career paths
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““One best way” vs. congruence One best way” vs. congruence (or contingency)(or contingency)
• The vertical model theory was presented as the “one best way”
• The horizontal model was first presented as a “contingent” design– But lately it is presented as the “one best way”
• When should managers use one or the other?
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Let’s return to the basics:Let’s return to the basics:Strategic grouping and linking Strategic grouping and linking
Dividing and coordinating people, Dividing and coordinating people, activities, and resources so as to maximize activities, and resources so as to maximize
efficiency, flexibility, and successefficiency, flexibility, and success
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Dimensions to group on Dimensions to group on
• Inputs
– Function, tasks, disciplines, or skills:
• Outputs
– Product, customer, market, region
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R&DEngineer-
ingManu-
facturing
General Manager
Human resources
Sales
ProductA
Product
B
Product C
Functional groupingFunctional grouping
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CEO
CarsPrefabHouses Electronics
HR Mfg Mkt HR Mfg Mkt HR Mfg Mkt
Product groupingProduct grouping
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CEO
North America
Europe Asia Pacific
HR Mfg Mkt HR Mfg Mkt HR Mfg Mkt
Regional groupingRegional grouping
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CEO
Product Group A
Product Group A
Product Group B
Product Group B
Product Group C
Product Group C LegalLegal FinanceFinance R&DR&D Acctg.Acctg.
Mkt
Distribution
Sales
Manufact.
Mkt
Distribution
Sales
Manufact.
Mkt
Distribution
Sales
Manufact.
A hybrid formA hybrid form
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Finance Professors
Lyons, Odean, Stanton
Undergrad Program
MBA Program
PhD Program
Undergrad
MBA
PhD
ProfessorLyons
ProfessorOdean
ProfessorStanton
Are Haas professors organized by function or product?Are Haas professors organized by function or product?
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What’s this? What’s this?
Marketing R&D EngineeringManu-facturing Sales
Cars
Prefab houses
Electronics
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The function - product matrix at the The function - product matrix at the Haas School Haas School
Accounting Finance Marketing OBIR EAP
Under- grad
MBA
PhD
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Product Z
Engineer-ing
Manufac-turing
Marketing
General Manager
Z Eng
Z Mfg
Z Mkt
Coordinating by hierarchy in a matrixCoordinating by hierarchy in a matrix
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Engineer-ing
Manufac-turing
Marketing
General Manager
Z Eng
ZMfg
Z Mkt
Alternatives to hierarchy:Alternatives to hierarchy:(1) leadership(1) leadership
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Engineer-ing
Manufac-turing
Marketing
General Manager
Z Mfg
Z Mtg
ProductZ cross-functional team
Alternatives to hierarchy: Alternatives to hierarchy: (2) cross-functional teams(2) cross-functional teams
Z Eng
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Engineer-ing
Manu-facturing
Marketing
General Manager
Z Eng
Z Mfg
Z Mkt
Product Z culture
Alternatives to hierarchy:Alternatives to hierarchy:(3) culture (3) culture
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Process organization: Process organization: Grouping by interdependenceGrouping by interdependence
General Manager
Marketing Manufacturing Engineering
Product
Manager
Prod. B
Prod. A
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Process organization: Process organization: Grouping by interdependenceGrouping by interdependence
Hammer and Champy: Hammer and Champy: Reengineering the CorporationReengineering the Corporation, 1993, 1993
• Identify core business processes
• Assign & empower teams as “owners” of processes
• Shrink functional groups but preserve specialist expertise
• Revamp accounting & reward systems
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Keep functional expertise but Keep functional expertise but dispense with functional groupsdispense with functional groups
“’Create a house Yellow Pages so functional expertise is easy to find even though dispersed. Link experts in a real or electronic network where they can keep each other up to date and can get training and career development help’…’The engineers can have a club. But they can’t work in the same room, and they can’t sit at the same table at the company banquet.’”
Thomas A. Stewart: “The search for the organization of tomorrow” Fortune, 5/18/92.
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Top Management
TeamTeamProcessCoordinators
TeamTeamProcessCoordinators
TeamTeamProcessCoordinators
New product development process
Order fulfillment process
Procurement, logistics process
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Network organizationNetwork organization
• Small, lean, & focused firms
• Rely on entrepreneurial, leadership, and networking skills to create and coordinate a division of labor – Examples:
• Silicon valley
• New York fashion industry
• Japanese keiretsu
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Designers
Core FirmProducers
DistributorsSuppliers
Managers
Suppliers Distributors
ITServices
Producers
Producers
Designers
Distributors
Suppliers
Brokers
Full Vertical Integration
Full Network Organization
Networked Firm
HR Services
IT Services
HR Services
Designers Marketers
HR Services
IT Services
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TakeawaysTakeaways
• Finding the right division of labor isn’t easy– Different ways of slicing the organization have
their trade-offs– Congruence with strategy, environment and
people is key
• There’s no one right way to coordinate– Apply multiple solutions – Again, congruence is key