Foundations of organizational design robbins&coulter ch11 moghimi

ManagementRobbins. St - Coulter. M

Chapter 11: Organizational design

Bahman MoghimiDoctor of business Administration Master of Electronic Commerce

Management, Chapter 11. [email protected]

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Planning Ahead — Chapter 11 Study Questions

What are the essentials of organizational design?

How do contingency factors influence

organization design?

What are the major issues in subsystems design?

How can work processes be reengineered?


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Study Question 1: What are the essentials of organizational design?

Organizational design:

– Choosing and implementing structures that best

arrange resources to serve the organization’s

mission and objectives.

– A problem-solving activity that should be

approached from a contingency perspective.


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Figure 11.1 A framework for organizational design-aligning structures with situational contingencies.


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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.

• External process approach focuses on environment.


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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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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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Contingency perspective on bureaucracy asks the questions:– When is a bureaucratic form a good choice for an

organization?– What alternatives exist when it is not a good choice?

Environment determines the answers to these questions.– A mechanistic design works in a stable environment– An organic design works in a rapidly changing and

uncertain environment.


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Figure 11.2 A continuum of organizational design alternatives: from bureaucratic to adaptive organizations.


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Structural characteristics associated with design alternatives:– 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 informal

and personal.


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Mechanistic Designs– Predictable goals– Centralized authority– Many rules and

procedures– Narrow spans of

control– Specialized tasks– Few teams and task

forces– Formal and impersonal

means of coordination

Organic Designs– Adaptable goals– Decentralized authority– Few rules and

procedures– Wide spans of control– Shared tasks– Many teams and task

forces– Informal and personal

means of coordination


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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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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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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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Figure 11.3 Environmental uncertainty and the performance of vertical and horizontal designs.


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Technology

– The combination of knowledge, skills,

equipment, computers, and work methods

used to transform resource inputs into

organization outputs.


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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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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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Core service technologies:– Intensive technology

• Focuses the efforts of many people with special expertise on the 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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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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Figure 11.4 Simultaneous “loose-tight” properties of team structures support efficiency and innovation.


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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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Human resources and good organization design —– Provides people with supporting structures

needed for both high performance and work satisfaction.

– 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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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 other subsystems, working toward interests of entire organization.


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Figure 11. 5 Subsystems differentiation among research and development (R&D), manufacturing, and sales divisions.


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Lawrence and Lorsch’s findings on subsystems design …– The total system structures of successful firms

match the challenges of their environments.– The subsystems structures of successful firms

match the challenges of their respective subenvironments.

– Subsystems in successful firms worked well with each other.


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Managing subsystem differentiation:– Differentiation is the degree of difference that

exists among the internal components of an organization.

– Common sources of subsystems differentiation:• Time orientation• Objectives• Interpersonal orientation• Formal structure


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Managing subsystem integration:– Integration is the level of coordination achieved

among an organization’s 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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Mechanisms for achieving subsystem integration:– Rules and procedures– Hierarchical referral– Planning– Direct contact– Liaison role– Task forces– Teams– Matrix organizations


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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.


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Study Question 4: How can work processes be reengineered?

Steps in reengineering core processes:– Identify core processes.– Map core processes in respect to workflows.– Evaluate all tasks for core processes.– Search for ways to eliminate unnecessary tasks or work.– Search for ways to eliminate delays, errors, and

misunderstandings.– Search for efficiencies in how work is shared and

transferred among people and departments.


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Figure 11.6 How reengineering can streamline core business processes.

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Foundations of organizational design robbins&coulter ch11 moghimi