Module Thirteen

Organization and Work Design

Levels of Analysis- Organizational BehaviorIndividualTeamOrganizationEnvironment

Organization and Work DesignDesign has become an exciting topic The subject of design is now front and center in grand architectural undertakings from the Opera House in Sydney Australia to the Guggenheim Museum in Bilbao, Spain to the proposals for a new World Trade Center in New York City. Design is the leading edge in dramatic waterfront revitalizations in a number of major cities in the world, and its popularity is evident in the large number of new television shows dedicated to house and kitchen design as well as the variety of household design challenge programs. Design hits the pages of business magazines through the many ergonomic design awards being acknowledged for exciting new products such as Apple Computers iPod or the new Vespa Scooter from Italy.In the Harvard Business Reviews list of breakthrough ideas for 2004, it is even suggested that a Masters of Fine Arts degree is the new MBA degree because the skill of design has the potential to create a significant competitive advantage in the future.Does the same kind of design excitement exist in the world of organization?

What is an organization?An organization is:A social entitydesigned to accomplish tasks that individuals cannot accomplish alonewithin an economic, scientific, cultural, institutional and legal context.Organizations rely on:Division of labor / specializationCoordination of activitiesGrouping of tasks and people

Organizational design involves:Choosing an organizational structure that best fits its:StrategyEnvironmentPeopleTechnologyMaking intelligent trade-offs

Organization Design FrameworkPolicy Choices Passive Design(Contextual Factors) Mess Active Design(Managerial Choices)

The Organization: A System-Based FrameworkINPUTS TRANSFORMATION

OUTPUTS

FEEDBACKSYSTEM BOUNDARIESENVIRONMENT

The Organization: A System-Based Framework INPUTSOrganization ObtainsInputs from Its Environment * Energy * Raw Materials * Human Resources * Financial Resources * Information TRANSFORMATIONOrganization Transforms Inputs and Adds Value to Them * Technical Subsystem * Human Subsystem * Managerial Subsystem

FEEDBACKSYSTEM BOUNDARIES ENVIRONMENT * International Sector* Government Sector * Industry Sector* Socio-Cultural Sector * Market Sector* Resources Sector OUTPUTSOrganization ReleasesOutputs to Its Environment * Products * Services * Waste *Human Satisfaction *Societal Benefits

Key Concepts of General Systems TheorySubsystems or Components A system composed of interrelated parts or elements. True for all systems - Mechanical, Biological, and Social. Every system has at least two interconnected elements.Holism, Synergism, Organicism, and GestaltThe whole is not just the sum of the parts; The system itself can be explained only as a totality. Holism is the opposite of elementarism, which views the total as the sum of its individual parts.Open Systems ViewSystems can be considered one of two ways: (1) closed or (2) open. Open systems exchange information, energy, or material with their environments. Biological and social systems are inherently open systems. Mechanical systems may be open or closed. The concepts of open and closed systems are difficult to defend in the absolute. Systems are considered on an open-closed dimension: i.e., systems are relatively open or relatively closed.

Key Concepts of General Systems TheoryInput-Transformation-Output ModelThe open system can be viewed as a transformation model, in a dynamic relationship with its environment, it receives various inputs, transforms these inputs in some way, and then exports the outputs.System BoundariesIt follows that systems have boundaries that separate them from the environments. The concept of boundaries helps us understand the distinction between open and closed systems. The relatively closed system has rigid, impenetrable boundaries, whereas the open system has permeable boundaries between itself and a broader suprasystem. Boundaries are relatively easily defined in physical and biological systems but are very difficult to delineate in social systems such as organizations.

Key Concepts of General Systems TheoryNegative EntropyClosed physical systems are subject to the force of entropy which increases until eventually the entire system fails. The tendency toward maximum entropy is a movement to disorder, complete lack of resource transformation, and death. In a closed system, the change in entropy must always be positive; however, in open biological or social systems, entropy can be arrested and may even be transformed into negative entropy a process of more complete organization and ability to transform resources because the system imports resources from its environment.Steady State, Dynamic Equilibrium, and HomeostasisThe concept of steady state is closely related to that of negative entropy. A closed system eventually must attain an equilibrium state with maximum entropy death or disorganization. However, an open system may attain a state in which the system remains in dynamic equilibrium through the continuous inflow of materials, energy, and information.

Key Concepts of General Systems TheoryFeedbackThe concept of feedback is important in understanding how a system maintains a steady state. Information concerning the outputs or the process of the system is fed back as an input into the system, perhaps leading to changes in the transformation process and/or future outputs. Feedback can be both positive and negative, although the field of Cybernetics is based on negative feedback. Negative feedback is informational input which indicates that the system is deviating from a prescribed course and should readjust to a new steady state.HierarchyA basic concept in systems thinking is that of hierarchical relationships between systems. A system is composed of subsystems of a lower order and is also part of a suprasystem. Thus, there is a hierarchy of the components of the system.

Key Concepts of General Systems TheoryInternal ElaborationClosed systems move toward entropy and disorganization. In contrast, open systems appear to move in the direction of greater differentiation, elaboration, and a higher level of organization.Multiple Goal SeekingBiological and social systems appear to have multiple goals or purposes. Social organizations seek multiple goals, if for no other reason than that they are composed of individuals and submits with different values and objectives.Equifinality of Open SystemsIn mechanistic systems there is a direct cause-and-effect relationship between the initial conditions and the final state. Biological and social systems operate differently. Equifinality suggests that certain results may be achieved with different initial conditions and in different ways. This view suggests that social organizations can accomplish their objectives with diverse inputs and with varying internal activities (Conversion processes).

WORK & ORGANIZATION DESIGNAt the most basic level, the structural arrangements are usually the products of rational decisions about:How to divide the labor (how should tasks and responsibilities be allocated among individuals)Which departmentalization to use (e.g., simple, functional, divisional, matrix, ) meaning how employees and activities are grouped togetherHow authority is to be distributed within and among organizational units (centralized, decentralized)What systems of coordination (e.g. cross-functional teams), control (e.g., rules) and rewards (e.g., pay structures) are appropriate for achieving collective ends

ELEMENTS OF ORGANIZATIONAL STRUCTUREFour basic structural elements (YOU NEED TO KNOW THESE TERMS): Span of control (# of people directly reporting to next level in the hierarchy)Centralization/decentralization (degree to which formal decision authority is held by a small group of people)Formalization (degree to which organizations standardize behavior through rules, procedures, training cooking and bagging fries at McDonalds)Departmentalization e.g., functional, divisional, matrix (specifies how employees and their activities are grouped togetheralternatively considered organizational chart)

Organization Design: The Star Model

Organization Performance Model

Forms of StructureSimpleFunctionalProduct or Self-ContainedMixed or HybridProcess OrganizationNetwork Organization

SIMPLE STRUCTUREOwnership = controlMain strategy/goalExistingExtending the personal skills of the entrepreneurPros: People specialize in areas of expertise, relative ease of coordination given size of businessMain drawback: cannot deal with complexity

Functional Form of StructurePresidentManufacturingAccountingMarketingR&D

FUNCTIONAL STRUCTUREGroup personnel on the basis of function performed, or work process, or functional knowledge, training or academic knowledgePros: Efficiency. Work well when business and environment are stable. Foster professional identity and clarify career paths. Direct supervision is easier because managers have background in function. Create pools of talent that serve the organization. Key downsides: Barriers between functions, employee lack of understanding of business, dysfunctional conflict Key: Typically utilized when an organization outgrows a simple structureExample: OCOB

Product (Self-Contained) FormPresidentProductGroup 1R&D Mfg. Acct. Mkt.ProductGroup 2ProductGroup 3R&D Mfg. Acct. Mkt.R&D Mfg. Acct. Mkt.

DIVISIONAL STRUCTUREKey specializationSemi-autonomous divisions (could be products - see above chart; clients - advertising firm organizes on automotive and hotel clients; or geography North and South American regions) Key pros: Greater responsiveness to a changing environment, improved coordination around product, decision making closer to customer, improved customer satisfactionKey downsides:Reinventing the wheel (each division has its own functions), barriers between divisions, transfer prices, destructive within firm competition Main strategy/goalDiversificationTypically used by mid- to large-size companies (although can be used by smaller companies)Example: McDonalds (Geography)

Matrix FormGeneral ManagerMarketingManufacturingEngineeringProjectManagerProgramProgram

MATRIX STRUCTURE (HYBRID)Multiple chain of command (Some employees have two supervisors) Key pros: Ideal for project based organizations, project flexibility, innovationKey downsidesCoordination costs associated with having more than one boss; time associated with communication with two bossesStressMain strategy/goalTypically used by large companies(although can be smaller) pursuing technological advantage, speed, and multiple markets at the same timeExamples: NASA, Boeing

Dynamic Network FormFashionCompanyHeadquarters(Broker)ProductdistributionProductdesignProductmanufacturingAccountsreceivableAdvertising

Horizontal and Flexible StructuresPeople get things done by working across organizational units rather than relying on a managerial hierarchyOrganization is decentralized with a free flow of informationInformal, voluntary cooperation requiredTypes: Process organization Designs for global competition Network organizations Matrix, transnational, keiretsu, and global consortia formats

Comprehensive Approaches to Organization DesignThree Orientations That Can Be Used To Guide Redesign Programs

Information ProcessingSelf-DesignSustainable Work Systems

Macro Organization DesignCultural Values and AssumptionsBusinesssituationGoals andstrategiesTask andworkprocessesGroupingEmergentbehaviorBusinessresultsLinkingInformation TechnologyManagerial processesDesign Choices

Self Design Process ModelConceptual andempirical knowledgeGroup valuesDiagnostic dataDefiningorganizationalissuesAgreeingon designcriteria

Identifying Design CriteriaFinalizingthe designReceivingfeedback andtesting againstcriteriaChoosingthe designTesting for consistency among components; testing against criteriaGeneratingalternativedesigns

Sustainable Work Systems

Types of TeamsSelf-Directed Work TeamsLean Production TeamsOff-Line Teams

Criteria of Work-Group Autonomy6.The group decides on questions of production method7.The group determines the internal distribution of tasks8.The group decides on questions of recruitment9.The group decides on questions of internal leadership10.The group members determine their individual production methods

1.The group has influence on its qualitative goals2.The group has influence on its qualitative goals 3.The group decides on questions of external leadership4.The group decides what additional tasks to take on5.The group decides when it will work

Source: Jon Gulowsen, A Measure of Work-Group Autonomy, In Davis, L.E., and Taylor, J.C., (eds.), Design of Jobs, (Santa Monica, CA: Goodyear, 1979), pp.207-209

Newer, Job-Focused Redesign OptionsJob EnlargementJob SharingFlexible Work SchedulesJob EnrichmentJob Characteristics Approach to JE

The Job Characteristics ModelCore jobdimensionsCritical psychologicalstatesPersonaland workoutcomesSkill varietyTask identityTask significanceExperiencedmeaningfulnessof the workExperiencedresponsibilityfor outcomesof the workKnowledge of theactual results ofthe work activitiesEmployee growthNeed strengthAutonomyFeedbackHigh internal workmotivationHigh-quality workperformanceHigh satisfactionwith the workLow absenteeismand turnover

WORK AND ORGANIZATION DESIGN (1)Structure = patterns of formalized interactionsStructure evolves through and with timeLink between structure, environment, and strategic goal is crucialOne size does not fit all: there are multiple designs availableEssence of design = choosing ones preferred trade-off

WORK AND ORGANIZATION DESIGN (2)Work design and organization design can be viewed as ways to create experiences, not only produce a product or a service.Depending on the strategic choice, the organization could be designed to match or align with the environment, it could be designed to deliberately misalign with the environment by finding niches of opportunity between the dominant environmental forces, or it could lead the environment Work & Organization design are not restricted to a structural perspective. People and the roles they play are manifested through organizational processes. For example, poor organization design can block the free flow of communications, creativity and innovation. We have viewed work & organization design as a holistic process that comprises several sequential variables: strategic or policy choices, design requirements that can make these choices operational , and design dimensions that bound and specify the requirements and lead to a realized design.

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