1

The Structural View of Things

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Organization Structure

How work is formally divided, grouped and then-hopefully-coordinated

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Reliability

Clarity

Speed

Efficiency

The Metaphor: The Organization as an Efficient Machine

Effectiveness

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The Fundamental Assumptions•1. Organizations exist to achieve established goals and objectives.•2. Organizations work best when rationality prevails over personal preferences and external pressures.•3. Structures must be designed to fit an organization’s circumstances (including its goals, technology and environment).•4. Organizations increase efficiency and enhance performance through specialization and division of labor.•5. Appropriate forms of coordination and control are essential to ensuring that individuals and units work together in the service of organizational goals.•6. Problems and performance gaps arise from structural deficiencies and can be remedied through restructuring.

5

The Structural View• Metaphor: complex

machine• Leader: analyst, architect• Strategy: do your

homework, analyze, design, weigh, measure, be rational, manage

• Focus: data, logic, structure, plans, policies,(the stuff that makes up most of the MBA degree )

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Key elements in org.structure

• Work specialization: how much should one person know?

• Departmentalization: how to put people together with similar tasks

• Chain of command: line of authority• Span of control: how many to manage• Centralization and decentralization: tall or flat• Formalization: how many rules, formal policies

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The Organization ChartThe Organization Chart

Organization Chart Organization Chart is a box-and-lines illustration showing the formal lines of authority and the organization’s official positions or division of labor

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There are many ways, different options, and various rationale for

dividing up the work…all with different consequences

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Simple Structure

T he or ganiz at ion is composed of a t op manager (owner ) and ar elat ively small number of or ganiz at ional member s (t echnical

wor ker s, suppor t per sonnel).

O rg an iza tion a l M em b er O rg an iza tion a l M em b er O rg an iza tion a l M em b er

O w n er - M an ag er

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TOWER BUILDING: AN EXERCISE IN LEADING,CENTRALIZING- DECENTRALIZING AUTHORITY, AND SPAN OF CONTROL

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Chain of command: to establish authority

• To whom individuals and groups report?• Chain of command is an unbroken line

of authority than extends from the top to the lowest level of organization

• Don’t confuse authority with influence• There are many other patterns of

influence

Such as>>> you tell me.

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Span of Control

How many individuals can a manager direct?

The following factors are often considered:

• Required Contact

• Degree of Specialization

• Ability to Communicate

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Spans of Control: Narrow versus WideSpans of Control: Narrow versus Wide

FF

CEOCEO

NarrowNarrow

Key:Key:T = Top managerM = Middle managerF = First-line (supervisory) manager

TT

MM MMMM

FF FF FF FF

FF FF FF FF

FF

TT

MM

FF

FF FF

MM

FF

FF

FF

TT

MM MMMM

FF FF FF

FF FF FF FF

FF

MM

FF

FF FF

WideWide CEOCEO

MM

FF FF

FF

MM

FF

FF FF

MM

FF FF

FF

MM

FF FF

FF

MM

FF

FF FF

MM

FF FF

FF

MM

FF

FF FF

MM

FF FF

FF

MM

FF

FF FF

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Centralized Vs. Centralized Vs. Decentralized OrganizationsDecentralized Organizations

Centralized Authority Centralized Authority important decisions are made by higher-level managers

Decentralized Authority Decentralized Authority important decisions are made by middle-level and supervisory-level managers

15

TOWER BUILDING: AN EXERCISE IN LEADING, STRUCTURE, AND SPAN OF CONTROL

• Task: Build a tower of sugar cubes as high as you think you can with your non-dominant hand, in five minutes, e.g. if you are right handed use your left hand or vice-versa. Your group score is based upon the number of cubes standing at the end of each round for the two builders. Then add up the three rounds. No practicing  before the exercise begins.

• Form groups of three for three rounds of tower building.• Change leaders for each round.• The other two, who are the builders, blindfold themselves.• If you are done or your tower falls before the end of five minutes,

remain silent until the end of the five minutes.• Begin building your tower as instructed by your group leader when

the instructor says to begin.• If the tower falls, the score is zero. Score the number of cubes that

remain standing at the end of each five minutes. Each group keeps track of total score per round,  then sums all three rounds.

• Between rounds two and three there are three minutes to talk tactics and/or time to practice. Time for training and integration.

 

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• 1. How did the tactics of the leader change from round to round? What helped? What hindered?

• 2. Was more help given than asked for? Did this change?

• 3. Were the structures flat or tall?  Rank each of the three structures 1 to  10

• 1Tall: almost all action directed by the leader.    • 10 Flat: builders work with little direction• 4. Return to your  regular groups Discuss: What do

you think would be the maximum span of control with what kind of structure, flat or tall, to maximize the score? Max number of workers is five. Try a round with the structure you think works best. We'll see which group wins.

•  

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Then There is Functional Structure?

So What Is it?

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Functional Organization: One of the Most Common Ways to Structure

F unct ional st r uct ur es gr oup or ganizat ional member s based on t hef ocus of t heir wor k act ivit y.

M anufacturing M arketing H um an R esources A ccounting and F inance

C hief E xecutiv e

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Other options for dividing the work (continued):

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Organization Chart for a Hospital: A Basic Example of a Function Organization Chart for a Hospital: A Basic Example of a Function Structure Designed to Assure Tension and ConflictStructure Designed to Assure Tension and Conflict

Director of

Personnel

Director of

Admissions

Director of Nutrition &

Food Services

Director of X-Ray &

Laboratory Services

Chief Physician

Director of

Pharmacy

Director of Patient &

Public Relations

Director of Accounting

Director of Surgery

Director of Outpatient Services

Board of Board of DirectorsDirectors

Strategic Strategic Planning AdvisorPlanning Advisor

Chief Executive Chief Executive OfficerOfficer

Legal CounselLegal Counsel

PresidentPresidentCost Containment Cost Containment

StaffStaff

Executive Administrative

Director

Executive Medical Director

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How Might You Lessen the Conflict

In Groups Discuss

What Might You Do? For example, is there a structural change that might help?

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Baldrige performance excellence criteria are a framework that any organization can use to

improve overall performance. Seven areas of examination

Baldrige National Quality Program

• Leadership—Examines how senior executives guide the organization and how the organization addresses its responsibilities to the public and practices good citizenship.

• Strategic planning—Examines how the organization sets strategic directions and how it determines key action plans.

• Customer and market focus—Examines how the organization determines requirements and expectations of customers and markets; builds relationships with customers; and acquires, satisfies, and retains customers.

• Measurement, analysis, and knowledge management—Examines the management, effective use, analysis, and improvement of data and information to support key organization processes and the organization’s performance management system.

• Human resource focus—Examines how the organization enables its workforce to develop its full potential and how the workforce is aligned with the organization’s objectives.

• Process management—Examines aspects of how key production/delivery and support processes are designed, managed, and improved.

• Business results—Examines the organization’s performance and improvement in its key business areas: customer satisfaction, financial and marketplace performance, human resources, supplier and partner performance, operational performance, and governance and social responsibility. The category also examines how the organization performs relative to competitors.

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2003 Saint Luke’s Hospital of Kansas City

National Baldridge Award Winner

http://www.nist.gov/public_affairs/baldrige2003/St.Lukes_3.3.04.pdf

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IN GROUPS:

25

• Meet with your group• Among those presently working, someone share with others an answer to

the question, on what basis is work divided up at your organization?• With what consequences? Where do things break down?

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McDonaldization

Deskilled Jobs

Tightly ControlledAct as Robots

Ruthless Efficiency

Mass Production

Speed

Division of Labor

Success

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Basic Factors to Consider

Grouped By:

*Knowledge or Skill

*Customers or Clients

*Time

*Process

*Place or Geography

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Basic Structural Tensions

How to divide up the work: differentiation

How to coordinatedifferent roles and units afterresponsibilities have been parceled out: integration

Division of Labor and Coordination ofEffort

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Vertical Coordination

Authority

Rules and Policies

Planning and Control Systems

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Strengths of Vertically Integrated Structure

*Efficiencies derive from straightforward processes

*Works well with a stable environment.

*Precision is a premium measured against clear standards

*Maximize responses to predictable markets

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Weaknesses

*Slow to change.

*Difficulty dealing with idiosyncratic problems.

*Stovepipes create subcultures.

*Possible dehumanizing effect on employees.

*Apathy, carelessness and lack of pride.

*Caps on human capacities.

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So….

• How do we do to integrate?

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Ad Hoc Teams Meetings/Committees Task Forces/Teams Matrix Structures NetworksCoordinating Roles

In General We Flatten

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But………

Lateral Coordination

is usually where things usually bog down

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First Semester

LeadershipResidency

Module ITools

CompetitiveAnalysis

Managerial AccountingEconomicsFinancial ManagementQuantitative Decision SkillsExecutive Leadership

Bloch School - EMBA

36

Module IIManagingPeople &Systems

Wash D.C.Residency

Operations ManagementHuman ResourcesManagement Info. SystemsOrganizational & Group Behavior

LeadershipResidency

Module ITools

CompetitiveAnalysis

Managerial AccountingEconomicsFinancial ManagementQuantitative Decision SkillsExecutive Leadership

Bloch School - EMBA

First Semester

Second Semester

37

First Semester

StrategicAssessment

Project

Module IIIThe

EnterpriseandIts

Environment

EntrepreneurshipExecutive LeadershipInternational BusinessStrategic MarketingStrategic Management

Bloch School - EMBA

Third Semester

38

First Semester Second Semester

Module IVStrategic

Leadership

International BusinessLeadership of Strategic ChangeStrategic Management of TechnologyOrganizational Behavior

InternationalResidency

StrategicAssessment

Project

Module IIIThe

EnterpriseandIts

Environment

EntrepreneurshipExecutive LeadershipInternational BusinessStrategic MarketingStrategic Management

Bloch School - EMBA

Third Semester

Fourth Semester

39

Contingency Design Contingency Design

Contingency Contingency DesignDesign the process of fitting the

organization to the environment

40

Discuss

• What are the major factors to consider in the environment?

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The Organizational Environment

Organization

Specific Forces

Demographic / Cultural Forces

General Forces

Work Force Issues

Economic Forces

Technological Forces

International Forces

Political Forces

Customers

Government

Suppliers Unions

Distributors

Competitors

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Sources of Environmental Uncertainty:complexity, dynamism, and richness

As the environment becomes morecomplex, less stable, and poorer, the level of uncertainty increases.

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. Contingency theory states that in order to

manage its environment effectively, an

organization should design its structure

to fit with its environment.

A poor fit between structure and environment

leads to failure, a close fit leads to success

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The Relationship Between Environmental Uncertainty and Organizational Structure

Centralized hierarchy of authorityCentralized hierarchy of authority Decentralized hierarchy of authorityDecentralized hierarchy of authority

Many rules and proceduresMany rules and procedures Few rules and proceduresFew rules and procedures

Specialized tasksSpecialized tasks Shared tasksShared tasks

Formalized communicationFormalized communication Informal communicationInformal communication

Few teams or task forcesFew teams or task forces Many teams or task forcesMany teams or task forces

Narrow span of control, taller structureNarrow span of control, taller structure Wider span of control, flatter structureWider span of control, flatter structure

Organic Organic organizationsorganizations

Mechanistic Mechanistic organizationsorganizations

Environmental UncertaintyStable In flux (variable)

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Types of Organizational Types of Organizational StructuresStructures

1.1. Simple StructureSimple Structure2.2. Functional StructureFunctional Structure3.3. Divisional StructureDivisional Structure4.4. Conglomerate StructureConglomerate Structure5.5. Hybrid StructureHybrid Structure6.6. Matrix StructureMatrix Structure7.7. Team-Based StructureTeam-Based Structure8.8. Virtual Network StructuresVirtual Network Structures

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Hybrid StructuresHybrid Structures

Vice-President, Production

Vice-President, Marketing

Vice-President,

Finance

Vice-President,

Human Resources

Functional Functional divisional divisional structurestructure

PresidentPresident

President President CadillacCadillac

PresidentPresidentBuickBuick

PresidentPresidentPontiacPontiac

PresidentPresidentChevroletChevrolet

Product Product Divisional Divisional StructureStructure

ManagerManagerRegion IRegion I

ManagerManagerRegion IIRegion II

ManagerManagerRegion IIIRegion III

ManagerManagerRegion IVRegion IV

Geographical Geographical divisional structuredivisional structure

A Hypothetical example of what GM might useA Hypothetical example of what GM might use

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Matrix Structure: The Customer as a Member of the CompanyMatrix Structure: The Customer as a Member of the Company

PresidentPresident

Vice Vice President, President,

EngineeringEngineering

Vice Vice President,President,FinanceFinance

Vice Vice President, President, ProductionProduction

ViceVicePresident.President.

SalesSales

Project Manager

and Customer

Project Manager,

and Customer

Project Manager,

and Customer

Project Manager,

and Customer

Functional Functional StructureStructure

Subordinate reports to both Vice President of Sales & to ProjectManager

Project Project structurestructure

At a Kansas City Manufacturing Co.At a Kansas City Manufacturing Co.

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Advantages of Matrix Organization

• Efficient use or resources• Flexibility in conditions of change and

uncertainty• Technical excellence• Freeing top management for long-run planning• Improving motivation and commitment• Providing opportunities for personal

development

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Team-Based StructuresTeam-Based StructuresPresidentPresident

ViceVicePresident, President, Research &Research &

DevelopmentDevelopment

ViceVicePresident, President,

DesignDesign

ViceVicePresident, President,

EngineeringEngineering

ViceVicePresident, President, MarketingMarketing

Product TeamProduct TeamManager,Manager,

ManufacturingManufacturingLight TrucksLight Trucks

Product TeamProduct TeamManager,Manager,

ManufacturingManufacturingSedansSedans

Product TeamProduct TeamManager,Manager,

ManufacturingManufacturingSport CarsSport Cars

Project team members

Functional structure

Project teams

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Network StructureNetwork Structure

Core of Core of personal personal computer computer companycompany

USAUSA

Design Design StudioStudio

SwedenSweden

Engineering Engineering CompanyCompany

JapanJapan

Components Components AssemblyAssembly

Mexico, AsiaMexico, Asia

DistributionDistributionCompanyCompany

CanadaCanadaAccountingAccounting& Finance& Finance

USAUSA

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Summary of Structural Frame

*Looks beyond individuals and operates at organizational level of analysis.

*When structure is overlooked, energy and resources are often misdirected.

*Right structure is a contingency; its character depends on goals, strategies, technology and environment of organization.

*Structures can work for, rather than against both people and the purpose of organizations.

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• While a poor structure makes a high performance impossible, the best structure in the world will not ensure good performance

Peter Drucker

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The Structural Frame

• Structure Iis the fundamental and relatively unchanging features of an organization which are officially sanctioned by those who control it and consist of the way activities and component parts are grouped , controlled and coordinated in order to achieve specific aims and outcomes

• taken alone, structure rarely tells the full story about why folks behave the way they do