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Organizational Design: How a Structure Connects Employees and Tasks

Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinOrganizational Behavior, Core Concepts

13Organizational Behavior

core concepts

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Learning Objectives

• Define organizations and their basic dimensions

• Explain commonly used metaphors for organizations as closed or open systems, military/mechanical bureaucracies, and biological and cognitive systems

• Describe basic criteria for organizational effectiveness

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Learning Objectives

• Summarize what is involved in the contingency approach to organizational design

• Discuss new-style and old-style organizations, including virtual organizations

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What is an Organization?

• Organization – system of consciously coordinated activities

of two or more people.

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What is an Organization?

• Four common denominators– Coordination of effort– Common goal– Division of labor– Hierarchy of authority

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Designing Effective Teams

See an article from Administrative Science Quarterly on designing effective teams

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What is an Organization?

• Unity of command principle – each employee should report to a single

manager.

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Organization Charts

• Organization chart – boxes-and-lines illustration showing chain of

formal authority and division of labor.

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Sample Organization Chart for a Hospital

Figure 13-1

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Organization Charts

• Hierarchy of authority

• Division of labor

• Span of control – the number of people reporting directly to a

given manager

• Line and staff positions

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Line and Staff Positions

• Staff personnel – provide research, advice, and

recommendations to line managers.

• Line Managers – have authority to make organizational

decisions.

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Needed: Open-System Thinking

• Closed System – self-sufficient entity, closed to the

surrounding environment.

• Open System – organism that must constantly interact with

its environment to survive

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Organizations as Military/Mechanical Bureaucracies• Bureaucracy

– Max Weber’s idea of the most rationally efficient form of organization

• Weber’s Bureaucracy– Division of labor– A hierarchy of authority– A framework of rules– Administrative personality

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Organizations as Biological Systems• The complex organization is a set of

interdependent parts which together make up a whole because each contributes something and receives something from the whole, which in turn is interdependent with some larger environment

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The Organization as an Open System: The Biological Model

Figure 13-2

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Organizations as Cognitive Systems

• Organizations have mechanisms to interpret ambiguous events and to provide meaning and direction for participants

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Question?

Which effectiveness criteria is the most widely used?

A. Goal accomplishment

B. Resource acquisition

C. Internal processes

D. Strategic constituencies satisfaction

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Generic Effectiveness Criteria

• Goal accomplishment – most widely used effectiveness criteria,

measured by comparing key organizational results with previously stated goals

• Resource acquisition – organization is effective if it acquires

necessary factors of production

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Generic Effectiveness Criteria

• Internal processes – healthy system if information flows smoothly

and if employee loyalty, commitment, job satisfaction prevail

• Strategic constituencies satisfaction– Strategic constituency: any group of

people with a stake in the organization’s operation or success.

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Mixing Effectiveness Criteria: Practical Guidelines

• Goal accomplishment – approach is appropriate when goals are

clear, consensual, time-bounded, and measurable

• Resource acquisition – approach is appropriate when inputs have a

traceable effect on results or output

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Mixing Effectiveness Criteria: Practical Guidelines

• Internal processes – appropriate when organizational

performance is strongly influenced by specific processes

• Strategic constituencies – appropriate when powerful stakeholders can

significantly benefit or harm the organization

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The Contingency Approach to Designing Organizations• Contingency approach to organization

design – creating an effective organization-

environment fit.

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Mechanistic versus Organic Organizations• Mechanistic organizations

– Rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication.

• Organic organizations – Flexible networks of multitalented individuals

who perform a variety of tasks

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Question?

In what type of decision making do top managers make all key decisions?

A. Centralized

B. Decentralized

C. Fundamental

D. Primary

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Approaches to Decision Making

• Centralized decision making – top managers make all key decisions

• Decentralized decision making– lower-level managers are empowered to

make important decisions

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New-Style versus Old-Style Organizations

Table 13-1

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Virtual Organizations

• Virtual Organizations – modern information technology allows

people to get something accomplished despite being geographically dispersed