Designing Effective Organizations

Chapter Fifteen

Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/IrwinOrganizational Behavior: Key Concepts, Skills & Best Practices, 3/e

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After reading the material in this chapter, you should be able to:

• Describe the four characteristics common to all organizations.

• Explain the difference between closed and open systems, and contrast the military/mechanical, biological, and cognitive systems metaphors for organizations.

• Describe the four generic organizational effectiveness criteria.

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After reading the material in this chapter, you should be able to:

• Explain what the contingency approach to organizational design involves.

• Discuss Burns and Stalker’s findings regarding mechanistic and organic organizations.

• Describe new-style and old-style organizations, and list the keys to managing geographically-dispersed employees in virtual organizations.

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What is an Organization?

• Organization - system of consciously coordinated activities of two or more people.

• 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 15-1

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Organization Charts

• Span of control - the number of people reporting directly to a given manager.

• 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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The Organization as an Open System: The Biological Model

Figure 15-2

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Four Dimensions of Organizational Effectiveness

Figure 15-3

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Question?

Which effectiveness criteria is the most widely used?

A. Goal accomplishment B. Resource acquisitionC. Internal processesD. Strategic constituencies satisfaction

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Generic Effectiveness Criteria

• Goal accomplishment – most widely used effectiveness criteria

• 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 is appropriate when organizational performance is strongly influenced by specific processes

• Strategic constituencies approach is 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. CentralizedB. DecentralizedC. FundamentalD. Primary

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Different 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 15-1

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How to ManageGeographically Dispersed Employees

• Hire carefully• Communicate regularly• Practice “management by wandering around”

• Conduct regular audits• Use technology as a tool, not a weapon• Achieve a workable balance between online and live training

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Video: Wal-Mart

Paul Solman reports on Wal-Mart’s efforts to improve its public image. (9:42)