ORGANIZATION MANAGEMENT Organizational Design. McKinsey 7-S Model Strategy Structure Systems Style Staff Skills Superordinate goals

ORGANIZATION MANAGEMENT

Organizational Design

McKinsey 7-S Model Strategy Structure Systems Style Staff Skills Superordinate goals

McKinsey 7-S Model

Strategy Structure Systems Style Staff Skills Superordinate goals

The hard elements are factual and easy to identify. They can be found in strategy statements, corporate plans, organization charts, and other documentation

The Hard S’s

McKinsey 7-S Model Strategy Structure Systems Style Staff Skills Superordinate goals

The soft elements are difficult to describe since they are continuously developing and changing. They are highly determined by the people at work in the organization.

The Soft S’s

7-S Model – The Hard S’s

Strategy Actions a company plans in response to or in anticipation of

changes in its external environment

Structure Basis for specialization and coordination, influenced

primarily by strategy and by organization size and diversity

Systems Formal and informal procedures that support the strategy

and structure (Systems are more powerful than they are given credit)


Organizational Structure

Organization Chartformal reporting relationships levels in hierarchyspans of controldepartmentalization

Systems to facilitate:coordinationcommunication integration


Structural Designs Functional Structure

Can adapt functional structure with horizontal linkages

Divisional Structure Geographical Structure Matrix Structure Horizontal Structure /

Product Line Structure Hybrid Structure

C h ie fA cco u nta n t

B u dg etA n a lyst

V ice P re sid e n tF ia na n ce

P la n tS u pe rin ten de nt

M a in te na n ceS u pe rin ten de nt

V ice P re sid e n tM a nu fa c tu ring

T ra in ingS p e c ia list

B e ne fitsA d m in is tra to r

D ire c to rH u m an R e so u rces

C E O


Other Organizational Forms Joint Ventures Licensing agreements Strategic Alliances Consortia Virtual organizations Global (transnational) Work Teams


Virtual Teams

Virtual Teams are characterized by: Distributed locations of team members Use of information technology to accomplish tasks Effective when:

Communication & collaboration skills are high. Trust among team members is high

Organizations are increasing their use of virtual teams

Potential for improvement in virtual team management is huge


Information Linkages

Vertical Information Linkages Hierarchy Rules and plans (i.e. budget)

Horizontal Information Linkages Information systems Liaison role Task force Integrator role (i.e. Project manager) Cross-functional teams


Ladder of Mechanisms for Horizontal Linkage and

Coordination

HIGH

LOW

LOW

Information Systems

Direct Contact

Task Forces

Full-time Integrators

Teams

Am

ount

of

Hori

zonta

lC

oord

inati

on R

equir

ed

Cost of Coordination in Time and Human Resources

H IGH

Systems – various elements

Communications practice and system Management reporting system Approval process Planning/budgeting system Rewards system including appraisal “Rules”


From Tasks to Structure

Tasks define jobs Jobs define skills required Skills (and other considerations) define

staff Over time skills change as staff gains

knowledge and experience, and as technology and corporate infrastructure mature

Collection of jobs basis for structure


Job design considerations Do they have the necessary skills and

knowledge to fulfill proposed / expanded job requirements?

What are the needs of the incumbent or the rest of your workforce in general? Monetary Growth Socialization


7-S Model – The Soft S’s - 1 Style / Culture

The culture of the organization, consisting of Organizational culture: the dominant values, beliefs and

norms which develop over time and become relatively enduring features of organization life

Management style: what managers do rather than what they say (where they spend their time and attention, what they allow, what they reward, etc)

Staff Skills Shared values /

Superordinate goals


7-S Model – The Soft S’s - 2 Style / Culture Staff

The people/human resource management – ways of shaping basic management values, processes used to develop managers, ways of introducing new employees and managing careers, socialization processes

Skills Distinctive competencies – what the company does best,

ways of developing or shifting competencies

Shared values / Superordinate goals Guiding concepts, fundamental ideas around which a

business is built – simple, usually stated at abstract level, have great meaning inside the organization, although outsiders may not see or understand them


Organizational Culture Culture is to organizations what

personality is to individuals

All companies have cultures Culture by default Culture by design – thoughtful choices

based on values and core beliefs

How does a company consciously create its culture?


From Gray & Larson “Project Management: The Managerial Process”

Types of Organizational Cultures Control cultures –

Drive for predictability and order

Collaboration cultures – Pursue close relationship with customers

Competence cultures – Pursue excellence and innovation

Cultivation cultures – Pursue life enrichment for customers and employees


Organizational CultureOrganizational Culture Observable Evidence:

Symbols Ceremonies Stories Behaviors Language Dress

Underlying Roots: Values, Assumptions, Beliefs, Attitudes, Feelings


Culture in practice Conflict management

Relationship or interpersonal conflict Task / process conflict Functional vs. dysfunctional conflict Factors: goal incompatibility, limited resources,

differences

Power – the capacity to influence behavior Positional power: rewards/consequences, control

of resources, information and decision control Personal power: expert, referent (based on

identification and admiration)

Politics – the use of power to influence decisions


Planning & vs. Setting the budgeting direction

Organizing & vs. Aligning people staffing

Controlling & vs. Motivating people problem solving

Management vs. Leadership

Management is about coping with complexity Leadership is about coping with change

Management vs. Leadership Some managers (but not all) are leaders Some leaders (but not all) are good managers A manager gets work done through the efforts

of other people Includes planning, organizing, motivating, and

controlling

A leader creates and realizes a vision Communicates that vision and moves the

organization toward that vision Strategy Structure Systems Style Staff Skills Superordinate goals

McKinsey 7-S Model


Effective organizations achieve a harmony between these seven elements; if one element changes, then this will affect all the others

McKinsey 7-S Model

The 7-S Model can be a valuable tool to initiate change processes and to give them direction; i.e. determine current state and ideal state of each element, and develop action plans to close the gaps


McKinsey 7-S Model

In change processes, many organizations focus their efforts on the hard S’s; however, the soft factors can make or break a successful change process. All factors must be accounted for.


McKinsey 7-S Model

Interrelated Equilibrium Foundation of

corporate culture Levers available to

management


Executing Change – Seven Key Considerations

Strategic Intent Substance Scale Scope/Breadth Speed Sequence Style

Style

Scope Substance

Speed

Sequence

Scale

StrategicIntent

Strategic Intent

Substance

Scale

Scope/Breadth

Speed

Sequence

Style

Style

Scope Substance

Speed

Sequence

Scale

StrategicIntent

Precise Broad

Soft S’s Hard S’s

Small Large

Isolated Organization-wide

Slow Fast

Hard – Soft Soft – Hard

Top Down Bottom Up

Assignment Read BA 550 class packet:

Turning Great Strategy into Great Performance Governance and Strategy Implementation

Case brief – Americhem Last names beginning with A – M

Complete proposal on term project

Documents

ORGANIZATION MANAGEMENT Organizational Design. McKinsey 7-S Model Strategy Structure Systems Style Staff Skills Superordinate goals