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4-Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 1
Organizational Theory,
Design, and Change
Sixth Edition
Gareth R. Jones
Chapter 4
Basic Challenges ofOrganizational
Design
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Diferentiation
Diferentiation: he process by !hichan organi"ation allocates people andresources to organi"ational tas#s andestablishes the tas# and authority
relationships that allo! the organi"ationto achie$e its goalsDivision o labor: the degree o%
speciali"ation in the organi"ation In a si&ple organi"ation, di'erentiation is lo!
because the di$ision o% labor is lo! Indi$iduals typically per%or& all organi"ational tas#s
In a co&ple( organi"ation, di'erentiation ishigh because the di$ision o% labor is high
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Figure 4.1: DesignChallenge
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Figure 4.1: DesignChallenge (cont.)
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Figure 4.1: DesignChallenge (cont.)
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Figure 4.1: DesignChallenge (cont.)
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Figure 4.1: DesignChallenge (cont.)
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Organizational Roles
he basic building bloc# o% di'erentiationare organi"ational roles
Organizational Roles: the set o% tas#-
related beha$iors reuired o% a personby his or her position in an organi"ation /s the di$ision o% labor increases, &anagers
speciali"e in so&e roles and hire people to
speciali"e in others peciali"ation allo!s people to de$elop
their indi$idual abilities and #no!ledge!ithin their specic role
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Organizational Roles(cont.)3rgani"ational structure is based on a
syste& o% interloc#ing roles and theseroles deter&ine authority and control
Authority: the po!er to hold peopleaccountable %or their actions and to&a#e decisions concerning the use o%organi"ational resources
Control: the ability to coordinate and&oti$ate people to !or# in theorgani"ations interests
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Subunits: Functions andDivisions
5oles are typically grouped into subunits Function: a subunit co&posed o% a group
o% people, !or#ing together, !ho possesssi&ilar s#ills or use the sa&e #ind o%
#no!ledge, tools, or techniues to per%or&their 6obs Division: a subunit that consists o% a
collection o% %unctions or depart&ents thatshare responsibility %or producing a
particular good or ser$ice Organizational complexity: the nu&ber
o% di'erent %unctions and di$isionspossessed by an organi"ation
7egree o% di'erentiation
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Diferent !inds o"Functions Support unctions: %acilitate an organi"ations control
o% its relations !ith its en$iron&ent and its sta#eholders Purchasing, sales and &ar#eting, public relations, and legal
a'airs ro!uction unctions: &anage and i&pro$e the
e8ciency o% an organi"ations con$ersion processes sothat &ore $alue is created
Production operations, production control, and ualitycontrol
"aintenance unctions: enable an organi"ation to#eep its depart&ents in operation
Personnel, engineering, and 6anitorial ser$ices
A!aptive unctions: allo! an organi"ation to ad6ust tochanges in the en$iron&ent
5esearch and de$elop&ent, &ar#et research, and long-range planning
"anagerial unctions: %acilitate the control andcoordination o% acti$ities !ithin and a&ong depart&ents
/cuisition o%, in$est&ent in, and control o% resources
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Figure 4.#: $uilding $loc%s o"Diferentiation
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&ertical and 'orizontalDiferentiation #ierarchy: a classication o% people
according to their relati$e authority and ran#
$ertical !iferentiation: the !ay anorgani"ation designs its hierarchy o% authority
and creates reporting relationships to lin#organi"ational roles and subunits Establishes the distribution authority bet!een
le$els
#orizontal !iferentiation: the !ay an
organi"ation groups organi"ational tas#s intoroles and roles into subunits 9%unctions anddi$isions:
5oles di'erentiated according to their &ain tas#responsibilities
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Figure 4.: OrganizationalChart o" the $..R. and*rille
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Figure 4.4: OrganizationalDesign Challenges
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$alancing Diferentiationand +ntegration Hori"ontal di'erentiation is supposed to
enable people to speciali"e and beco&e &oreproducti$e peciali"ation o%ten li&its co&&unication bet!een
subunits People de$elop subunit orientation Subunit orientation: a tendency to $ie! ones role
in the organi"ation strictly %ro& the perspecti$e o% theti&e %ra&e, goals, and interpersonal orientations o%ones subunit
;hen subunit orientation occurs, co&&unication%ails and coordination beco&es di8cult
%ntegration: the process o% coordinating$arious tas#s, %unctions, and di$isions so thatthey !or# together and not at cross-purposes
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,-es o" +ntegration/echanis0s
#ierarchy o authority: dictates
acti$ities Proble&atic that a &anager in one %unction has no authority
o$er a &anager in another
&iaison roles: a specic &anager is gi$en responsibility %orcoordinating !ith &anagers %ro& other subunits on behal%o% their subunits
'as( orce: &anagers &eet in te&porary co&&ittees tocoordinate cross-%unctional acti$ities
as# %orce &e&bers responsible %or ta#ing coordinatingsolutions bac# to their respecti$e %unctions %or %urther input andappro$al
'eams: a per&anent tas# %orce used to deal !ith ongoingstrategic or ad&inistrati$e issues
%ntegrating role: a ne!, %ull-ti&e role established toi&pro$e co&&unications bet!een di$isions
>ocused on co&pany-!ide integration
%ntegrating !epartment: a ne! depart&ent intended tocoordinate the acti$ities o% %unctions or di$isions
Created !hen &any e&ployees enact integrating roles
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$alancing Diferentiation and+ntegration ?anagers &ust t le$el o%
integration and le$el o%di'erentiation
7i'erentiation and integration&ust be balanced
Co&ple( organi"ations need &ore
integration i&ple organi"ations need less
integration
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$alancing Centralizationand Decentralization Centralize! organization: the authority to
&a#e i&portant decisions is retained by tople$el &anagers op &anagers able to coordinate acti$ities to #eep
the organi"ation %ocused on its goals
Decentralize! organization: the authorityto &a#e i&portant decisions is delegated to&anagers at all le$els in the hierarchy Pro&otes @e(ibility and responsi$eness
Ideal balance entailsA Enabling &iddle and lo!er &anagers !ho are at
the scene o% the action to &a#e i&portant decisions /llo!ing top &anagers to %ocus on long-ter&
strategy &a#ing
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$alancing Standardizationand /utual dust0ent Stan!ar!ization: con%or&ity to
specic &odels or e(a&ples that areconsidered proper in a gi$en situation 7ened by rules and nor&s
"utual a!)ustment: the processthrough !hich people use their
6udg&ent rather than standardi"edrules to address proble&s, guidedecision &a#ing, and pro&otecoordination
Formalization: the use o% rules and
procedures to standardi"e operations
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$alancing Standardization
and /utual dust0ent (cont.) ociali"ationA Bnderstood or&s
Rules: %or&al, !ritten state&ent thatspeci%y the appropriate &eans %orreaching desired goals
*orms: standards or styles o% beha$iorthat are considered typical %or a group o%people ?ay arise in%or&ally E(ternal rules &ay beco&e internali"ed nor&s
Socialization: the process by !hichorgani"ational &e&bers learn the nor&so% an organi"ation and internali"e theseun!ritten rules o% conduct
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Standardization versus/utual dust0ent Challenge %acing &anagers isA
o nd a !ay o% using rules andnor&s to standardi"e beha$ior, and
to allo! %or &utual ad6ust&ent togi$e &anagers opportunity todisco$er ne! and better !ays to
achie$e goals
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/echanistic and OrganicOrganizational Structures"echanistic structures:
designed to induce people tobeha$e in predictable, accountable
!aysOrganic structures: structures
that pro&ote @e(ibility, so people
initiate change and can adaptuic#ly to changing conditions
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Figure 4.2: 'o3 the Design ChallengesResult in /echanistic and OrganicStructures
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Contingenc- roach
/ &anage&ent approach in !hich the designo% an organi"ations structure is tailored tothe sources o% uncertainty %acing anorgani"ation
3rgani"ation should design its structure to tits en$iron&ent
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Figure 4.1: Relationshi $et3een5nviron0ental 6ncertaint- and
Structure