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PowerPoint Presentation to Accompany Chapter 11 of Management Canadian Edition Schermerhorn Wright Prepared by:Michael K. McCuddy Adapted by: Lynda Anstett.

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Presentation on theme: "PowerPoint Presentation to Accompany Chapter 11 of Management Canadian Edition Schermerhorn Wright Prepared by:Michael K. McCuddy Adapted by: Lynda Anstett."— Presentation transcript:

1 PowerPoint Presentation to Accompany Chapter 11 of Management Canadian Edition Schermerhorn Wright Prepared by:Michael K. McCuddy Adapted by: Lynda Anstett & Lorie Guest Published by: John Wiley & Sons Canada, Ltd.

2 Management - Chapter 112 Planning Ahead Chapter 11 Study Questions What are the essentials of organizational design? How do contingency factors influence organization design? What are the major issues in subsystems design? How can work processes be reengineered?

3 Management - Chapter 113 Study Question 1: What are the essentials of organizational design? Organizational design – Choosing and implementing structures that best arrange resources to serve the organizations mission and objectives. – A problem-solving activity that should be approached from a contingency perspective.

4 Management - Chapter 114 Figure 11.1 A framework for organizational designaligning structures with situational contingencies.

5 Management - Chapter 115 Study Question 1: What are the essentials of organizational design? Organizational effectiveness – Sustainable high performance in using resources to accomplish mission and objectives. – Approaches: Systems resource approach focuses on inputs. Internal process approach focuses on transformation process. Internal process approach focuses on outputs. Internal process approach focuses on environment.

6 Management - Chapter 116 Study Question 1: What are the essentials of organizational design? Short-run, medium-run and long-run criteria for evaluating organizational effectiveness: – Short-run focus. Goal accomplishment. Performance efficiency in resource utilization. Stakeholder satisfaction. – Medium-run focus. Adaptability in the face of changing environments. Development of people and systems to meet new challenges. – Long-run focus. Survival under conditions of uncertainty.

7 Management - Chapter 117 Study Question 1: What are the essentials of organizational design? Bureaucracy – A form of organization based on logic, order, and the legitimate use of formal authority. – Bureaucratic designs feature … Clear-cut division of labor. Strict hierarchy of authority. Formal rules and procedures. Promotion based on competency.

8 Management - Chapter 118 Study Question 1: What are the essentials of organizational design? Contingency perspective on bureaucracy asks the questions: –When is a bureaucratic form a good choice for an organization? –What alternatives exist when it is not a good choice? Environment determines the answers to these questions. –A mechanistic design works in a stable environment –An organic design works in a rapidly changing and uncertain environment.

9 Management - Chapter 119 Figure 11.2 A continuum of organizational design alternatives: from bureaucratic to adaptive organizations.

10 Management - Chapter 1110 Study Question 1: What are the essentials of organizational design? Structural characteristics associated with design alternatives: –Goal predictability versus adaptability. –Authority centralized versus decentralized. –Rules and procedures many versus few. –Spans of control narrow versus wide. –Tasks specialized versus shared. –Teams and task forces few versus many. –Coordination formal and impersonal versus informal and personal.

11 Management - Chapter 1111 Study Question 1: What are the essentials of organizational design? Mechanistic Designs –Predictable goals –Centralized authority –Many rules and procedures –Narrow spans of control –Specialized tasks –Few teams and task forces –Formal and impersonal means of coordination Organic Designs –Adaptable goals –Decentralized authority –Few rules and procedures –Wide spans of control –Shared tasks –Many teams and task forces –Informal and personal means of coordination

12 Management - Chapter 1112 Study Question 2: How do contingency factors influence organization design? Checklist for identifying contingency factors in organizational design: –Does the design fit well with the major problems and opportunities of the external environment? –Does the design support implementation of strategies and the accomplishment of key operating objectives? –Does the design support core technologies and allow them to be used to best advantage? –Can the design handle changes in organizational size and different stages in the organizational life cycle? –Does the design support and empower workers and allow their talents to be used to best advantage?

13 Management - Chapter 1113 Study Question 2: How do contingency factors influence organization design? Environment and organizational design – Certain environment … Relatively stable and predictable elements. Bureaucratic organizations and mechanistic designs are appropriate. –Uncertain environment … More dynamic and less predictable elements. Adaptive organizations and organic designs are appropriate.

14 Management - Chapter 1114 Study Question 2: How do contingency factors influence organization design? Strategy and organizational design –Structure follows strategy. –Stability strategy is supported by : –Bureaucratic organizations using mechanistic designs. –Growth strategies are is supported by : –Adaptive organizations using organic designs.

15 Management - Chapter 1115 Figure 11.3 Environmental uncertainty and the performance of vertical and horizontal designs.

16 Management - Chapter 1116 Study Question 2: How do contingency factors influence organization design? Technology –The combination of knowledge, skills, equipment, computers, and work methods used to transform resource inputs into organization outputs.

17 Management - Chapter 1117 Study Question 2: How do contingency factors influence organization design? Core manufacturing technologies: –Small-batch production. A variety of custom products are tailor-made to order. –Mass production. A large number of uniform products are made in an assembly- line system. –Continuous-process production. A few products are made by continuously feeding raw materials through a highly automated production system with largely computerized controls.

18 Management - Chapter 1118 Study Question 2: How do contingency factors influence organization design? Technology and organization design –The technological imperative Technology is a major influence on organizational structure. The best small-batch and continuous process plants have more flexible organic structures. The best mass-production plants have more rigid mechanistic structures.

19 Management - Chapter 1119 Study Question 2: How do contingency factors influence organization design? Core service technologies: –Intensive technology Focuses the efforts of many people with special expertise on the needs of patients or clients. –Mediating technology Links together parties seeking a mutually beneficial exchange of values. –Long-linked technology Functions like mass production, where a client is passed from point to point for various aspects of service delivery.

20 Management - Chapter 1120 Study Question 2: How do contingency factors influence organization design? Organization size, life cycle, and design – Larger organizations tend to have more mechanistic designs, but it is not always best. –Organizational life cycle: Birth stage small size, simple structure. Youth stage rapid growth in size, simple structure experiences stress. Midlife stage growing to large size, more complex and formal structure. Maturity stage stabilizes at large size, mechanistic structure.

21 Management - Chapter 1121 Figure 11.4 Simultaneous loose-tight properties of team structures support efficiency and innovation.

22 Management - Chapter 1122 Study Question 2: How do contingency factors influence organization design? Coping with the disadvantages of large size: –Downsizing. Reducing the scope of operations and number of employees. –Intrapreneurship. The pursuit of entrepreneurial behavior by individuals and subunits within large organizations. –Simultaneous structures. Organizations that combine mechanistic and organic designs.

23 Management - Chapter 1123 Study Question 2: How do contingency factors influence organization design? Human resources and good organization design –Provides people with supporting structures needed for both high performance and work satisfaction. –Produces a good fit between organization structures and human resources. –Allows the expertise and talents of organization members to be unlocked and utilized.

24 Management - Chapter 1124 Study Question 3: What are the major issues in subsystems design? Basics of subsystem design … –Subsystem A department or work unit headed by a manager. Operates as a smaller part of the larger organization. –Ideally, each subsystem supports other subsystems, working toward interests of entire organization.

25 Management - Chapter 1125 Figure 11. 5 Subsystems differentiation among research and development (R&D), manufacturing, and sales divisions.

26 Management - Chapter 1126 Study Question 3: What are the major issues in subsystems design? Lawrence and Lorschs findings on subsystems design … –The total system structures of successful firms match the challenges of their environments. –The subsystems structures of successful firms match the challenges of their respective subenvironments. –Subsystems in successful firms worked well with each other.

27 Management - Chapter 1127 Study Question 3: What are the major issues in subsystems design? Managing subsystem differentiation: –Differentiation is the degree of difference that exists among the internal components of an organization. –Common sources of subsystems differentiation: Time orientation Objectives Interpersonal orientation Formal structure

28 Management - Chapter 1128 Study Question 3: What are the major issues in subsystems design? Managing subsystem integration: –Integration is the level of coordination achieved among an organizations internal components. –Organization design paradox Increased differentiation creates the need for greater integration. Integration is more difficult to achieve as differentiation increases.

29 Management - Chapter 1129 Study Question 3: What are the major issues in subsystems design? Mechanisms for achieving subsystem integration: –Rules and procedures –Hierarchical referral –Planning –Direct contact –Liaison role –Task forces –Teams –Matrix organizations

30 Management - Chapter 1130 Study Question 4: How can work processes be reengineered? Process reengineering –Systematic and complete analysis of work processes. –Design of new and better work processes. Work process –A related group of tasks that create a result of value for the customer. (Michael Hammer) Workflow –Movement of work from one point to another in the manufacturing or service delivery process.

31 Management - Chapter 1131 Study Question 4: How can work processes be reengineered? Steps in reengineering core processes: –Identify core processes. –Map core processes in respect to workflows. –Evaluate all tasks for core processes. –Search for ways to eliminate unnecessary tasks or work. –Search for ways to eliminate delays, errors, and misunderstandings. –Search for efficiencies in how work is shared and transferred among people and departments.

32 Management - Chapter 1132 Figure 11.6 How reengineering can streamline core business processes.

33 COPYRIGHT Copyright © 2007 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.


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