1. Management 11e Griffin
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PowerPoint Presentation by Charlie Cook The University of West Alabama
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2. Describe the basic nature of organization design.
Management 11e Griffin
Describe the basic nature of organization design.
Identify and explain two basic universal perspectives on organization design.
Identify and explain key situational influences on organization design.
Discuss how an organization’s strategy and its design are interrelated.
Describe the basic forms of organization design.
Describe emerging issues in organization design
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3. The Nature of Organization Design
Management 11e Griffin
The Nature of Organization Design
Organization Design
The structural elements and the relationships among the elements used to manage the organization.
A means to implement strategies and plans to achieve organizational goals.
Organization Design Concepts
Organizations are not designed and then left intact.
Organizations are in a continuous state of change.
Designs for larger organizations are extremely complex and have many nuances and variations.
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4. Perspectives on Organization Design
Management 11e Griffin
Perspectives on Organization Design
Bureaucratic Model (Max Weber)
A logical, rational, and efficient organization design based on a legitimate and formal system of authority.
Characteristics:
A division of labor with each position filled by an expert.
A consistent set of rules ensuring uniformity in task performance.
A hierarchy of positions that creates a chain of command.
Impersonal management; with the appropriate social distance between superiors and subordinates.
Employment and advancement based on technical expertise, and employees protected from arbitrary dismissal.
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5. Bureaucratic Model Advantages Disadvantages Efficiency in function
Management 11e Griffin
Bureaucratic Model
Advantages
Disadvantages
Efficiency in function
Organizational inflexibility and rigidity
Prevention of favoritism
Neglect of social and human processes
Recognition of and requirement for expertise
Belief in “one best way” to design organizations
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6. Management Challenge Question
Management 11e Griffin
Management Challenge Question
What characteristics of a bureaucratic structure help an organization in meeting its diversity goals?
What characteristics of a bureaucratic would hinder an organization in meeting its diversity goals?
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7. Behavioral Model: Likert System
Management 11e Griffin
Behavioral Model: Likert System
Renesis Likert
Organizations that pay attention to work groups and interpersonal processes are more effective than bureaucratic organizations.
Bureaucratic
Behavioral
System Exploitative Authoritative
System 2 Benevolent Authoritative
System 3 Consultative
System 4 Participative
Employee-centered leader behavior
Job-centered leader behavior
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8. Situational Influences on Organization Design
Management 11e Griffin
Situational Influences on Organization Design
Environment
Technology
Organizational Life Cycle
Organization Design
Size
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9. Organization Design and Technology
Management 11e Griffin
Organization Design and Technology
Core Technology
Is the conversion processes used to transform inputs into outputs.
Is an organization’s most important technology.
Joan Woodward
Initially sought a correlation between organization size and design; instead, she found a potential relationship between technology and design:
As the complexity of technology increases, so do the number of levels of management.
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10. Core Technology and Organization Design
Management 11e Griffin
Core Technology and Organization Design
Woodward’s Basic Forms of Technology
Unit or small-batch
Large-batch/mass-production
Continuous-process
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11. Situational Influences on Organization Design (cont’d)
Management 11e Griffin
Situational Influences on Organization Design (cont’d)
The Environment (Burns and Stalker)
Forms of the organizational environment
Stable environments that remain constant over time.
Unstable environments subject to uncertainty and rapid change.
Organization Designs
Mechanistic organizations are similar to bureaucratic or System 1 models; found most frequently in stable environments.
Organic organizations are flexible and informal models; usually found in unstable and unpredictable environments.
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12. Situational Influences on Organization Design (cont’d)
Management 11e Griffin
Situational Influences on Organization Design (cont’d)
Organization Dimensions (Lawrence and Lorsch)
Differentiation
The extent to which the organization is broken down into subunits.
Integration
The degree to which the various subunits must work together in a coordinated fashion.
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13. Situational Influences on Organization Design (cont’d)
Management 11e Griffin
Situational Influences on Organization Design (cont’d)
Organizational Size (Ashton Studies)
Defined as the total number of full-time or full-time equivalent employees
Research findings:
Small firms tend to focus on their core technology.
Large firms have more job specialization, standard operating procedures, rules and regulations, and are more decentralized.
Organizational Life Cycle
Organizations progressively evolve as they grow and mature—birth, youth, midlife, and maturity.
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14. Strategy and Organization Design
Management 11e Griffin
Strategy and Organization Design
Corporate-Level Strategies
Single-product strategy
Related or unrelated diversification
Portfolio approach to managing strategic business units
Organizational Functions
Major functions of the organization can influence an organization’s design.
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15. Organizational Strategies
Management 11e Griffin
Organizational Strategies
Business-Level Strategies
Generic Competitive Strategies
Defender
Differentiation
Prospector
Cost Leadership
Analyzer
Focus
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16. Basic Forms of Organization Designs
Management 11e Griffin
Basic Forms of Organization Designs
Functional or U-form (Unitary) Design
Organizational members and units are grouped into functional departments such as marketing and production.
Coordination is required across all departments.
Design approach resembles functional departmentalization in its advantages and disadvantages.
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17. 12.1 Functional or U-form Design for a Small Manufacturing Company
Management 11e Griffin
12.1 Functional or U-form Design for a Small Manufacturing Company
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18. Basic Organization Designs (cont’d)
Management 11e Griffin
Basic Organization Designs (cont’d)
Conglomerate or H-form (Holding) Design
Organization is a set of unrelated businesses with a general manager for each business.
Holding-company design is similar to product departmentalization.
Coordination is based on the allocation of resources across companies in the portfolio.
Design has produced only average to weak financial performance; has been abandoned for other approaches.
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19. 12.2 Conglomerate (H-form) Design at Samsung
Management 11e Griffin
12.2 Conglomerate (H-form) Design at Samsung
Semiconductors
Telecommunications
Appliances
Media
CEO
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20. Basic Organization Designs (cont’d)
Management 11e Griffin
Basic Organization Designs (cont’d)
Divisional or M-form (Multidivisional) Design
Multiple businesses in related areas operating within a larger organizational framework.
Results from a strategy of related diversification.
Activities are decentralized down to the divisional level; others are centralized at the corporate level.
Design advantage is in opportunities for coordination and sharing of resources.
Successful M-form organizations can out perform U-form and H-form organizations.
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21. 12.3 Multidivisional (M-form) Design at Hilton Hotels
Management 11e Griffin
12.3 Multidivisional (M-form) Design at Hilton Hotels
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22. Basic Organization Designs (cont’d)
Management 11e Griffin
Basic Organization Designs (cont’d)
Matrix Design
Two overlapping bases of departmentalization:
A set of product groups or temporary departments are superimposed across the functional departments.
Employees in the matrix belong to their departments and the project team:
A multiple command structure in which an employee reports to both departmental and project managers.
A matrix design is useful when:
There is strong environmental pressure.
There are large amounts of information to be processed.
There is pressure for shared resources.
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23. 12.4 A Matrix Organization Management 11e Griffin
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24. Matrix Design Advantages
Management 11e Griffin
Matrix Design Advantages
Enhances organizational flexibility.
Creates high motivation and increased organizational commitment for team members.
Gives team members opportunity to learn new skills.
Provides an efficient way for the organization to use its human resources.
Uses team members as bridges to their departments for the team.
Useful as a vehicle for decentralization.
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25. Matrix Design Disadvantages
Management 11e Griffin
Matrix Design Disadvantages
Employees are uncertain about reporting relationships.
Managers may view design as an anarchy in which they have unlimited freedom.
The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus.
More time may be required for coordinating task-related activities.
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26. Basic Organization Designs (cont’d)
Management 11e Griffin
Basic Organization Designs (cont’d)
Hybrid Designs
Based on two or more common forms of organization design—may have a mixture of related divisions and a single unrelated division.
Most organizations use a modified form of organization design that permits them to have sufficient flexibility to make adjustments for strategic purposes.
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27. The Future of Organization Design
Management 11e Griffin
The Future of Organization Design
Emerging Organization Design Issues
The Team Organization
The Virtual Organization
The Learning Organization
The International/Global Organization
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28. International Organization Design Issues
Management 11e Griffin
International Organization Design Issues
Establish an international operating group?
Make international operations an autonomous subunit?
Create an international division?
Competing Effectively in Global Markets
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29. 12.5a Common Organization Designs for International Organizations
Management 11e Griffin
12.5a Common Organization Designs for International Organizations
A. Separate International Division
CEO
Production
Marketing
Finance
International
division
B. Location Departmentalization
North
American
operations
European
Asian
CEO
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30. 12.5b Common Organization Designs for International Organizations
Management 11e Griffin
12.5b Common Organization Designs for International Organizations
C. Product Departmentalization
Product
Manager A
CEO
Manager B
Manager C
Asia
North
America
Europe
D. Multidivisional Structure
CEO
Subsidiary A
(Germany)
Subsidiary C
(France)
Subsidiary E
(China)
Subsidiary D
(Japan)
Subsidiary B
(U.S.)
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31. KEY TERMS organization design bureaucracy behavioral model
Management 11e Griffin
organization design
bureaucracy
behavioral model
System 1 design
System 4 design
situational view of organization design
technology
mechanistic organization
organic organization
differentiation
integration
organization size
organizational life cycle
functional design
conglomerate design
divisional design
matrix design
hybrid design
team organization
virtual organization
learning organization
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