1. Chapter 10 (Lecture Outline Presentation) Organizing in the Twenty-First Century

2. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–2 Chapter Objectives 1.Explain the concept of contingency organization design. 2.Distinguish between mechanistic and organic organizations. 3.Discuss the roles that differentiation and integration play in organization structure. 4.Identify and briefly describe the five basic departmentalization formats. 5.Describe how a highly centralized organization differs from a highly decentralized one.

3. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–3 Chapter Objectives (cont’d) 6.Define the term delegation and list at least five common barriers to delegation. 7.Explain how the traditional pyramid organization is being reshaped.

4. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–4 Contingency Design Organizing The structuring of a coordinated system of authority relationships and task responsibilities. Contingency Design The process of determining the degree of environmental uncertainty and adapting the organization and its sub units to the situation. How much environmental uncertainty is there? What combination of structural characteristics is most appropriate? There is no single best organization design.

5. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–5 Contingency Design (cont’d) The Burns and Stalker Model Mechanistic organizations are rigid in design, rely on formal communications, and have strong bureaucratic qualities best suited to operating in relatively stable and certain environments. Organic organizations have flexible structures, participative communication patterns and are successful in adapting to change in unstable and uncertain environments.

6. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–6 Contingency Design (cont’d) Joan Woodward’s Study When task complexity is either high or low, organizations with organic structures are more effective. When task complexity is moderate, organizations with mechanistic structures are more effective.

7. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–7 Contingency Design (cont’d) The Lawrence and Lorsch Model The relationship of two opposing structural forces and environmental complexity. Differentiation: the tendency of specialists to think and act in restricted ways. Integration: the collaboration among specialists needed to achieve a common purpose. A dynamic equilibrium between differentiation and integration is necessary for a successful organization. Both differentiation and integration increase as environmental complexity increases.

8. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–8 Basic Structural Formats Departmentalization The grouping of related jobs or processes into major organizational units. Overcomes some of the effect of fragmentation caused by differentiation (job specialization). Permits coordination (integration) to be handled in the least costly manner. Sometimes refers to division, group, or unit in large organizations.

9. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–9 Basic Structural Formats (cont’d) Functional Departments Categorizing jobs according to the activity performed. Product-Service Departments Grouping jobs around a specific product or service. Geographic Location Departments Adopting a structural format based on the physical dispersion of assets, resources, and customers. Customer Classification Departments Creating a structural format centered on various customer categories.

10. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–10 Basic Structural Formats (cont’d) Work Flow Process Departments in Reengineered Organizations Creating horizontal organizations that emphasize speedy work flow between two points: Identifying customer needs Satisfying customer needs

11. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–11 Contingency Design Alternatives Span of Control (Management) The number of people who report to a manager. Narrow spans of control foster tall organizations with many organizational/managerial layers. Flat organizations have wider spans of control. Is There an Ideal Span of Control? The right span of control efficiently balances too little and too much supervision.

12. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–12 Contingency Design Alternatives (cont’d) The Contingency Approach to Spans of Control Both overly narrow and overly wide spans of control are counterproductive. Situational factors dictate the width of spans of control. Wide spans of control are appropriate for departments where many workers work close together and do the same job. Narrow spans of control are best suited for departments where the work is complex and/or the workers are widely dispersed.

13. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–13 Contingency Design Alternatives (cont’d) Centralization The retention of decision-making authority by top management. Decentralization The sharing of decision-making authority by management with lower-level employees. The Need for Balance The challenge is to balance the need for responsiveness to changing conditions (decentralization) with the need to create low-cost shared resources (centralization).

14. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–14 Contingency Design Alternatives (cont’d) Decentralization Through Strategic Business Strategic business units (SBU) are organizational subunits that serve a specific market outside the parent organization. face outside competitors. are in a position of controlling their own destiny. are profit centers, with their effectiveness measured in terms of profit and loss.

15. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–15 Line and Staff Organizations Organizations in which line managers make decisions and staff personnel provide advice and support. Personal staff are assigned to a specific manager in supporting roles. Specialized staff constitute a reservoir of specialized talent available to the entire organization. Functional authority gives staff temporary and limited authority for specified tasks. Contingency Design Alternatives (cont’d)

16. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–16 Matrix Organization A structure with both vertical and horizontal lines of authority. Advantages Increased coordination Improved quantity of information flow. Disadvantages Violates unity-of-command principle. Authority gap (lack of line authority) for project managers. Decreases quality of information flow.

17. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–17 Effective Delegation Delegation Assigning various degrees of decision-making authority to lower-level employees. The Advantages of Delegation Frees up managerial time for other important tasks. Serves as a training and development tool for lower- level managers. Increases subordinates’ commitment by giving them challenging assignments.

18. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–18 Effective Delegation (cont’d) Barriers to Delegation Belief that only you can do the job right. Lack of confidence and trust in subordinates. Low self-confidence. Fear of being called lazy. Vague job definition. Fear of competition from subordinates. Reluctance to take risks that depend on others. Lack of early warning controls. Poor example of bosses who do not delegate.

19. Copyright © Houghton Mifflin Company. All rights reserved.Lecture Outline Presentation, 10–19 The Changing Shape of Organizations Characteristics of New Organizations Fewer organizational layers More teams Smallness within bigness New Organizational Configurations Hourglass organization: a three-layer structure with constricted middle (management) layer. Cluster organization: collaborative structure in which teams are the primary unit. Virtual organizations: internet-linked networks of value-adding subcontractors.