1. Copyright © 2002 by South-Western 13–1 Organizational Design Organizational designOrganizational design  The structures, systems, and processes that enable an organization to implement its plans and achieve its goals.

2. Copyright © 2002 by South-Western 13–2 Dimensions of Organizational Design Organizational structureOrganizational structure  Those attributes that characterize the interaction patterns that link people to people and people to work. Decentralization of authorityDecentralization of authority FormalizationFormalization StandardizationStandardization Task specializationTask specialization Person specializationPerson specialization ComplexityComplexity StratificationStratification ConfigurationConfiguration

3. Copyright © 2002 by South-Western 13–3 Dimensions of Organizational Design (cont’d) Organizational ProcessesOrganizational Processes  Decision making  Dictatorial or participative  Coordinating  Personal or impersonal  Communicating  Open exchange or restricted

4. Copyright © 2002 by South-Western 13–4 Centralization and Decentralization of Authority—A Closer Look Influence and PowerInfluence and Power  Influence—the ability to produce a change in one’s environment.  Interpersonal influence—the ability to produce a change in others.  Power—the means to achieve influence.  Authority—the legitimate use of influence and organizationally sanctioned power.

5. Copyright © 2002 by South-Western 13–5 Centralization and Decentralization of Authority—A Closer Look (cont’d) Classical view of authority (Weber)Classical view of authority (Weber)  Authority finds its origin and flows from the top of the organization down to the hierarchy. Acceptance view of authority (Barnard)Acceptance view of authority (Barnard)  Authority finds its origin in subordinates’ acceptance of directives and thus flows from the subordinates upward to the manager. Situational view of authority (Follett)Situational view of authority (Follett)  Orders should flow from the situation, not from the person.

6. Copyright © 2002 by South-Western 13–6 Centralization and Decentralization of Authority—A Closer Look (cont’d) Types of authority and authority relationshipsTypes of authority and authority relationships  Line authority—command authority to make decisions and direct the organization.  Staff authority—advisory authority in the form of counsel, advice, and recommendation.  Functional authority—the “right” to direct or control specific activities that are under the span of control of other managers.

7. Copyright © 2002 by South-Western 13–7 Centralization and Decentralization of Authority—A Closer Look (cont’d) Delegating AuthorityDelegating Authority  Delegation—transferring formal authority from one position to another in an organization.

8. Copyright © 2002 by South-Western 13–8 The Delegation Process Accept Stage 1 Stage 2 Stage 3 Stage 4 Assign Tasks Transfer Task Authority Acceptance Condition Creation of Responsibility Reject FIGURE 13–3

9. Copyright © 2002 by South-Western 13–9 Centralization and Decentralization of Authority—A Closer Look (cont’d) CentralizationCentralization  Formal authority is concentrated at the top of the organizational hierarchy. DecentralizationDecentralization  Formal authority is diffused throughout an organization, and specific authority for decision making is lodged at the level where that decision gets executed.

10. Copyright © 2002 by South-Western 13–10 Benefits of Decentralization More flexibility and greater speed in reacting to changes in the environment.More flexibility and greater speed in reacting to changes in the environment. Better able to deal with complex combinations of business activitiesBetter able to deal with complex combinations of business activities Increased ability to cope with growth and change.Increased ability to cope with growth and change. Motivates and improves human resources.Motivates and improves human resources. Better placement and utilization of the expertise of organizational members.Better placement and utilization of the expertise of organizational members. Relieves managers of information and decision overload.Relieves managers of information and decision overload. Increases a sense of ownership and for work and for the organization.Increases a sense of ownership and for work and for the organization.

11. Copyright © 2002 by South-Western 13–11 Determinants of the Decentralization Decision The external environmentThe external environment  Stability versus uncertainty The organizationThe organization  Strategy, history/culture, growth/change rate, size, complexity The workThe work  Cost/risks decisions, technology, task interdependence The peopleThe people  Upper-level managers, lower-level managers

12. Copyright © 2002 by South-Western 13–12 Controls on Decentralization Formalization of operating normsFormalization of operating norms  Rules, policies, operating procedures  Benefits  Consistency  Coordination  Economy  Standardization Personalization (professionalization)Personalization (professionalization)  Control delegated authority

13. Copyright © 2002 by South-Western 13–13 Mechanistic Model Characteristics of the Classical Bureaucratic Model (Weber)Characteristics of the Classical Bureaucratic Model (Weber)  Emphasis on obeying one leader rather than many.  Reliance on a set of rules that specify employee rights and duties.  Selection based on technical competence.  Advancement is based on longevity and competence.  Relationships are impersonal.  Labor is divided and individual specialization is encouraged.

14. Copyright © 2002 by South-Western 13–14 Mechanistic Model (cont’d) Problems with bureaucracyProblems with bureaucracy  People problems are created.  Social and psychological aspects of the organization are ignored.  Rules and procedures (means) replace goals (ends).  Rigid communication system prevents or slows information flows.  Inflexibility inhibits responses to environmental changes.

15. Copyright © 2002 by South-Western 13–15 Structures of Organic and Mechanistic Organizations OrganicMechanistic High Complexity Low Centralization Low Formalization Low Standardization High Person Specialization High Task Specialization Low Complexity High Centralization High Formalization High Standardization Low Person Specialization Low Task Specialization FIGURE 13–5

16. Copyright © 2002 by South-Western 13–16 Strategic Choice and Organizational Design Management’s Strategic Choices Environment Culture Technology Goals Size People Organizational Design FIGURE 13–7 Organizational Context

17. Copyright © 2002 by South-Western 13–17 Employee Responses to Organizational Design and Context ComplexityComplexity  Managers like tall organizations (high complexity), lower-level employees prefer flat organizations (low complexity). FormalizationFormalization  The higher the formalization, the lower the job satisfaction. Centralization and decentralizationCentralization and decentralization  Decentralization is preferable to centralization.

18. Copyright © 2002 by South-Western 13–18 Employee Responses to Organizational Design and Context (cont’d) Stratification (status incongruence)Stratification (status incongruence)  The higher the stratification, the lower the job satisfaction (somewhat supported). SizeSize  Size increases job dissatisfaction and withdrawal behaviors. TechnologyTechnology  Routine, boring jobs result in job dissatisfaction.  Properly implemented technology increases employee satisfaction.

19. Copyright © 2002 by South-Western 13–19 Employee Responses to Organizational Design and Context (cont’d) People—Management’s attitudes and behaviorsPeople—Management’s attitudes and behaviors  The “norm of reciprocity”—an organization’s commitment to its employees and favorable treatment of their needs is a significant determinant of the employees’ commitment to the organization. EmpowermentEmpowerment  The result of a process that enhances organizational members’ feelings of self-efficacy about their work and motivates their work performance.

20. Copyright © 2002 by South-Western 13–20 The Commitment-Commitment Relationship FIGURE 13–8 Employee’s Perception of Organizational Support Organizational Commitment to the Employee: Support, Rewards, Positive Experiences Employee’s Commitment to the Organization Absenteeism Attendance Motivation Citizenship Behavior Performance

21. Copyright © 2002 by South-Western 13–21 The Empowerment Model FIGURE 13–9 Feeling Energized Empowerment Skills and Abilities Accurate Role Perceptions Intrinsic Motivation Performance Delegation Decentralization Participation Personal Control Autonomy