Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Chapter 15 Organizational Behavior Nelson & Quick 6th edition Organizational Design and Structure

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Organizational Design - Organizational Design - the process of constructing and adjusting an organizations structure to achieve its goals. organizations structure the linking of departments and jobs within an organization Organizational Design Contextual variables – Contextual variables – a set of characteristics that influence the organizations design processes

Ministerial Conference General Council Trade Negotiations Committee Council for Trade in Goods Council for Trade-related Aspects of Intellectual Property Rights Council for Trade in Services General Council Meeting as Dispute Settlement Body Plurilaterals Doha Development Agenda TNC and its bodies Special Sessions & Negotiating groups Committees Working parties Working groups Committees Working parties Committees Working parties Appellate Body Dispute Settlement Panels General Council Meeting as Trade Policy Review Body Taken from WTO Organizational Chart. http: Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved KeyOrganizational Design Processes Key Organizational Design Processes Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Four Dimensions Managers goal orientation Time orientation Interpersonal orientation Formality of structure The process of deciding how to divide the work in an organization Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Horizontal Differentiation The degree of differentiation between organizational subunits Based on employees specialized knowledge, education, or training Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Vertical Differentiation The difference in authority and responsibility in the organizational hierarchy Greater in tall, narrow organizations than in flat, wide organizations Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Spatial Differentiation Geographic dispersion of an organizations offices, plants, and personnel Complicates organizational design, but may simplify goal achievement or protection Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Differentiation & Complexity in an Organization The Greater the... Differention The Greater the need for structural... Horizontal Vertical Spatial Width Height Breadth Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved The more structurally differentiated an organization is, the more complex it is Complexity refers to the number of activities, subunits, or subsystems within an organization

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Designed to achieve unity among individuals and groups Supports a state of dynamic equilibrium - elements of organization are integrated, balanced The process of coordinating the different parts of an organization Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Vertical Integration Hierarchical referral Rules and procedures Plans and schedules Positions added to the organization structure Management information systems Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Horizontal Integration Liaison roles Task forces Integrator positions Teams Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Hierarchy of Authority - the degree of vertical differentiation across levels of management Specialization - the degree to which jobs are narrowly defined and depend on unique expertise Basic Design Dimensions Formalization - the degree to which the organization has official rules, regulations and procedures Standardization - Standardization - the degree to which work activities are accomplished in a routine fashion Complexity - Complexity - the degree to which many different types of activities occur in the organization Centralization - Centralization - the degree to which decisions are made at the top of the organization Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved

Adhocracy - a selectively decentralized form of organization that emphasizes the support staff & mutual adjustment among people Simple Structure - a centralized form of organization that emphasizes the upper echelon & direct supervision Machine Bureaucracy - a moderately decentralized form of organization that emphasizes the technical staff & standardization of work processes Divisional Form - a moderately decentralized form of organization that emphasizes the middle level & standardization of outputs Professional Bureaucracy - a decentralized form of organization that emphasizes the operating level & standardization of skills Structural Configurations of Organizations Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved

Five Structural Configurations of Organization StructuralConfiguration PrimeCoordinatingMechanism KeyPartof Key Part ofOrganization Typeof Type ofDecentralization Simple Structure Direct Supervision Upper Echelon Centralization MachineBureaucracy Standardization of Work Processes Technical Staff Limited Horizontal Decentralization ProfessionalBureaucracy Standardization of Skills Operating Level Vertical & Horizontal Decentralization DivisionalizedForm Standardization of Outputs Middle Level Limited Vertical Decentralization Adhocracy Mutual Adjustment Support Staff Selective Decentralization Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Middle Line Strategic Apex Operating Core Support Staff Techno- structure Mintzbergs Five Basic Parts of an Organization From H. Mintzberg, The Structuring of Organizations (Upper Saddle River, N.J.: Prentice-Hall, 1979): 20. Reprinted with permission.

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Contextual Variables – a set of characteristics that influences the organizations design processes Technology Strategy & Goals EnvironmentSize

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Basic Design Small Large Dimensions Organizations Organizations Formalization Centralization Specialization Standardization Complexity Hierarchy of authority Less High Low Flat More Low High Tall Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Size

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Technological Interdependence - the degree of interrelatedness of the organizations various technological elements Technology

Relationship Between Technology and Basic Design Dimensions Key 1 Formalization 4 Standardization 2 Centralization 5 Complexity 3 Specialization 6 Hierarchy of Authority Craft 1. Moderate 2. Moderate 3. Moderate 4. Low-moderate 5. High 6. Low Routine 1. High 2. High 3. Moderate 4. High 5. Low 6. High Nonroutine 1. Low 2. Low 3. Low 4. Low 5. High 6. Low Engineering 1. Moderate 2. Moderate 3. High 4. Moderate 5. Moderate 6. Moderate Few Exceptions Many Exceptions Task Variability Ill-defined & Unanalyzable Well-defined & Analyzable Problem Analyzability Built from C. Perrow, A Framework for the Comparative Analysis of Organization, American Sociological Review, April 1967, Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Environment - Environment - anything outside the boundaries of an organization Task Environment - Task Environment - the elements of an organizations environment that are related to its goal attainment Environmental Uncertainty - Environmental Uncertainty - the amount and rate of change in the organizations environment Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Environment

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Extremes of Environmental Uncertainty Mechanistic Structure - Mechanistic Structure - an organizational design that emphasizes structured activities, specialized tasks, and centralized decision making Organic Structure - Organic Structure - an organizational design that emphasizes teamwork, open communication, and decentralized decision making

Innovation--to understand Low formalization and manage new processes Decentralization and technologies Flat hierarchy Millers Integrative Framework of Structural & Strategic Dimensions D. Miller, The Structural and Environmental Correlates of Business Strategy, Strategic Management Journal 8 (1987): John Wiley & Sons Limited. Reproduced with permission. Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Strategy & Goals Cost control--to produce High formalization standardized products High centralization efficiently High standardization Low complexity Market differentiation--to Moderate to high complexity specialize in customer Moderate to high preferences formalization Moderate centralization Strategic Dimension Predicted Structural Characteristics

The Relationship among Key Organizational Design Elements Structural dimensions Level of formalization Level of centralization Level of specialization Level of standardization Level of complexity Hierarchy of authority Influences how manager perceive structural needs Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Context of the organization Correct size Current technology Perceived environment Current strategy & goals

Which characterize the organizational processes Which influence how well the structure meets its Which influence how well the structure fits the Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Differentiation & Integration Purposes Designate formal lines of authority Designate formal information- processing patterns Context of the organization

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved ForcesReshapingOrganizations Forces Reshaping Organizations Organization Life Cycle -Organization Life Cycle - the differing stages of an organizations life from birth to death Globalization Changes in Information-Processing Technologies Demands on Organizational Processes Emerging Organizational Structures

StructuralRolesofManagers Structural Roles of Managers Roles of Managers Today 1. Strictly adhering to boss -employee relationships 2. Getting things done by giving orders 3. Carrying messages up and down the hierarchy 4. Performing a set of tasks according to a job description 5. Having a narrow functional focus 6. Going through channels, one by one by one 7. Controlling subordinates Roles of Future Managers 1. Having hierarchical relationships subordinated 2. Getting things done by negotiating 3. Solving problems and making decisions 4. Creating the job through entrepreneurial projects 5. Having a broad cross- functional collaboration 6. Emphasizing speed & flexibility 7. Coaching ones workers Management Review, January 1991, Thomas R. Horton. Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Create Demand Provide Support Produce Product Leadership and Strategy Council (LSC) HDsCircleOrganization HDs Circle Organization From R. Teerlink and L. Ozley, More than a Motorcycle: The Leadership Journey at Harley-Davidson. Boston, MA, P Copyright © 2000 by the Harvard Business School Publishing Corporation; all rights reserved.

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved FourSymptomsofStructural Weakness Four Symptoms of Structural Weakness Delay in decision making Poor quality decision making Lack of innovative response to changing environment High level of conflict No coordinating effort Overloaded hierarchy; information funneling limited to too few channels Right information not reaching right people in right format Departments work against each other, not for organizational goals

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Dysfunctional Personality/Organization Combinations Paranoid Depressive Schizoid Compulsive Dramatic Photos courtesy of Clips Online, © 2008 Microsoft Corporation

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Chapter 15: Reflect & Discuss Casino Video Clip What to Watch for and Ask Yourself Which type or form of organizational design does this scene show? Does this scene show the results of the differentiation and integration organizational design processes? Does this scene show any behavioral demands of organizational design? What are they?