PowerPoint Presentation to Accompany Chapter 11 of Management Canadian Edition

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? Management - Chapter 11

Study Question 1: What are the essentials of organizational design? Choosing and implementing structures that best arrange resources to serve the organization’s mission and objectives. A problem-solving activity that should be approached from a contingency perspective. Management - Chapter 11

Figure 11.1 A framework for organizational design—aligning structures with situational contingencies. Management - Chapter 11

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. Management - Chapter 11

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. Management - Chapter 11

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. Management - Chapter 11

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. Management - Chapter 11

Figure 11.2 A continuum of organizational design alternatives: from bureaucratic to adaptive organizations. Management - Chapter 11

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. Management - Chapter 11

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 Management - Chapter 11

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? Management - Chapter 11

Environment and organizational design — 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. Management - Chapter 11

Strategy and organizational design — 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. Management - Chapter 11

Figure 11.3 Environmental uncertainty and the performance of vertical and horizontal designs. Management - Chapter 11

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. Management - Chapter 11

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. Management - Chapter 11

Technology and organization design — 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. Management - Chapter 11

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. Management - Chapter 11

Figure 11.4 Simultaneous “loose-tight” properties of team structures support efficiency and innovation. Management - Chapter 11

Coping with the disadvantages of large size: 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. Management - Chapter 11

Human resources and good organization design — 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. Management - Chapter 11