Organizational Design and Structure Chapter 15 Organizational Behavior: Foundations, Realities, & Challenges Nelson & Quick, 5th edition Organizational Design and Structure

Organizational Design Organizational Design – the process of constructing and adjusting an organization’s structure to achieve its goals. organization’s structure the linking of departments and jobs within an organization 2

Key Organizational Design Processes Differentiation Integration 3

Differentiation The process of deciding how to divide the work in an organization Differentiation Four Dimensions Manager’s goal orientation Time orientation Interpersonal orientation Formality of structure

Horizontal Differentiation The degree of differentiation between organizational subunits Based on employee’s specialized knowledge, education, or training

Vertical Differentiation The difference in authority and responsibility in the organizational hierarchy Greater in tall, narrow organizations than in flat, wide organizations

Spatial Differentiation Geographic dispersion of an organization’s offices, plants, and personnel Complicates organizational design, but may simplify goal achievement or protection

Differentiation Between Marketing and Engineering Basis for Difference Marketing Engineering Goal orientation Time orientation Interpersonal orientation Structure Sales volume Long run People oriented Less formal Design Medium run Task oriented More formal Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved

Integration The process of coordinating the different parts of an organization Integration Designed to achieve unity among individuals and groups Supports a state of dynamic equilibrium – elements of organization are integrated, balanced

Vertical Integration Integration Hierarchical referral Rules and procedures Plans and schedules Positions added to the organization structure Management information systems

Horizontal Integration Liaison roles Task forces Integrator positions Teams

Hierarchy of Authority – Basic Design Dimensions Formalization – the degree to which the organization has official rules, regulations, and procedures Centralization – the degree to which decisions are made at the top of the organization 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 Complexity – the degree to which many different types of activities occur in the organization Standardization – the degree to which work activities are accomplished in a routine fashion Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved

Professional Bureaucracy – Simple Structure – a centralized form of organization that emphasizes the upper echelon and direct supervision Machine Bureaucracy – a moderately decentralized form of organization that emphasizes the technical staff and standardization of work processes Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Structural Configurations of Organizations Adhocracy – a selectively decentralized form of organization that emphasizes the support staff and mutual adjustment among people Professional Bureaucracy – a decentralized form of organization that emphasizes the operating level and standardization of skills Divisional Form – a moderately decentralized form of organization that emphasizes the middle level and standardization of outputs

Extremes of Environmental Uncertainty Mechanistic Structure – an organizational design that emphasizes structured activities, specialized tasks, and centralized decision making Organic Structure – an organizational design that emphasizes teamwork, open communication, and decentralized decision making

The Relationship among Key Organizational Design Elements Context of the organization Correct size Current technology Perceived environment Current strategy and goals Influences how manager perceive structural needs Structural dimensions Level of formalization Level of centralization Level of specialization Level of standardization Level of complexity Hierarchy of authority

Differentiation and Integration Context of the organization Which characterize the organizational processes Differentiation and Integration Which influence how well the structure meets its Purposes Designate formal lines of authority information- processing patterns Which influence how well the structure fits the Context of the organization

Forces Reshaping Organizations Organization Life Cycle – the differing stages of an organization’s life from birth to death Globalization Changes in Information-Processing Technologies Demands on Organizational Processes Emerging Organizational Structures

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 and flexibility 7. Coaching one’s workers Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Management Review, January 1991, Thomas R. Horton.