ORGANIZATION MANAGEMENT Organizational Design

McKinsey 7-S Model Strategy Structure Systems Style Staff Skills Superordinate goals

McKinsey 7-S Model The Hard S’s Strategy Structure Systems Style Staff Skills Superordinate goals The Hard S’s The hard elements are factual and easy to identify. They can be found in strategy statements, corporate plans, organization charts, and other documentation

McKinsey 7-S Model The Soft S’s Strategy Structure Systems Style Staff Skills Superordinate goals The Soft S’s The soft elements are difficult to describe since they are continuously developing and changing. They are highly determined by the people at work in the organization.

7-S Model – The Hard S’s Strategy Structure Systems Style Staff Skills Superordinate goals Strategy Actions a company plans in response to or in anticipation of changes in its external environment Structure Basis for specialization and coordination, influenced primarily by strategy and by organization size and diversity Systems Formal and informal procedures that support the strategy and structure (Systems are more powerful than they are given credit)

Organizational Structure Strategy Structure Systems Style Staff Skills Superordinate goals Organization Chart formal reporting relationships levels in hierarchy spans of control departmentalization Systems to facilitate: coordination communication integration

Structural Designs Functional Structure Divisional Structure Strategy Structure Systems Style Staff Skills Superordinate goals Functional Structure Can adapt functional structure with horizontal linkages Divisional Structure Geographical Structure Matrix Structure Horizontal Structure / Product Line Structure Hybrid Structure

Other Organizational Forms Strategy Structure Systems Style Staff Skills Superordinate goals Joint Ventures Licensing agreements Strategic Alliances Consortia Virtual organizations Global (transnational) Work Teams

Virtual Teams Virtual Teams are characterized by: Strategy Structure Systems Style Staff Skills Superordinate goals Virtual Teams Virtual Teams are characterized by: Distributed locations of team members Use of information technology to accomplish tasks Effective when: Communication & collaboration skills are high. Trust among team members is high Organizations are increasing their use of virtual teams Potential for improvement in virtual team management is huge

Information Linkages Vertical Information Linkages Strategy Structure Systems Style Staff Skills Superordinate goals Information Linkages Vertical Information Linkages Hierarchy Rules and plans (i.e. budget) Horizontal Information Linkages Information systems Liaison role Task force Integrator role (i.e. Project manager) Cross-functional teams

Ladder of Mechanisms for Horizontal Linkage and Coordination H IGH Teams Full-time Integrators Task Forces Coordination Required Amount of Horizontal Direct Contact LOW Information Systems LOW HIGH Cost of Coordination in Time and Human Resources

Systems – various elements Strategy Structure Systems Style Staff Skills Superordinate goals Communications practice and system Management reporting system Approval process Planning/budgeting system Rewards system including appraisal “Rules”

From Tasks to Structure Strategy Structure Systems Style Staff Skills Superordinate goals Tasks define jobs Jobs define skills required Skills (and other considerations) define staff Over time skills change as staff gains knowledge and experience, and as technology and corporate infrastructure mature Collection of jobs basis for structure

Job design considerations Do they have the necessary skills and knowledge to fulfill proposed / expanded job requirements? What are the needs of the incumbent or the rest of your workforce in general? Monetary Growth Socialization Strategy Structure Systems Style Staff Skills Superordinate goals

7-S Model – The Soft S’s - 1 Strategy Structure Systems Style Staff Skills Superordinate goals Style / Culture The culture of the organization, consisting of Organizational culture: the dominant values, beliefs and norms which develop over time and become relatively enduring features of organization life Management style: what managers do rather than what they say (where they spend their time and attention, what they allow, what they reward, etc) Staff Skills Shared values / Superordinate goals

7-S Model – The Soft S’s - 2 Style / Culture Staff Skills Strategy Structure Systems Style Staff Skills Superordinate goals Style / Culture Staff The people/human resource management – ways of shaping basic management values, processes used to develop managers, ways of introducing new employees and managing careers, socialization processes Skills Distinctive competencies – what the company does best, ways of developing or shifting competencies Shared values / Superordinate goals Guiding concepts, fundamental ideas around which a business is built – simple, usually stated at abstract level, have great meaning inside the organization, although outsiders may not see or understand them

Organizational Culture Strategy Structure Systems Style Staff Skills Superordinate goals Culture is to organizations what personality is to individuals All companies have cultures Culture by default Culture by design – thoughtful choices based on values and core beliefs How does a company consciously create its culture?

From Gray & Larson “Project Management: The Managerial Process”

Types of Organizational Cultures Strategy Structure Systems Style Staff Skills Superordinate goals Control cultures – Drive for predictability and order Collaboration cultures – Pursue close relationship with customers Competence cultures – Pursue excellence and innovation Cultivation cultures – Pursue life enrichment for customers and employees

Organizational Culture Strategy Structure Systems Style Staff Skills Superordinate goals Observable Evidence: Symbols Ceremonies Stories Behaviors Language Dress Underlying Roots: Values, Assumptions, Beliefs, Attitudes, Feelings

Culture in practice Conflict management Strategy Structure Systems Style Staff Skills Superordinate goals Conflict management Relationship or interpersonal conflict Task / process conflict Functional vs. dysfunctional conflict Factors: goal incompatibility, limited resources, differences Power – the capacity to influence behavior Positional power: rewards/consequences, control of resources, information and decision control Personal power: expert, referent (based on identification and admiration) Politics – the use of power to influence decisions

Management vs. Leadership Planning & vs. Setting the budgeting direction Organizing & vs. Aligning people staffing Controlling & vs. Motivating people problem solving Management is about coping with complexity Leadership is about coping with change

Management vs. Leadership Some managers (but not all) are leaders Some leaders (but not all) are good managers A manager gets work done through the efforts of other people Includes planning, organizing, motivating, and controlling A leader creates and realizes a vision Communicates that vision and moves the organization toward that vision Strategy Structure Systems Style Staff Skills Superordinate goals

McKinsey 7-S Model Strategy Structure Systems Style Staff Skills Superordinate goals Effective organizations achieve a harmony between these seven elements; if one element changes, then this will affect all the others

McKinsey 7-S Model Strategy Structure Systems Style Staff Skills Superordinate goals The 7-S Model can be a valuable tool to initiate change processes and to give them direction; i.e. determine current state and ideal state of each element, and develop action plans to close the gaps

McKinsey 7-S Model In change processes, many organizations focus their efforts on the hard S’s; however, the soft factors can make or break a successful change process. All factors must be accounted for. Strategy Structure Systems Style Staff Skills Superordinate goals

McKinsey 7-S Model Strategy Structure Interrelated Equilibrium Systems Style Staff Skills Superordinate goals Interrelated Equilibrium Foundation of corporate culture Levers available to management

Executing Change – Seven Key Considerations Strategic Intent Substance Scale Scope/Breadth Speed Sequence Style Style Scope Substance Speed Sequence Scale Strategic Intent

Strategic Intent Substance Scale Scope/Breadth Speed Sequence Style Precise Broad Soft S’s Hard S’s Small Large Isolated Organization-wide Slow Fast Hard – Soft Soft – Hard Top Down Bottom Up

Assignment Read BA 550 class packet: Turning Great Strategy into Great Performance Governance and Strategy Implementation Case brief – Americhem Last names beginning with A – M Complete proposal on term project