1. Organizational Design

2. Today’s Agenda Organizational Structure & Design SMA MEPD
Three goals of structure
Understand relationships between environment, strategy and structure
SMA MEPD

3. Open Systems Model History Outputs Inputs Interactions of: Formal Org
Transformation
Processes
Outputs
Inputs
Interactions of:
Formal Org
Informal Org
Tasks
Individuals
Individual
behavior
Group
Organizational
functioning
Environment
Strategy
Resources
History
Feedback

4. The Three Goals of Structure
Efficiency
minimize costs, time, effort
Coordination
coordinate diverse organizational tasks
ease information flow
Adaptability/Flexibility
scan environment
change to meet environmental needs

5. Structural Design Dimensions of Organizations
(Structural) Differentiation: How are activities divided?
Vertical differentiation (hierarchy of authority)
Horizontal differentiation (specialization, e.g. product, process, function, geography)
Complexity (number of activities or subsystems)
Integration: How are activities coordinated/linked?
Centralization (hierarchical level of decision making)
Span of control (# of products, processes, functions supervised)
Formalization (amount of written documentation)
Standardization (degree similar work is done in uniform manner)

6. Issues in Differentiation of Subsystems
Differences in time orientation
Differences in objectives
Differences in interpersonal orientation
Differences formal structure
Divisional (Product or Market, etc.) Structure
President
Product
Group 1
Product
Group 2
Product
Group 3
R&D
Mfg
Acct
Mkt
R&D
Mfg
Acct
Mkt
R&D
Mfg
Acct
Mkt

7. Structural Integrating Mechanisms

8. Non-structural Integrating Mechanisms

9. Vertical Linkages Information Capacity of Linkage Mechanism
Vertical information
systems
High
Add positions to hierarchy
Degree of Vertical Coordination
and Control Required
Rules and plans
Hierarchical referral
Low
Low
High
Information Capacity of Linkage Mechanism

10. Horizontal Linkages Costs of Coordination High Coordination Required
Teams
Full-time integrators
Task forces
Coordination Required
Degree of Horizontal
Liaison roles
Direct contact
Information Systems
Low
Low
High
Costs of Coordination

11. Designing Organizations is the process of purposefully configuring the elements of the organization to foster the achievement of valued business, customer, and employee, community and environmental outcomes.
SM14J

12. Design at All System Levels
Inter-Organizational
Corporate/ System Wide
Business Unit
Team, Work Unit, or Work Process
Inter-Unit
SM22I

13. Why is organization design important?
Resources are aligned or misaligned with strategy and priorities.
Coordination is efficient or inefficient—resource use is optimized or resources are wasted.
Performance capabilities are enabled or disabled—quality, speed, innovation, growth
Work is hard or easy to do—people are frustrated or feel well utilized.
Customer interfaces are effective or ineffective—high value is delivered or not.
Human capital is developed, motivated, and retained or stagnates, becomes cynical and “departs”.
Societies, communities, and ecologies are strengthened or depleted
SM194P

14. Organizations are designed to fit a context, not a recipe
Learning Two:
Organizations are designed to fit a context, not a recipe

15. Star Model Strategy People Structure Behavior Performance Culture
Rewards
People
Structure
Management Processes
Work
Processes/
Capabilities
Behavior
Performance
Culture
Adapted from: J. Galbraith
SM107T

16. Self-Design and the Star
Strategy
Laying the Foundation
Valuing
Acquiring
Knowledge
Diagnosing
CRI
TERIA
Designing
Implementation &
Assessment S M R P W S M R P W
SM106T

17. Hierarchical structure is necessary but insufficient
Learning Three:
Hierarchical structure is
necessary but insufficient
in a dynamic and complex
environment.

18. Hierarchical, Functional Organization
General Manager
Director of
Engineering
Director of
Marketing
Director of
Manufacturing
Administrative
Director
Manager
Software
Engineer
Manager Hardware
Engineer
Manager
Tech Support
Manager
Product
Marketing
Manager Marketing
Support
Manager Mfg
Engineer
Manager Operations
Manager HR
Finance Manager
Manager Info Systems
etc.
etc.
etc.
etc.
etc.
etc.
etc. QA
Manager
Testing Manager
Mfg QA
Manager
Mfg Testing
Manager
Comp & Benefits
Manager QA
Specialist QA
Specialist QA
Specialist
Training Specialist
Comp
Manager
Benefits Specialist
etc.
etc.
Comp. Specialist
Comp. Analyst
SM34I

19. Team-Based Organization
Executive Team
Councils
Process
Teams
Shared Services
Team
Team
Business Unit 1
Leadership Team
Process Team
Team
Business Unit 2
Leadership Team
Process Team
Team
Cross Unit Opportunity Teams
SM50T

20. Networks Executive Team Integrating Councils Shared Services
Management Team Unit 1
Integrating Teams
Team
Executive Team
Shared Services
Management Team Unit 2
Knowledge Network
Opportunity Team
SM33M

21. Common Aims of Internal Restructuring
Enhance flow of information and expertise across organizational boundaries to increase:
Learning
Catching Mistakes
Innovation
Efficiency
Shared Understanding
Coordination

22. Implement the Internal Restructuring
Over communicate honestly
Align goals with the restructuring Efforts
Avoid the creation of bottle-necks that require certain people to be brokers
Involve employees in the process and take their input into account
Create a climate that supports speaking up in order to enhance the flow of information resources across organizational boundaries.

23. Managing Internal Change: Downsizing
Downsizing= Layoffs + Restructuring
Given economic weakness, majority of CEOs report the need to reduce staff amid continued economic weakness and tight profit margins
More than 3 M people are laid off every year
Downsizing can happen even during good economic times.

24. Effect on Work
Try to figure out which departments and people matter and protect them.
Be ready to adjust work processes now that there are fewer people to accomplish the work.
Be mindful of how it will affect customers and their expectations.

25. Announcing a Downsizing
Use as a last resort
Be clear about long and short term goals.
Communicate rationale and allow for questions and answers
Involve senior management
Let everyone know at the same time
Provide counseling at the location
Try not to make an announcement before the holidays or before the weekend

26. Implement the Downsizing
Over communicate honestly
Be fair (Procedural Justice, Trevor & Nyberg, 2008)
Help victims find other jobs
Senior management should share this burden
Reduces likelihood of voluntary turnover
Explain the selection process
Focus on merit or future skill needs
Fit this criterion with the vision for the future

27. Implementing the Downsizing (Cont’d)
Involve employees
Don’t just take people out
Work out procedures and processes
If you can’t offer job security, provide ways to enhance employability
Training and Development
Link incentives to performance in order to motivate skill development

28. Surviving Organizational Downsizing
Depends a great deal on the way that survivors respond:
If they support the change initiative, downsizing is perceived to meet its objectives
If they feel that the downsizing has violated them and their work environment, workers will tend to work against the objectives of downsizing.

29. From a Worker’s Perspective: Survivor’s experience
Recommended text: -Healing the Wounds (Noer, 2009)

30. SMA MEPD: Performance? How is SMA MEPD performing? Profitability
Product development
Morale?
Anything else?

31. SMA MEPD: Diagnostic Question
What are the sources of the intergroup and inter-functional challenges in MEPD?
Management and Org problems & practices
External Environment
Organizational Design
Leadership
People

32. SMA MEPD: Action Question
What should Spichty do about these problems or what should a consultant recommend to Spichty?

33. Recommendations for Change
Increase integration by development product organization, communication, and decision-making systems
Communicate new project organization to division and R&D group
Develop interpersonal competence
Improve group relations through inter-group problem-solving meetings
More personal leadership

34. SMA Lessons Structure should follow strategy
MEPD’s structure has become misaligned with its strategy and market conditions
Structure shapes interactions and accountability inside the organization
Structure influences communication patterns and quality
Split accountability and control leads to conflict
Linking mechanisms can compensate for mismatches, but only so far!

35. Midterm Results
2016