1. Designing Effective Organizations
Chapter Fifteen

2. After reading the material in this chapter, you should be able to:
LO15.1 Describe the four characteristics common to all organizations.
LO15.2 Explain the difference between closed and open systems.
LO15.3 Define seven basic ways organizations are structured

3. After reading the material in this chapter, you should be able to:
LO15.4 Discuss Burns and Stalker’s findings regarding mechanistic and organic organizations. LO15.5 Identify when each of the seven organization structures is the right fit. LO15.6 Describe the four generic organizational effectiveness criteria.

4. What is an Organization?
system of consciously coordinated activities or sources of two or more people.

5. Sample Organization Chart for a Hospital

6. The Organization as an Open System

7. Traditional Design Functional structure Divisional structure
groups people according to the business functions they perform manufacturing, marketing, finance
Divisional structure
groups together activities related to outputs type of product or customer

8. Traditional Design Matrix structure
combines functional and divisional chains of command to form a grid with two command structures

9. Matrix Structure

10. Designs That Open Boundaries between Organizations
Hollow structure
organization identifies core competencies and outsources other activities such as manufacturing, order taking and shipping
Modular structure
Outsources parts of a product instead of processes

11. Designs That Open Boundaries between Organizations
Virtual organization
organization identifies partners with the needed talents and negotiates an agreement in which the participants typically work in separate facilities, linked by technology as they work toward a common goal

12. Mechanistic versus Organic Organizations
Mechanistic organizations
Rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication.
Organic organizations
Flexible networks of multitalented individuals who perform a variety of tasks

13. Different Approaches to Decision Making
Centralized decision making
key decisions are made by top management
Decentralized decision making
important decisions are made by middle- and lower-level managers

14. Four Dimensions of Organizational Effectiveness
Figure 15-4

15. Generic Effectiveness Criteria
Internal processes
focuses on “what the organization must excel at” to effectively meet its financial objectives and customers’ expectations.
Strategic constituencies satisfaction
Strategic constituency: any group of people with a stake in the organization’s operation or success.