2. Designing Effective Organizations
Learning Objectives
Describe the four characteristics common to all organizations.
Explain the difference between closed and open systems, and contrast the military/mechanical, biological, and cognitive systems metaphors for organizations.
Describe the four generic organizational effectiveness criteria.
Explain what the contingency approach to organizational design involves.
Discuss Burns and Stalker’s findings regarding mechanistic and organic organizations.
Describe new-style and old-style organizations, and list the keys to managing geographically-dispersed employees in virtual organizations.
Chapter Fifteen

3. What is an Organization?
15-1
Organization: system of consciously coordinated activities of two or more people.
Unity of command principle: each employee should report to a single manager.
Organization chart: boxes-and-lines illustration showing chain of formal authority and division of labor.
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4. Sample Organization Chart for a Hospital
15-2 Figure 15-1
Board of Directors
Strategic Planning Advisor
Legal Counsel
Chief Executive Officer
Cost- Containment Staff
President
Executive Administrative Director
Executive Medical Director
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5. Sample Organization Chart for a Hospital (Cont.)
15-3 Figure 15-1
Executive Administrative Staff
Executive Medical Director
Dir. Of Human Resources
Dir. Of Patient & Public Relations
Dir. Of Nutrition & Food Services
Dir. X-Ray & Lab Services
Dir. Of Out- Patient Services
Chief Physician
Dir. Of Admissions
Dir. Of Accounting
Dir. Of Surgery
Dir. Of Pharmacy
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6. Span of Control
15-4
Span of control: the number of people reporting directly to a given manager.
Staff personnel: provide research, advice, and recommendations to line managers.
Line Managers: have authority to make organizational decisions.
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7. Needed: Open-System Thinking
15-5
Closed System: “A self-sufficient entity, closed to the surrounding environment.” (For example, a battery-powered clock.)
Open system: “Depends on constant interaction with the surrounding environment for survival.” (For example, the human body.)
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8. Organizations as Military/Mechanical
Bureaucracies
15-6
Bureaucracy: Max Weber’s idea of the most rationally efficient form of organization.
Weber’s Bureaucracy: four factors should make bureaucracies the epitome of efficiency
Division of labor
A hierarchy of authority
A framework of rules
Administrative personality
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9. Goals and Values Subsystem Psychological Subsystem
The Organization as an Open System:
The Biological Metaphor
15-7 Figure 15-2
Goals and Values Subsystem
Technical Subsystems
Inputs
Outputs
Managerial Subsystem
Psychological Subsystem
Structural Subsystem
Feedback
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10. Generic Effectiveness Criteria
15-8
“No single approach to the evaluation of effectiveness is appropriate to all circumstances or for all organization types.”
Goal accomplishment
Resource acquisition
Internal processes
Strategic constituencies satisfaction
Strategic constituency: any group of people with a stake in the organization’s operation or success.
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11. Strategic Constituencies Satisfaction
Four Dimensions of Organizational
Effectiveness
15-9 Figure 15-3
Goal Accomplishment
Resource Acquisition
Strategic Constituencies Satisfaction
Internal Processes
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12. The Contingency Approach to Designing
Organizations
15-10
Contingency approach to organization design: creating an effective organization-environment fit.
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13. Mechanistic versus Organic
Organizations
15-11
Mechanistic organizations: “Rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication.” (Tend toward centralized decision-making.)
Organic organizations: “Flexible networks of multitalented individuals who perform a variety of tasks.” (Tend toward decentralized decision making.)
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14. New-Style versus Old-Style
Organizations
15-12 Table 15-1
Customer oriented
Lateral/networked
Involvement oriented
Team oriented
Skills oriented
Product/customer oriented
Small and large
Global
Information rich
Dynamics learning
New
Job requirements oriented
Hierarchical
Command/control oriented
Individual oriented
Job oriented
Functional
Large
Local
Information is scarce
Stable
Old
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15. Skills & Best Practices: How to Manage Globally-Dispersed Employees
15-13
The three keys are: sharing knowledge, building trust, and maintaining connectedness
Other steps include:
Hire carefully
Communicate regularly
Practice “management by walking around”
Conduct regular audits
Use technology as a tool, not a weapon
Achieve a workable balance between online and live training
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