1. Chapter 15 Organizational Design & Structure Nelson & Quick

2. Organizational Design
Organizational Design - the process of constructing and adjusting an organization’s structure to achieve its goals.
the linking of
departments and
jobs within an
organization
H. Mintzberg, The Structuring of Organizations, Prentice Hall, © 1979, 301.
Reprinted by permission of Prentice-Hall, Inc, Upper Saddle River, NJ. 2

3. Key Organizational Design Processes3

4. Interpersonal orientation Formality of structure
The process of deciding
how to divide the work
in an organization
Four Dimensions
Goal orientation
Time orientation
Interpersonal orientation
Formality of structure

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

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

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

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

9. Vertical Integration Hierarchical referral Rules and procedures
Plans and schedules
Positions add to the organization structure
Management information system

10. Horizontal Integration
Liaison roles
Task forces
Integrator positions
Teams

11. 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

12. Structural Configurations of Professional
Simple Structure - a
centralized form of
organization that
emphasizes the upper
echelon & direct
supervision
Machine Bureaucracy -
a moderately
decentralized form of
organization that
emphasizes the
technical staff &
standardization of
work processes
Structural
Configurations of
Organizations
Adhocracy - a
selectively
decentralized
form of
organization that
emphasizes the
support staff &
mutual adjustment
among people
Professional
Bureaucracy -
a decentralized
form of
organization that
emphasizes the
operating level
& standardization
of skills
Divisional Form - a
moderately decentralized
form of organization
that emphasizes the
middle level &
standardization of outputs

13. Five Structural Configurations of Organization
Prime
Coordinating
Mechanism
Direct
Supervision
Standardization
of Work
Processes
of Skills
of Outputs
Mutual
Adjustment
Key Part of
Organization
Upper
Echelon
Technical
Staff
Operating
Level
Middle
Support
Type of
Decentralization
Centralization
Limited
Horizontal
Vertical &
Limited Vertical
Selective
Structural
Configuration
Simple
Structure
Machine
Bureaucracy
Professional
Divisionalized
Form
Adhocracy

14. Size Technology Strategy & Goals Environment Contextual Variables -
a set of characteristics that
influences the organization’s
design processes
Strategy
& Goals
Environment 4

15. Size Basic Design Small Large Dimensions Organizations Organizations
Formalization
Centralization
Specialization
Standardization
Complexity
Hierarchy of authority
Less
High
Low
Flat
More
Low
High
Tall 4

16. Technology Technological Interdependence -
the degree of interrelatedness
of the organization’s various
technological elements 4

17. Problem Analyzability
Relationship Between
Technology and Basic
Design Dimensions
Craft
1. Moderate
2. Moderate
3. Moderate
4. Low moderate
5. High
6. Low
Routine
1. High
2. High
4. High
5. Low
6. High
Nonroutine
1. Low
2. Low
3. Low
4. Low
Engineering
3. High
4. Moderate
5. Moderate
6. Moderate
Few Exceptions Many Exceptions
Task Variability
Ill-defined &
Unanalyzable
Well-defined &
Analyzable
Problem Analyzability
Key
1 Formalization 4 Standardization
2 Centralization 5 Complexity
3 Specialization 6 Hierarchy-Authority
Built from C. Perrow, “A Framework for the Comparative Analysis of Organization,” American Sociological Review, April 1967,

18. Environment Environment - anything outside the boundaries
of an organization
Task environment - the elements of an
organization’s environment that are related to
its goal attainment
Environmental uncertainty - the
amount and rate of change
in the organization’s
environment
Environment 4

19. Strategy & Goals Strategic Dimension Predicted Structural
Characteristics
Innovation--to understand Low formalization
and manage new processes Decentralization
and technologies Flat hierarchy
Market differentiation--to Moderate to high complexity
specialize in customer Moderate to high formalization Moderate centralization
preferences
Cost control--to produce High formalization
standardized products High centralization
efficiently High standardization
Low complexity
Strategy
& Goals
Integrative Framework of
Structural & Strategic Dimensions 4

20. The Relationship among Key Organizational Design Elements
Context of the organization
Correct size
Current technology
Perceived environment
Current strategy & 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

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

22. Forces Reshaping Organizations
Life cycles in organizations - 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

23. Structural Roles of Managers Today versus Managers of the Future
1. Strictly adhering to boss
-employer 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 subordinate
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 &
flexibility
7. Coaching one’s workers
Management Review, January 1991, Thomas R. Horton.

24. Four Symptoms of Structural Weakness
Delay in decision
making
Poor quality
decision making
Lack of innovative
response to changing
environment
High level of conflict
Overloaded hierarchy; information
funneling limited to too few channels
Right information not reaching
right people in right format
No coordinating effort
Departments work against each
other, not for organizational goals

25. Personality/Organization
Paranoid
Depressive
Dysfunctional
Personality/Organization
Combinations
Schizoid
Dramatic
Compulsive