10
Organizing Chapter in the 21st Century
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Chapter Outline
Contingency Design
x x
The Burns and Stalker Model The Lawrence and Lorsch Model
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Chapter Outline
(continued)
Basic Structural Formats
x x x x x
Functional Departments Product-Service Departments Geographic Location Departments Customer Classification Departments Work Flow Process Departments in Reengineered Organizations
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Chapter Outline
(continued)
Contingency Design Alternatives
x x x x
Span of Control Centralization and Decentralization Line and Staff Organizations Matrix Organizations
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Chapter Outline
(continued)
Effective Delegation
x x
The Advantages of Delegation Barriers to Delegation
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Chapter Outline
(continued)
The Changing Shape of Organizations
x x
Characteristics of the New Organizations New Organizational Configurations
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CONTINGENCY DESIGN
Contingency design: the process of determining the degree of environmental uncertainty and adapting the organization and its subunits to the situation.
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CONTINGENCY DESIGN
(continued)
Dimensions of Environmental Uncertainty
1. Strength of social, political, and economic pressures on the organization. 2. Frequency of technological breakthroughs in the industry. 3. Reliability of resources and suppliers. 4. Stability of demand for the organization's products or services.
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CONTINGENCY DESIGN
(continued)
For Discussion: Is the general trend today toward more or less environmental uncertainty? Explain with specific examples.
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10-9
THE BURNS AND STALKER MODEL
(Contingency Organization Design)
Two Ends of a Structural Continuum
x Mechanistic organizations: rigid in design and have strong bureaucratic qualities. x Organic organizations: flexible in
structure and adaptive to change.
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THE BURNS AND STALKER MODEL
(Contingency Organization Design)
(continued)
Key Research Findings:
1. Successful organizations in relatively stable and certain environments tended to be mechanistic. 2. Relatively organic organizations tended to be the successful ones when the environment was unstable and uncertain.
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THE BURNS AND STALKER MODEL
(Contingency Organization Design)
(continued)
Practical Conclusion: "Mechanistic design is appropriate for environmental stability, and organic design is appropriate for high environmental uncertainty."
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THE LAWRENCE AND LORSCH MODEL Opposing Organizational Forces
x
x
Differentiation: tendency among specialists to think and act in restricted ways. (Tends to fragment the organization.) Integration: in direct opposition to differentiation, it involves the collaboration among specialists needed to achieve a common purpose. (Tends to coordinate the organization.)
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Figure 10.1 Differentiation and Integration: Opposing Organizational Forces
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THE LAWRENCE AND LORSCH MODEL
(continued)
Key Research Findings:
1. Every organization requires an appropriate dynamic equilibrium between differentiation and integration. 2. In successful firms, both differentiation and integration increased as environmental complexity increased.
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THE LAWRENCE AND LORSCH MODEL
(continued)
Practical Conclusions:
x
x
"These findings suggest that organizational failure in the face of environmental complexity probably results from a combination of high differentiation and inadequate integration." Needed organizational integration (coordination) can be achieved through formal hierarchy, standard policies and rules, departmentalization, computer networks, cross-functional teams, human relations training, and liaison individuals.
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BASIC STRUCTURAL FORMATS
Departmentalization: related jobs, activities, or processes are grouped into major organizational subunits.
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BASIC STRUCTURAL FORMATS
(continued)
Five Types of Departmentalization
x x
x
Functional Departments (most common) Product-service departments (organic alternative to functional departments) Geographic location departments (communication can be strained)
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BASIC STRUCTURAL FORMATS
(continued)
Five Types of Departmentalization
x
x
Customer classification departments (needs of different customers better served Work flow process departments (found in horizontal organizations resulting from reengineering)
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Figure 10.2 Alternative Departmentalization Formats (A)
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Figure 10.2 Alternative Departmentalization (B)
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Figure 10.2 Alternative Departmentalization Formats (C & D)
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Figure 10.2 Alternative Departmentalization Formats (E)
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SPAN OF CONTROL
(Contingency Design Alternatives)
Span of control: the number of people who report directly to a manager. Is There an Ideal Span of Control? "The relevant question is no longer how wide spans of
control should be but instead, `How wide can one's span of control be?' Wider spans of control mean less administrative expense and more selfmanagement, both popular notions today."
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Figure 10.3 Narrow and Wide Spans of Control
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Figure 10.4 Situational Determinants of Span of Control
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CENTRALIZATION AND DECENTRALIZATION
(Contingency Design Alternatives)
Two Ends of the Same Continuum
x
x
Centralization: the retention of decisionmaking authority by top management. Decentralization: management shares decision-making authority with lower-level employees.
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CENTRALIZATION AND DECENTRALIZATION
(Contingency Design Alternatives)
(continued)
Balance Needed within a Contingency Approach
x
x
x
"The case against extreme decentralization can be summed up in three words, lack of control. Balance helps neutralize this concern." "Centralization, because of its mechanistic nature, generally works best for organizations in relatively stable situations." "A more organic, decentralized approach is appropriate for firms in complex and changing conditions."
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Figure 10.5 Factors in Relative Centralization/Decentralization
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MATRIX ORGANIZATION
Matrix organization: vertical and horizontal lines of authority are combined in checkerboard fashion.
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Figure 10.7 A Simplified Matrix Organization Chart
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MATRIX ORGANIZATION
(continued)
Advantages (increased coordination)
x x x x x x Efficient use of resources Project integration Improved information flow Flexibility Discipline retention Improved motivation and commitment
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MATRIX ORGANIZATION
(continued)
Disadvantages (project manager's authority
gap)
x x x x x x
Power struggles Heightened conflict Slow reaction time Difficulty in monitoring and controlling Excessive overhead Experienced stress
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MATRIX ORGANIZATION
(continued)
For Discussion: On balance, is matrix design worth the trouble? Why?
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Figure 10.6 A Line and Staff Organization
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DELEGATION
x
Delegation: process of assigning various degrees of decision-making authority to lower-level employess.
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Figure 10.8 The Delegation Continuum
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DELEGATION
(continued)
For Discussion:
1. Does a high degree of delegation make an organization more mechanistic or more organic? Explain. 2. What is the relationship between delegation and decentralization?
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BARRIERS TO DELEGATION
Why Managers Do Not Delegate as Much as They Should:
x
x
x x
Belief in the fallacy, "If you want it done right, do it yourself." Lack of confidence and trust in lower-level employees. Low self-confidence. Fear of being called lazy.
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BARRIERS TO DELEGATION
(continued)
x x x
x
x
Vague job definition. Fear of competition from those below. Reluctance to take the risks involved in depending on others. Lack of controls that provide early warning of problems with delegated duties. Poor example set by bosses who do not delegate.
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BARRIERS TO DELEGATION
(continued)
For Discussion:
1. Which three of the above reasons for not delegating do you think are most common? Why? 2. What should managers delegate: What they know best, or what they know least well?
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THE CHANGING SHAPE OF ORGANIZATIONS Characteristics of the New Organizations
x Fewer layers x More teams x Smallness within bigness
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Figure 10.9 Reshaping the Traditional Pyramid Organization
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THE CHANGING SHAPE OF ORGANIZATIONS
(continued)
For Discussion:
1. Which of the new-style organizations will likely be most common in twenty years? 2. In which of these new organizations would you most like to be a top manager? A middle manager? A first-line supervisor? A nonmanagerial employee?
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