Chapter 9 Organizations: Effectiveness, and Design Instructor: IFTEKHAR AMIN CHOWDHURY

 An organization is a cooperative and coordinated social system of two or more people with a common purpose  Common Characteristics of Organizations  Coordination of effort: Multiplying individual contributions to achieve results greater than those possible by individuals working alone  Common goal or purpose: Having a focus to strive for something of mutual interest  Division of labor: Dividing tasks into specialized jobs that use human resources efficiently  Hierarchy of authority: Using a chain of command to control and direct the actions of others Instructor: IFTEKHAR AMIN CHOWDHURY

 Organization Chart (Table)  A visual display of an organization’s positions and lines of authority that is useful as a blueprint for deploying human resources  Vertical and Horizontal Dimensions  Vertical hierarchy establishes the chain of command.  Horizontal specialization denotes the division of labor.  Line and Staff Positions  Line managers make decisions and staff personnel provide advice and support.  Personal staff are assigned to a specific manager in supporting roles. Instructor: IFTEKHAR AMIN CHOWDHURY

 Characteristics of Open Systems  Interaction with the external environment through permeable boundaries  An open-system model encourages managers to think about the organization’s life-support system Instructor: IFTEKHAR AMIN CHOWDHURY

 Developing an Open-System Model  Interacting organizational subsystems: Technical (production function) subsystems define the organization’s transformation process. Boundary-spanning subsystems provide the organization’s interface with the external environment. Managerial subsystems bridge (control and direct) the technical and boundary-spanning subsystems. Instructor: IFTEKHAR AMIN CHOWDHURY

 Effectiveness  A measure of whether or not organizational objectives are accomplished  Efficiency  A measure of the relationship between inputs and outputs for the organization  No Silver Bullet  No single approach to the evaluation of effectiveness is appropriate in all circumstances or for all organizational types. Instructor: IFTEKHAR AMIN CHOWDHURY

 The Time Dimension of Organizational Effectiveness Involves:  Meeting organizational objectives and prevailing societal expectations in the near future  Adapting to environmental demands and developing as a learning organization in the intermediate future  Surviving as an effective organization into the distant future Instructor: IFTEKHAR AMIN CHOWDHURY

Source: Adapted from James L. Gibson, John M. Ivancevich, and James H. Donnelly, Jr., ORGANIZATIONS: BEHAVIOR, STRUCTURE, PROCESSES, 5th ed. (Homewood, IL: Richard D. Irwin, Inc.), p. 37. © l991. Instructor: IFTEKHAR AMIN CHOWDHURY

 Contingency Design  The process of determining the degree of environmental uncertainty and adapting the organization and its subunits to the situation How much environmental uncertainty is there? What combination of structural characteristics is most appropriate?  There is no single best organization design. Instructor: IFTEKHAR AMIN CHOWDHURY

 Mechanistic Organizations  Are rigid in design, rely on formal communications, and have strong bureaucratic qualities best suited to operating in relatively stable and certain environments  Organic Organizations  Have flexible structures, have participative communication patterns, and are successful in adapting to change in unstable and uncertain environments Instructor: IFTEKHAR AMIN CHOWDHURY

Source: Adapted from Tom Burns and G. M. Stalker, The Management of Innovation (London: Tavistock, 1961), pp. 119–125. Reprinted by permission. Instructor: IFTEKHAR AMIN CHOWDHURY

 Departmentalization  Grouping of related jobs or processes into major organizational units Overcomes some of the effect of fragmentation caused by differentiation (job specialization) Permits coordination (integration) to be handled in the least costly manner  Sometimes refers to divisions, groups, or units in large organizations Instructor: IFTEKHAR AMIN CHOWDHURY

 Functional Departments  Categorizing jobs according to the activity performed  Product-Service Departments  Grouping jobs around a specific product or service  Geographic Location Departments  Adopting a structural format based on the physical dispersion of assets, resources, and customers  Customer Classification Departments  Creating a structural format centered on various customer categories Instructor: IFTEKHAR AMIN CHOWDHURY

 Work Flow Process Departments in Reengineered Organizations  Creating horizontal organizations that emphasize speedy work flow between two points: Identifying customer needs Satisfying customer needs Instructor: IFTEKHAR AMIN CHOWDHURY

 Span of Control (Management)  Span of control is the number of people who report to a manager.  Narrow spans of control foster tall organizations with many organizational/managerial layers.  Flat organizations have wider spans of control.  Is There an Ideal Span of Control?  The right span of control efficiently balances too little and too much supervision.  Situational factors dictate the width of spans of control. Instructor: IFTEKHAR AMIN CHOWDHURY

 Centralization  The retention of decision-making authority by top management  Decentralization  The sharing of decision-making authority by management with lower-level employees  The Need for Balance  The challenge to balance the need for responsiveness to changing conditions (decentralization) with the need to create low-cost shared resources (centralization) Instructor: IFTEKHAR AMIN CHOWDHURY

 Delegation  Assigning various degrees of decision-making authority to lower-level employees  Advantages of Delegation  Frees up managerial time for other important tasks  Serves as a training and development tool for lower-level managers  Increases subordinates’ commitment by giving them challenging assignments Instructor: IFTEKHAR AMIN CHOWDHURY

 Barriers to Delegation  Belief that only you can do the job right  Lack of confidence and trust in subordinates  Low self-confidence  Fear of being called lazy  Vague job definition  Fear of competition from subordinates  Reluctance to take risks that depend on others  Lack of early warning controls  Poor example of bosses who do not delegate Instructor: IFTEKHAR AMIN CHOWDHURY

 Organization  Authority  Organization chart  Line and staff organization  Organizational effectiveness  Contingency design  Mechanistic organizations  Organic organizations  Span of control  Centralization  Hourglass organization  Cluster organization  Virtual organization Instructor: IFTEKHAR AMIN CHOWDHURY