Designing Effective Organizations Chapter Fifteen

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

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.

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

Sample Organization Chart for a Hospital

The Organization as an Open System

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

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

Matrix Structure

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

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

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

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

Four Dimensions of Organizational Effectiveness Figure 15-4

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.