Organizational Designs Mr. Spinelli BOH4M Source: Business Leadership – Management Fundamentals. Wiley & Sons. Schermerhorn, Wright and Guest 2013.

Today’s Lesson Agenda: Learning Outcome: Organizational Designs Mechanistic Designs Organic Designs Trends in Organizational Designs Learning Outcome: You will understand that there is an increasing trend of flatter organizations as businesses adapt to their changing environments

Organizational Designs Is the process of choosing and implementing structures that best arrange resources to serve the organization’s mission and objectives Because every organization faces its own set of unique problems and opportunities, the best design at any moment is the one that achieves a good match between structure and situational contingencies Therefore, organizational design is a problem-solving activity – no one design applies in all circumstances

Mechanistic and Organic Designs Mechanistic Designs Recall earlier Max Weber theorized people should be managed through bureaucracy? – “hierarchy and clear divisions of labour” organizations with mechanistic designs are highly bureaucratic They are vertical structures that typically operate with centralized authority, many rules and procedures, a precise division of labour, narrow spans of control and formal coordination Are described as “tight” structures of the traditional pyramid form

Mechanistic and Organic Designs Mechanistic Designs What organizations would this be good for? Good for routine tasks in a stable environment. All franchises operate the same according to rules established by corporate management. Extensive training, rules and procedures accompanied by supervision. Any changes to the mechanistic system takes a long time to have cohesion throughout the organization.

Mechanistic and Organic Designs The limits of mechanistic designs are especially apparent in organizations that operate in dynamic, often uncertain, environments An organic design is decentralized, with fewer rules and procedures, open divisions of labour, wide spans of control, and more personal coordination These are adaptive organizations with horizontal structures and cultures that encourage worker empowerment and teamwork

Mechanistic and Organic Designs What organizations would this be good for? click These organizations are organic because their employees are encouraged to use creative problem solving skills and develop new products. Employee empowerment is encouraged and employees are more goal orientated than job orientated. ~ LEARNING ORGANIZATIONS

Mechanistic and Organic Designs A continuum of organizational design alternatives: from bureaucratic to adaptive organizations.

Trends in Organizational Design The complexity, uncertainty, and change characteristic of today’s environment have prompted more and more organizations to shift toward horizontal structures and organic designs This has led to a number of trends in organizational design

Trends in Organizational Design Fewer Levels of Management The chain of command, or the line of authority, that vertically links positions in an organization is no longer always growing “taller” as organizations grow in size Organizations are becoming increasingly “flatter” with wider spans of control and fewer levels of management allowing workers more empowerment and independence the flat terminology isn’t about grouping or structure, it’s how the decisions flow inside the company, which is more peer-to-peer and less top-down

Trends in Organizational Design More Delegation and Empowerment Managers are delegating more by finding ways to empower people at all levels to make more decisions that affect themselves and their work Delegation involves: Assign responsibility Grant authority for others to make decisions Create accountability by having others report results

Trends in Organizational Design Decentralization with Centralization Delegation, empowerment, and horizontal structures are contributing to more decentralization in organizations At the same time, advances in information technology are allowing for adequate centralized control

Trends in Organizational Design Reduced Use of Staff Organizations are reducing the size of staff They are lowering costs and increasing efficiency by employing fewer staff personnel and using smaller units There is no one best solution for all organizations – requires extensive information technology

Success Criteria I understand that : Although many traditional hierarchal organizational designs exist, there has been a shift towards more flatter and organic organizational designs This is made possible through IT, and it empowers employees by fostering creativity and problem solving