Organizational Design Fundamentals

Contemplative Questions In what type of company would I like to work? How do organizations process information? Are all organizations the same? How are they different? What career paths can I pursue?

Management Functions Planning Organizing Leading Controlling Defining goals, estab- lishing strategy, and developing subplans to coordinate activities Determining what needs to be done, how it will be done, and who is to do it Directing and moti- vating all involved parties and resolving conflicts Monitoring activities to ensure that they are accomplished as planned Achieving the organization’s stated purpose Lead to Designing organizational structures is part of organizing, one of the four basic management functions.

Org chart example Chief Executive Officer President Vice- President Region 3 District D Executive Vice-President Region 1 Region 2 Region 4 Region 5 District A District B District E District F District G District C Vice- President Vice- President Vice- President Vice- President Executive Vice-President

Alternate Org. Form: A Matrix Organization Design Engineering Manu- facturing Contract Admin. PurchasingAccounting Human Resources Alpha Project Beta Project Gamma Project Omega Project Design Group 1 Design Group 2 Design Group 3 Design Group 4 Mftg. Group 1 Mftg. Group 2 Mftg. Group 3 Mftg. Group 4 Contract Group 1 Contract Group 2 Contract Group 3 Contract Group 4 Purch. Group 1 Purch. Group 2 Purch. Group 3 Purch. Group 4 Acctg. Group 1 Acctg. Group 2 Acctg. Group 3 Acctg. Group 4 HR Group 1 HR Group 2 HR Group 3 HR Group 4

An IS Department Org Chart Fig IS professionals frequently work in project-based teams. Only 1 team works on a project, usually. People work on many projects, however (e.g. a matrix organization). Teams are comprised of diverse group of members from several areas, and may include users, managers, analysts, programmers, etc.

 Whether you are a programmer, analyst, user or manager, it will help your career if you can understand how organizations work.  Analysts, especially, need to understand how organizations process information.  There are literally millions of organizations in the world.  When is a group of people considered an organization?  An organization is a ________ with some form of ___________ who collectively possess some ___________. Organizations

 In what type of organization would you like to work?  All organizations vary in terms of their strategy, their structure, their processes, their culture.  Organizational structure is almost always predetermined. It is there on your first day on the job.  What works at one company may not work in another, therefore it would be helpful to classify organizations into certain types.  Then we can make general statements about the types. Organizations

 In what type of organization would you like to work?  We can classify organizations in terms of 3 dimensions:  Degree of complexity  Formalization  Centralization  These dimensions will help you assess prospective employers and your career path  They generate great questions for job interviews.  They also help to determine how information is processed within the organization. Organizations

Degree of Complexity  Two dimensions of organizational design  Vertical (the number of layers of management)  Span of control = avg. # employees / manager  Horizontal (how jobs are differentiated) Unity of Command says everyone should report to one and only one superior (this is often not the case in IS).  IS positions commonly require team work  You may have a superior who advises you and team leaders or project managers who give you specific direction

Assuming Span of 4 Vertical complexity Contrasting Spans of Control (Highest) Assuming Span of ,024 4, ,096 Organization Level (Lowest) Span of 4: 4,096 Operatives. 1,365 Managers Span of 8: 4,096 Operatives. Only 585 Managers! Which organization looks more appealing to you?

Horizontal complexity Functional Departmentalization Plant Manager Manager, Engineering Manager, Accounting Manager, Manufacturing Manager, Human Resources Manager, Purchasing Press Dept. Mgr. Tube Dept. Mgr. Finishing Dept. Mgr. Inspection Dept. Mgr. Castings Dept. Mgr.

Horizontal complexity Product Departmentalization Bombardier, Inc. Recreational Products Division Logistic Equipment Division Industrial Equipment Division Bombardier- Rotax (Gunskirchen) Mass Transit Sector Rail Products Sector Recreational and Utility Vehicles Sector Mass Transit Division Bombardier-Rotax (Vienna) Rail and Diesel Products Division

Horizontal complexity Customer Departmentalization Director of Sales Manager Manager, Retail Accounts Manager Manager, Wholesale Accounts Manager Manager, Government Accounts Figure 10-7

Horizontal complexity Geographic Departmentalization Vice President for Sales Sales Director, Western Region Sales Director Southern Region Sales Director, Midwest Region Sales Director Eastern Region

Centralization and Decentralization DEGREE OF CENTRALIZATION DEGREE OF DECENTRALIZATION Judging by the size of the desk, where do decisions get made? Which organization looks more appealing to you?

Two Extremes for Organizational Types Rigid hierarchical relationships Fixed duties High formalization Formalized communication channels Centralized decision authority Vertical and horizontal collaboration Adaptable duties Low formalization Informal communication Decentralized decision authority Mechanistic Organic

Types of Organizations Rigid hierarchical relationships Fixed duties High formalization Formalized communication channels Centralized decision authority Vertical and horizontal collaboration Adaptable duties Low formalization Informal communication Decentralized decision authority Mechanistic Organic In which type of organization would you like to work? Do you like to take orders? Are you risk-averse, i.e. do you avoid risk? Do you prefer to be aware of the ‘big picture’?