The Use of Organization Structure and Organizational Design

Topics Last Week n Housekeeping: u Internship UNU u Cases F Group 2 pls stay after class F Check with your group, drop by Wednesday! F Group 2 get questions asked by group 3, etc. F All teams read Ch. 6 of “Tools for Innovators” on Team Management n Questions about the readings for this week. What did you think of it? Now Presentation! n Markets, public-private partnerships & contracts u Privatization

Topics n Housekeeping: u California Electricity Crisis: Deregulation u Internships UN u Cases F Costa Rica’s Minister of Education Faces a Dilemma (A & B) F Don’t worry. It takes time. Beginning is hard (also the readings, e.g., governance). F Good group discussion n Readings this week. What did you think? u Presentation! n Set up of the course n Organizational structure and design

Course Outline n Introduction: u Corruption & Kleptocracy u What is public management u Governance n Traditional tools: u The use of contracts: Non-profits & private firms u Organization Structure and Design u HRM u Budgeting, Financial Management, MIS u Leadership, Standard Operating Procedures

Course Outline n Organizational Strategy: The Bureaucracy’s Environment u Strategic Planning u Political Management u Corruption & Ethics n Integrating Environment & Operations: Management Innovation Techniques u Privatization u TQM & Mgmt innovation

Today’s Outline n Origins/reasons for organizational structure n building blocks of org structure n different types of structure n reorganizing structure u when u design n Costs of reorganization n Other issues u Program Management u Fair & reasonable assignments u Control (& learn to delegate)

Organizational Structure n Second class, we talked about the complexity of our society. What basic process caused that? u Differentiation, Specialization, Division of Labor n Third class, we discussed different types of markets and how the govt needs to discriminate between these types of markets and needs capacity to deal with these markets. One argument for more market-like functioning was efficiency. Now when you ‘ve an organization, the organizational structure should foster efficiency.

Organizational Structure n Why do you need an organization structure? u If you have differentiation, you also need Integration (to whom do you report, who is the boss, what are the responsibilities) u Formal power, possibilities for promotion, higher financial rewards, special perks. Sometimes more interesting work. n Is a structure always fixed? In the long run, everything is a process. Structure is dependent on: u strategy of the organization: goals u internal social structure u external environment

Organizational Structure n This explains two definitions of organizational structure u organization chart & policies and procedures of administrative systems, such as those for planning, resource allocation, resource allocation, budgeting, and controlling u organization chart (building blocks, family picture)

Organizational Structure n Org Structure is u division of labor u relationships and tasks u internal coordination and authority n The organization chart shows the formal structure. Yet, structure encompasses more than a set of boxes, it also is set of agreements on how the org. functions n Does an organization only have a formal structure? No, you also have to understand the informal relationships. (Hawthorne studies)

Building Blocks: A Puzzle n Horizontal differentiation (emphasis is on execution/ primary process): u functional (differentiation) u geographic (specialization) u market (specialization) u product (specialization) n Vertical differentiation (emphasis on leading & strategy & decision making) u Integrative management n Distinguish between line-management and staff management

Different types of structures n Functional n Divisional n Overlay n Matrix n All have their advantages and disadvantages in terms of adaptation and flexibility u Stable environment-Unstable Environment u Centralized-Decentralized

Different types of structures n With govt organizational structure you often have to deal with programs. So, the structure needs to be geared to understanding program management n A program is a set of related programs n Every organization structure involves a trade- offs, for example u regional adaptation vs. efficiency

When do you reorganize? Reorganization is a strategic choice about the future of the organization n To break up dysfunctional patterns of organizational behavior (internal: informal patterns of communication and unsanctioned organizational goals develop) n To create more logical combinations of functions in order to stimulate greater organizational efficiencies e.g., improve work- flow & communication (internal & external) n To emphasize new or modified missions, goals, or objectives, e.g., growth (strategy). n To reward excellent performers (internal).

Steps in reorganization/design n Diagnosis of a structural problem u which results are bad or off-balance u perspectives of people on the organization (growth, important issues for work behavior) u emergent relationship and perspectives within and outside the organization n Analysis of structural design u What are the key tasks? (What is the primary process? Prioritize tasks?) u How can the key tasks be grouped? u In other words, what is the ideal organization without taken office politics into account. Look at 4 subquestions:

Steps in reorganization/design F In light of prioritized tasks and the organization’s size, what is the most important basic rationale for the horizontal division of labor?(functional, divisional, overlay, matrix) F In lights of tasks, size and basic form, what are the essential units of horizontal differentiation? Cluster tasks. Put similar services/products together, for example lobbying & PR F What are the essential units of vertical division of labor? (who does the operational work, strategic work, and control) F Are there other integrative mechanisms necessary? E.g., budgetary control, conflict management, clear mission, etc. as in the case today.

Steps in reorganization/design n Synthesis: u Given the ideal design, what will be the effects on the perspectives of groups and key individuals? So, you bring the political, practical and ideal together, e.g., some good people or strong divisions could better stay close, what are the informal patterns of communication). u Be iterative, go over the steps at least once again n Implementation: u monitor (responsibilities, time-line) u correct & adjust u follow-up (in procedures, etc.) u evaluation

Possible Costs of Reorganization n Disrupt informal patterns of communication (pos & neg ones) n Create insecurity & declining productivity n Less effective formal reporting relationships n Sometimes people feel not involved in the process, the reorganization is sprung on them Look at reorganization as an investment risk. Involve the employees. Seek advice. Reorganization does not solve operational problems, e.g., budgeting. It is no substitute for motivation. Structural redesign as the last resort.

Other issues n Why are organizations getting flatter today? u Need for faster response to clients facilitated by F modern production techniques F ICT for faster communication n Other topics: u Program Management (check with your org or course) u Fair & reasonable assignment u Control & delegation (p )

Today’s Outline n Origins/reasons for organizational structure n building blocks of org structure n different types of structure n reorganizing structure u when u design n Costs of reorganization n Other issues u Program Management u Fair & reasonable assignments u Control (& learn to delegate)

Topics n Housekeeping: u California Electricity Crisis: Deregulation u Internships UN u Cases F Costa Rica’s Minister of Education Faces a Dilemma (A & B) F Don’t worry. It takes time. Beginning is hard (also the readings, e.g., governance). F Good group discussion n Readings this week. What did you think? u Presentation! n Set up of the course n Organizational structure and design