1. Designing Effective Organizations
Chapter 7
Designing Effective Organizations
Microsoft clip art photos reprinted with permission from Microsoft Corporation.

2. Chapter Objectives
Identify and describe four characteristics common to all organizations, and explain the time dimension of organizational effectiveness.
Explain the concept of contingency organization design, distinguish between mechanistic and organic organizations, and identify the basic departmentalization formats
Define the term delegation and list at least five common barriers to delegation.

3. Chapter Objectives (cont’d)
Explain how the traditional pyramid organization is being reshaped.
Describe at least three characteristics of organizational culture and explain the cultural significance of stories.

4. What Is an Organization?
A cooperative and coordinated social system of two or more people with a common purpose.
When people gather and formally agree to combine their efforts for a common purpose.

5. What Is an Organization? (cont’d)
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.

6. Characteristics of Organizations
Coordination of effort
Common goal or purpose
Division of labor
Hierarchy of authority
Organizational Characteristics

7. Organization Charts 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 which coordinates the efforts of the organization.
Horizontal specialization denotes the division of labor.
A balance between hierarchy and specialization is necessary if the organization is to be effective.

8. The Evolution of an Organization Chart

9. Organizational Effectiveness
Evaluation of Effectiveness
There is no single approach that is appropriate in all circumstances or for all organizational types.
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 future.

10. Figure 7.1 The Time Dimension of Organizational Effectiveness
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, A9 © l991.

11. Contingency Design Organizing Contingency Design
The structuring of a coordinated system of authority relationships and task responsibilities.
Contingency Design
The process of determining the degree of environmental uncertainty and adapting the organization and its sub units to the situation.
How much environmental uncertainty is there?
What combination of structural characteristics is most appropriate?
There is no single best organization design.

13. Contingency Design (cont’d)
The Burns and Stalker Model
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, participative communication patterns and are successful in adapting to change in unstable and uncertain environments.

16. Contingency Design Alternatives
Departmentalization
The 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 division, group, or unit in large organizations.

17. Basic Structural Formats
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.
Work-flow Process Departments
Starting with a clean sheet of paper and radically redesigning the organization into cross-functional teams.

18. Figure 7.2 Alternative Departmentalization Formats

19. Figure 7.2 Alternative Departmentalization Formats (cont’d)

20. The Organizational Structure of Finagle A Bagel

21. Contingency Design Alternatives
Span of Control (Management)
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.

22. Figure 7.3 Narrow and Wide Spans of Control

23. Contingency Design Alternatives (cont’d)
The Contingency Approach to Spans of Control
Both overly narrow and overly wide spans of control are counterproductive.
Situational factors dictate the width of spans of control.
Wide spans of control are appropriate for departments where many workers work close together and do the same job.
Narrow spans of control are best suited for departments where the work is complex and/or the workers are widely dispersed.

24. Figure 7.4 Situational Determinants of Span of Control

25. Contingency Design Alternatives (cont’d)
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 is to balance the need for responsiveness to
changing conditions (decentralization) with the need to create
low-cost shared resources (centralization).

26. Figure 7.5 Factors in Relative Centralization/Decentralization

27. Effective Delegation Delegation The Advantages of Delegation
Assigning various degrees of decision making authority to lower-level employees.
The 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.

28. Figure 7.6 The Delegation Continuum

29. Effective Delegation (cont’d)
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.

30. The Changing Shape of Organizations
Characteristics of New Organizations
Fewer organizational layers
More teams
Smallness within bigness
New Organizational Configurations
Hourglass organization: a three-layer structure with constricted middle (management) layer.
Cluster organization: collaborative structure in which teams are the primary unit.
Virtual organizations: internet-linked networks of value-adding subcontractors.

31. Do You Have the Skill Set to Be a Participant in a Virtual Organization?
Autonomy – Are you capable of working independently and being personally accountable with no one looking over your shoulder?
Communication – How literate are you in online and phone conversation? Are you able to communicate quickly and clearly?
Trust – Are you sensitive to the importance of developing a track record that demonstrates accountability and responsiveness? Do others perceive you as reliable and trustworthy?
Flexibility – Do you have the ability to take on different roles as different needs arise? Are you comfortable with fluid situations?
Source:

32. Figure 7.7 Reshaping the Traditional Pyramid Organization

33. Organizational Cultures
The collection of shared beliefs, values, rituals, stories, myths, and specialized language that creates a common identity and sense of community.
The “social glue” that binds an organization’s members together.

34. Organizational Cultures (cont’d)
Characteristics of Organizational Cultures
Collective: organizations are social entities.
Emotionally charged: the organization’s culture serves as a security blanket to its members.
Historically based: trust and loyalty result from long-term organizational associations.
Inherently symbolic: actions often speak louder than words.
Dynamic: culture promotes stability and control.
Inherently fuzzy: ambiguity, contradictions, and multiple meanings are part of culture.

35. The Organizational Culture at Finagle A Bagel

36. Organizational Cultures (cont’d)
Forms and Consequences of Organizational Cultures
Organizational values: shared beliefs about what the organization stands for.
The degree of sharing and intensity of the consequences determine whether an organization’s culture is strong or weak.

37. Figure 7.8 Forms and Consequences of Organizational Cultures
Source: Forms adapted from Harrison M. Trice and Janice M. Beyer, The Cultures of Work Organizations (Englewood Cliffs, N.J.: Prentice-Hall, 1993), pp Consequences adapted from Linda Smircich, “Concepts of Culture and Organizational Analysis,” Administrative Science Quarterly, 28 (September 1983):

38. Organizational Cultures (cont’d)
The Organizational Socialization Process
Organizational socialization: the process of transforming outsiders into accepted insiders.
Orientations
Programs that familiarize new employees with the organization’s history, culture, competitive realities, and compensation and benefits.
Storytelling
Recitations of heroic or inspiring deeds provide “social roadmaps” for new employees.

39. Are You Properly Socialized?
In the the next ten minutes, make a list describing how you were “socialized” into your college experience.
Consider orientation programs, stories you may have heard, older students you admired, other leaders, advice from other students etc.
Are there additional suggestions you might make that would be helpful to incoming freshmen?

40. Organizational Cultures (cont’d)
Strengthening Organizational Cultures
Symptoms of a weak organizational culture
Inward focus
Morale problems
Fragmentation/inconsistency
Ingrown subcultures
Warfare among subcultures
Subculture elitism

41. Tying Concepts Together
What effects could departmentalization have on an organization’s culture?
How is an organic organization’s culture likely to differ from that of a mechanistic organization?
What is the relationship between span of control and delegation? How does one affect the other?
What effects does an organization’s culture have on span of control? on delegation?
What sort of culture could develop in a virtual organization?

42. Key Term Review Authority Centralization Cluster organization
Contingency design
Decentralization
Hourglass organization
Mechanistic organization
Organic organization
Organization
Organization chart
Organizational culture
Organizational socialization
Span of control
Virtual organization
Match the term to the scenarios.
Ashley was quite frustrated at her job. There were very precise rules about how everything was to be done, and everything had to be checked with her boss. She did not feel as though she had any flexibility at all.
Ellen really enjoyed her new job. Not only was the work fun, but she had full access to her boss for help and consultation when she needed it. It helped that her boss only had three other employees.