1. Chapter 15 Organizational Design and Structure
1 Define differentiation and integration as organizational design processes.
2 Discuss the basic design dimensions managers must consider in structuring an organization.
3 Describe five structural configurations for organizations.
4 Describe four contextual variables that influence organizational structure.
5 Explain the forces reshaping organizations.
6 Discuss emerging organizational structures.
7 Identify two cautions about the effect of organizational structures on people.
Learning Outcomes
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2. © 2009 Cengage Learning. All rights reserved.
Learning Objective 1
Define differentiation and integration as organizational design processes.
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3. Organizational Design-Evan
the process of constructing and adjusting an organization’s structure to achieve its goals.
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4. Organizational Design-Evan
Organizational Design – the process of constructing and adjusting an organization’s structure to achieve its goals.
organization’s structure
the linking of
departments and
jobs within an
organization
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5. Key Organizational Design Processes
Differentiation
Integration
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The process of deciding
how to divide the work
in an organization-Katie
Differentiation
Four Dimensions
Manager’s goal orientation
Time orientation
Interpersonal orientation
Formality of structure
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7. Horizontal Differentiation-Katie
The degree of differentiation between organizational subunits
Based on employee’s specialized knowledge, education, or training
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8. Vertical Differentiation-Katie
The difference in authority and responsibility in the organizational hierarchy
Greater in tall, narrow organizations than in flat, wide organizations
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9. Spatial Differentiation-Katie
Geographic dispersion of an organization’s offices, plants, and personnel
Complicates organizational design, but may simplify goal achievement or protection
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10. Differentiation Between Marketing and Engineering
Basis for Difference
Marketing
Engineering
Goal orientation
Time orientation
Interpersonal
orientation
Structure
Sales volume
Long run
People
oriented
Less formal
Design
Medium run
Task
oriented
More formal

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The process of coordinating
the different parts
of an organization-Robin
Integration
Designed to achieve unity among individuals and groups
Supports a state of dynamic equilibrium – elements of organization are integrated, balanced
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12. Vertical Integration-Robin
Hierarchical referral
Rules and procedures
Plans and schedules
Positions added to the organization structure
Management information systems
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13. Horizontal Integration-Robin
Liaison roles
Task forces
Integrator positions
Teams
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14. © 2009 Cengage Learning. All rights reserved.
Learning Objective 2
Discuss the basic design dimensions managers must consider in structuring an organization.
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15. 2 Ways to Approach-Justin
Organizational Design Process I
establish desired level of each structural dimension on a high-low continuum and develop structure that meets desired configuration
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16. 2 Ways to Approach-Justin
Organizational Design Process II
describe what is or is not important to the success of the organization rather than worry about specific characteristics
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17. Hierarchy of Authority – Specialization –
Formalization – the degree
to which the organization
has official rules,
regulations, and procedures
Centralization – the degree
to which decisions are
made at the top of the
organization
Ben M.
Hierarchy of
Authority –
the degree of
vertical
differentiation
across
levels of
management
Specialization –
the degree to
which jobs are
narrowly
defined and
depend on
unique
expertise
Basic
Design
Dimensions
Complexity – the degree to
which many different types
of activities occur in the
organization
Standardization – the
degree to which work
activities are accomplished
in a routine fashion

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Learning Objective 3
Describe five structural configurations for organizations.
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19. Machine Bureaucracy – Professional Bureaucracy –
Simple Structure – a
centralized form of
organization that
emphasizes the upper
echelon and direct
supervision
Machine Bureaucracy –
a moderately
decentralized form of
organization that
emphasizes the
technical staff and
standardization of
work processes
Kyle P
Structural
Configurations of
Organizations
Adhocracy – a
selectively
decentralized
form of
organization that
emphasizes the
support staff and
mutual adjustment
among people
Professional
Bureaucracy –
a decentralized
form of
organization that
emphasizes the
operating level
and standardization
of skills
Divisional Form – a
moderately decentralized
form of organization
that emphasizes the
middle level and
standardization of outputs

20. Five Structural Configurations of Organization-Kyle P
Prime
Coordinating
Mechanism
Key Part of
Organization
Type of
Decentralization
Simple Structure
Direct
Supervision
Upper
Echelon
Centralization
Limited
Horizontal
Decentralization
Machine
Bureaucracy
Standardization of Work Processes
Technical
Staff
Vertical and
Horizontal
Decentralization
Professional
Bureaucracy
Standardization
of Skills
Operating
Level
Divisionalized
Form
Standardization
of Outputs
Middle
Level
Limited Vertical
Decentralization
Adhocracy
Mutual Adjustment
Support
Staff
Selective
Decentralization

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Middle
Line
Strategic
Apex
Operating Core
Support
Staff
Techno-
structure
Mintzberg’s Five Basic Parts of an Organization
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From H. Mintzberg, The Structuring of Organizations (Upper Saddle
River, N.J.: Prentice-Hall, 1979): 20. Reprinted with permission.

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Learning Objective 4
Describe four contextual variables that influence organizational structure.
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23. Size Technology Strategy and Goals Environment Contextual Variables –
a set of characteristics that
influences the organization’s
design processes
Strategy
and Goals
Environment 4

24. Basic Design Small Large Dimensions Organizations Organizations
Implications of Size
Basic Design Small Large
Dimensions Organizations Organizations
Formalization
Centralization
Specialization
Standardization
Complexity
Hierarchy of authority
Less
High
Low
Flat
More
Tall 4

25. Technological Interdependence
the degree of interrelatedness of the organization’s various technological elements
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26. Relationship Between Technology and Basic Design Dimensions
Task Variability
Few Exceptions Many Exceptions
Ill-defined and
Unanalyzable
Craft
1. Moderate
2. Moderate
3. Moderate
4. Low moderate
5. High
6. Low
Nonroutine
1. Low
2. Low
3. Low
4. Low
5. High
6. Low
Problem Analyzability
Well-defined and
Analyzable
Routine
1. High
2. High
3. Moderate
4. High
5. Low
6. High
Engineering
1. Moderate
2. Moderate
3. High
4. Moderate
5. Moderate
6. Moderate
Key
1 Formalization 4 Standardization
2 Centralization 5 Complexity
3 Specialization 6 Hierarchy of Authority
Built from C. Perrow, “A Framework for the Comparative Analysis of Organization,” American Sociological Review, April 1967,

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Environment
anything outside the boundaries of an organization
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28. © 2009 Cengage Learning. All rights reserved.
Task Environment – the elements of an organization’s environment that are related to its goal attainment
Environmental Uncertainty – the amount and rate of change
in the organization’s
environment ?
Environment
Environment
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29. Extremes of Environmental Uncertainty-Tyson
Mechanistic Structure – an organizational design that emphasizes structured activities, specialized tasks, and centralized decision making
Organic Structure – an organizational design that emphasizes teamwork, open communication, and decentralized decision making
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30. Key Organizational Design Elements-Tyson
Context of the organization
Correct size
Current technology
Perceived environment
Current strategy and goals
Influences how manager perceive structural needs
Structural dimensions
Level of formalization
Level of centralization
Level of specialization
Level of standardization
Level of complexity
Hierarchy of authority
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31. Strategic Dimension Predicted Structural Characteristics
Innovation—to understand Low formalization
and manage new processes Decentralization
and technologies Flat hierarchy
Market differentiation—to Moderate to high complexity
specialize in customer Moderate to high preferences formalization
Moderate centralization
Cost control—to produce High formalization
standardized products High centralization
efficiently High standardization
Low complexity
Miller’s Integrative
Framework of
Structural & Strategic Dimensions
Dillin
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D. Miller, “The Structural and Environmental Correlates of Business Strategy,” Strategic Management Journal 8 (1987): John Wiley & Sons Limited. Reproduced with permission. 4

32. Differentiation and Integration Context of the organization
Which characterize the organizational processes-Dillin
Differentiation and Integration
Which influence how well the structure meets its
Purposes
Designate formal
lines of authority
information-
processing patterns
Which influence how well the structure fits the
Context of the organization
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33. © 2009 Cengage Learning. All rights reserved.
Learning Objective 5
Explain the forces reshaping organizations.
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34. Organization Life Cycle
the differing stages of an organization’s life from birth to death
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35. Forces Reshaping Organizations
Globalization
Changes in Information-Processing Technologies
Demands on Organizational Processes
Emerging Organizational Structures
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36. Structural Roles of Managers
Roles of Managers Today
1. Strictly adhering to boss–
employee relationships
2. Getting things done by
giving orders
3. Carrying messages up
and down the hierarchy
4. Performing a set of tasks
according to a job description
5. Having a narrow functional
focus
6. Going through channels,
one by one by one
7. Controlling subordinates
Roles of Future Managers
1. Having hierarchical
relationships subordinated
2. Getting things done by
negotiating
3. Solving problems and
making decisions
4. Creating the job through
entrepreneurial projects
5. Having a broad cross-
functional collaboration
6. Emphasizing speed and
flexibility
7. Coaching one’s workers
Management Review, January 1991, Thomas R. Horton.

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Learning Objective 6
Discuss emerging organizational structures.
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Emerging structures
Network organizations
Virtual organizations
Circle organizations
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39. HD’s Circle Organization
Create
Demand
Produce
Product
Provide
Support
Leadership and
Strategy Council
(LSC)
From R. Teerlink and L. Ozley, More than a Motorcycle: The Leadership Journey at Harley-Davidson. Boston, MA, P. 139.
Copyright © 2000 by the Harvard Business School Publishing Corporation; all rights reserved.
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40. © 2009 Cengage Learning. All rights reserved.
Learning Objective 7
Identify two cautions about the effect of organizational structures on people.
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41. Four Symptoms of Structural Weakness-Zach
Delay in
decision making
Poor quality
Lack of innovative
response to changing
environment
High level of
conflict
Overloaded hierarchy; information funneling limited to too few channels
Right information not reaching right people in right format
No coordinating effort
Departments work against each other, not for organizational goals
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42. Personality/Organization
Paranoid
Depressive
Dysfunctional
Personality/Organization
Combinations-Zach
Schizoid
Dramatic
Compulsive