1. Organizing in the Twenty-First Century
Chapter 10 (Lecture Outline and Line Art Presentation)
Organizing in the Twenty-First Century

2. Chapter Objectives
Explain the concept of contingency organization design.
Distinguish between mechanistic and organic organizations.
Discuss the roles that differentiation and integration play in organization structure.
Identify and briefly describe the five basic departmentalization formats.
Describe how a highly centralized organization differs from a highly decentralized one.
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3. Chapter Objectives (cont’d)
Define the term delegation and list at least five common barriers to delegation.
Explain how the traditional pyramid organization is being reshaped.
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4. 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.
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6. 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.
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7. Contingency Design (cont’d)
Joan Woodward’s Study
When task complexity is either high or low, organizations with organic structures are more effective.
When task complexity is moderate, organizations with mechanistic structures are more effective.
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8. Contingency Design (cont’d)
The Lawrence and Lorsch Model
The relationship of two opposing structural forces and environmental complexity.
Differentiation: the tendency of specialists to think and act in restricted ways.
Integration: the collaboration among specialists needed to achieve a common purpose.
A dynamic equilibrium between differentiation and integration is necessary for a successful organization.
Both differentiation and integration increase as environmental complexity increases.
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9. Figure 10.1 Differentiation and Integration: Opposing Organizational Factors
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10. Basic Structural Formats
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.
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11. Basic Structural Formats (cont’d)
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.
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12. Figure 10.2 Alternative Departmentalization
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13. Figure 10.2 Alternative Departmentalization (cont’d)
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14. Figure 10.2 Alternative Departmentalization (cont’d)
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15. Basic Structural Formats (cont’d)
Work Flow Process Departments in Reengineered Organizations
Creating horizontal organizations that emphasize speedy work flow between two points:
Identifying customer needs
Satisfying customer needs
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16. 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.
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17. Figure 10.3 Narrow and Wide Spans of Control
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18. 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.
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19. Figure 10.4 Situational Determinants of Span of Control
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20. 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).
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21. Figure 10.5 Factors in Relative Centralization/Decentralization

22. Contingency Design Alternatives (cont’d)
Decentralization Through Strategic Business
Strategic business units (SBU) are organizational subunits that
serve a specific market outside the parent organization.
face outside competitors.
are in a position of controlling their own destiny.
are profit centers, with their effectiveness measured in terms of profit and loss.
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23. Contingency Design Alternatives (cont’d)
Line and Staff Organizations
Organizations in which line managers make decisions and staff personnel provide advice and support.
Personal staff are assigned to a specific manager in supporting roles.
Specialized staff constitute a reservoir of specialized talent available to the entire organization.
Functional authority gives staff temporary and limited authority for specified tasks.
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24. Figure 10.6 A Line and Staff Organization
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25. Matrix Organization Matrix Organization
A structure with both vertical and horizontal lines of authority.
Advantages
Increased coordination
Improved quantity of information flow.
Disadvantages
Violates unity-of-command principle.
Authority gap (lack of line authority) for project managers.
Decreases quality of information flow.
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26. Figure 10.7 A Simplified Matrix Organization Chart

28. 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.
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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.
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30. Figure 10.8 The Delegation Continuum
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31. 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.
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32. Figure 10.9 Reshaping the Traditional Pyramid Organization
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