2. Designing Effective Organizations Chapter Fifteen Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Organizational Behavior: Key Concepts, Skills & Best Practices, 3/e

3. 15-3 After reading the material in this chapter, you should be able to: Describe the four characteristics common to all organizations. Explain the difference between closed and open systems, and contrast the military/mechanical, biological, and cognitive systems metaphors for organizations. Describe the four generic organizational effectiveness criteria.

4. 15-4 After reading the material in this chapter, you should be able to: Explain what the contingency approach to organizational design involves. Discuss Burns and Stalker’s findings regarding mechanistic and organic organizations. Describe new-style and old-style organizations, and list the keys to managing geographically-dispersed employees in virtual organizations.

5. 15-5 What is an Organization? Organization - system of consciously coordinated activities of two or more people. Four common denominators -Coordination of effort -Common goal -Division of labor -Hierarchy of authority

6. 15-6 Designing Effective Teams See an article from Administrative Science Quarterly on designing effective teams

7. 15-7 What is an Organization? Unity of command principle - each employee should report to a single manager.

8. 15-8 Organization Charts Organization chart - boxes-and-lines illustration showing chain of formal authority and division of labor.

9. 15-9 Sample Organization Chart for a Hospital Figure 15-1

10. 15-10 Organization Charts Span of control - the number of people reporting directly to a given manager. Staff personnel - provide research, advice, and recommendations to line managers. Line Managers - have authority to make organizational decisions.

11. 15-11 Needed: Open-System Thinking Closed System - self-sufficient entity, closed to the surrounding environment. Open System - organism that must constantly interact with its environment to survive

12. 15-12 Organizations as Military/Mechanical Bureaucracies Bureaucracy - Max Weber’s idea of the most rationally efficient form of organization Weber’s Bureaucracy -Division of labor -A hierarchy of authority -A framework of rules -Administrative personality

13. 15-13 The Organization as an Open System: The Biological Model Figure 15-2

14. 15-14 Four Dimensions of Organizational Effectiveness Figure 15-3

15. 15-15 Question? Which effectiveness criteria is the most widely used? A.Goal accomplishment B.Resource acquisition C.Internal processes D.Strategic constituencies satisfaction

16. 15-16 Generic Effectiveness Criteria Goal accomplishment – most widely used effectiveness criteria Resource acquisition – organization is effective if it acquires necessary factors of production

17. 15-17 Generic Effectiveness Criteria Internal processes – healthy system if information flows smoothly and if employee loyalty, commitment, job satisfaction prevail Strategic constituencies satisfaction -Strategic constituency: any group of people with a stake in the organization’s operation or success.

18. 15-18 Mixing Effectiveness Criteria: Practical Guidelines Goal accomplishment approach is appropriate when goals are clear, consensual, time-bounded, and measurable Resource acquisition approach is appropriate when inputs have a traceable effect on results or output

19. 15-19 Mixing Effectiveness Criteria: Practical Guidelines Internal processes is appropriate when organizational performance is strongly influenced by specific processes Strategic constituencies approach is appropriate when powerful stakeholders can significantly benefit or harm the organization

20. 15-20 The Contingency Approach to Designing Organizations Contingency approach to organization design - creating an effective organization- environment fit.

21. 15-21 Mechanistic versus Organic Organizations Mechanistic organizations - Rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication. Organic organizations - Flexible networks of multitalented individuals who perform a variety of tasks

22. 15-22 Question? In what type of decision making do top managers make all key decisions? A.Centralized B.Decentralized C.Fundamental D.Primary

23. 15-23 Different Approaches to Decision Making Centralized decision making – top managers make all key decisions Decentralized decision making – lower- level managers are empowered to make important decisions

24. 15-24 New-Style versus Old-Style Organizations Table 15-1

25. 15-25 How to Manage Geographically Dispersed Employees Hire carefully Communicate regularly Practice “management by wandering around” Conduct regular audits Use technology as a tool, not a weapon Achieve a workable balance between online and live training

26. 15-26 Video: Wal-Mart Paul Solman reports on Wal-Mart’s efforts to improve its public image. (9:42)