Chapter Two Simple Ideas, Complex Organizations. Properties of Organizations Organizations are...

Chapter Two

Simple Ideas, Complex Organizations

Properties of Organizations

Organizations are ComplexHuman behavior is difficult to predictAlmost anything can affect anything else in collective activity

Organizations are SurprisingYesterday’s solutions creating future impediments

Organizations are DeceptiveDefy expectations, camouflage surprisesTendency to attribute things to personalityCultural taboos

Properties of Organizations

Organizations are AmbiguousWe aren’t sure what the problem is. . .We aren’t sure what is really happening. . .We aren’t sure what we want . . .We don’t have the resources we need. . .We aren’t sure who is supposed to to what. . .We aren’t sure how to get what we want. . .We aren’t sure how to determine if we’ve succeeded. . .

Fallacies in Organizational Diagnosis

People BlamingBlame the BureaucracyThirst for Power

The Structural Frame

Structural ImperativesSizeAgeCore ProcessesEnvironmentStrategy and GoalsInformation TechnologyNature of the Workforce

Structural Dilemmas

DifferentiationIntegrationGaps and overlapsPersonnel underuse vs. overloadLack of clarity versus lack of creativityAutonomy vs. interdependence

Structural Dilemmas

Loose/tightDiffuse authority vs. overcentralizationGoalless vs. goalboundIrresponsible/unresponsive

Organizational Design DefinedOrganizational Design Defined

The way in which the activities of an organization are arranged and coordinated so

that its mission can be fulfilled and its goals achieved

Components of Organizational DesignComponents of Organizational Design

Organizational StructureDefines the primary reporting relationships that exist within an organization.Common forms of organizational structure:

Functional structureDivisional structureMatrix structureNetwork structure

Mintzberg’s Fives

Elements of DesignOperating CoreMiddle LineStrategic ApexTechnostructureSupport Staff

Mintzberg’s Fives

Five Basic StructuresSimple StructureMachine BureaucracyProfessional BureaucracyDivisionalized FormAdhocracy

Functional Structure Slide 1 of 3


Members of the organization are grouped according to the particular function that they perform within the organizationAppropriate when an organization’s greatest source of complexity comes from the diverse tasks that must be performed rather than from its products, geographic markets or consumer groups


Functional Structure Slide 2 of 3Advantages

Facilitates specializationCohesive work groupsImproved operational efficiency

DisadvantagesFocus on departmental vs. organizational issuesDifficult to develop generalists needed for top managementOnly top management held accountable for profitability



Coors Brewing Company

CEOCEO

SalesSales FinanceFinanceHRMHRMR & DR & D

Divisional Structure Slide 1 of 6


Members of the organization are grouped on the basis of common products, geographic markets, or customers servedTypes of divisional structures

Product divisionsMost appropriate for organizations with relatively diverse product lines that require specialized efforts to achieve high product quality.



Types of divisional structures (cont.)Geographic divisions

Most appropriate for organizations with limited product lines that either have wide geographic coverage or desire to grow through geographic expansion.

Customer divisionsMost appropriate for organizations that have separate customer groups with very specific and distinct needs.



AdvantagesEnhanced coordinationBetter assessment of manager performance and responsibilityDevelopment of generalist managers

DisadvantagesManagers may lack expertise to operate in wide geographic areasDuplication of resources

Product division



AdvantagesAllows for focus on specific new marketsGood structure for growth along geographic linesAdaptable to local needs

DisadvantagesDuplication of product or product/technology effortsCoordination and integration are difficult

Geographic division



DisadvantagesMay be difficult to manage diverse product lines

Geographic division (cont.)



Bowyer-Singleton and Company

CEOCEO

Land Development

Land Development

Survey & MappingSurvey & Mapping

Envir. SciencesEnvir.

Sciences

Matrix Structure Slide 1 of 3


A structure in which the tasks of the organization are grouped along two organizational dimensions simultaneously

Examples include product/function, product/geographic region, etc.


Matrix Structure Slide 2 of 3Advantages

Can achieve simultaneous objectives.Managers focus on two organizational dimensions, resulting in more specific job skills.

DisadvantagesComplex, leading to difficulties in implementation.Behavioral difficulties from “two bosses.”Time consuming from a planning/coordination perspective.



PGP, Inc.CEO

VP Cosmetics

VP Nail Care

VP Skin Care

Domestic

Europe

Asia

Network Structure Slide 1 of 5


A contemporary organizational structure that is founded on a set of alliances with other organizations that serve a wide variety of functionsTypes of network structures

Internal networkA network structure that relies on internally developed units to provide services to a core organizational unit.



Types of network structures (cont.)Stable network

A network structure that utilizes external alliances selectively as a mechanism for gaining strategic flexibility.

Dynamic networkA network structure that makes extensive use of outsourcing through alliances with outside organizations.



AdvantagesMaximizes the effectiveness of the core unitDo more with less resourcesFlexibility

DisadvantagesFragmentation makes it difficult to develop control systemsSuccess is dependent on ability to locate sources



Disadvantages (cont.)Difficult to develop employee loyalty



BrokerBroker

SuppliersSuppliers

DesignersDesigners

DistributorsDistributors

ProducersProducers

Managing Complexity Through IntegrationManaging Complexity Through Integration

InterdependenceThe degree to which work groups are interrelated.

Three primary levels of work group integration

Pooled interdependenceSequential interdependenceReciprocal interdependence

Pooled InterdependencePooled InterdependenceOccurs when organizational units have a

common resource but no interrelationship with one another

Head-quarters

B

C

D

A

F

E

Sequential Interdependence Sequential Interdependence Occurs when organizational units must coordinate the flow of information, resources, and tasks from

one unit to another

A B C

Reciprocal InterdependenceReciprocal InterdependenceOccurs when information, resources, and tasks must

be passed back and forth between work groups

A

C

E F

D

B

Integrating Mechanisms Slide 1 of 2


Methods for managing the flow of information, resources, and tasks within the organizationThree major categories of integrating mechanisms

General management systemsMethods of increasing coordination potentialMethods of reducing the need for coordination



Methods of increasing

coordinationpotential

Methods of increasing

coordinationpotential

Methods of reducing the needfor coordination

Methods of reducing the needfor coordination

Integrating mechanisms

General management

systems

General management

systems

Boundary Spanning RolesBoundary Spanning Roles

Lateral relationships that help to integrate and coordinate the activities of the organizationExamples include:

Liaisons, committees, task forces, integrating positions, and interfunctional work teams

Locus of Decision Making Slide 1 of 2


The degree to which decision making is centralized versus decentralized

Centralized decision makingAdvantage

Gives top management maximum control.

DisadvantageLimits the organization’s ability to respond quickly and effectively to changes in the environment.



Centralized vs. Decentralized (cont.)Decentralized decision making

AdvantageOrganizations can respond to environmental change more rapidly and effectively because the decision makers are the people closest to the situation.

DisadvantageTop managers lose some control.

Mechanistic versus Organic SystemsMechanistic versus Organic Systems

Mechanistic systemsHighly centralized organizations in which decision-making authority rests with top management.

Organic systemsDecentralized organizations that push decision making to the lowest levels of the organization in an effort to respond more effectively to environmental change.

Stable versus Turbulent EnvironmentsStable versus Turbulent Environments

Stable environmentsEnvironments which experience little change.

Turbulent environmentsEnvironments which are characterized by rapid and significant change.

Adaptive OrganizationsAdaptive Organizations

Organizations that eliminate bureaucracy that limits employee creativity and brings the decision makers of the organization closer to the customer

Generic Issues in Restructuring

Need to account for specific tensions specific to structural form

Web of Inclusion

Chapter Two Simple Ideas, Complex Organizations. Properties of Organizations Organizations are...

Documents

Transcript of Chapter Two Simple Ideas, Complex Organizations. Properties of Organizations Organizations are...