Download Organization design

Organizing
and Organization Design
dr. hab. Jerzy Supernat
Institute of Administrative Studies
University of Wrocław
Organizing and Organization Design
I
Organizing is deciding how to best assemble organizational (structural) elements into an efficient overall structure for the organization.
The six basic organizational (structural) elements that can
be used to configure an organization are:
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designing jobs
grouping jobs
establishing reporting relationships
distributing authority
coordinating activities
differentiating between positions
dr hab. Jerzy Supernat
Organizing and Organization Design
Designing jobs
Job design is the determination of an individual’s workrelated responsibilities. The starting point for designing
jobs is determining the level of desired specialization.
dr hab. Jerzy Supernat
Organizing and Organization Design
Job specialization is the degree to which the overall task
of the organization is broken down and divided into smaller component parts. Job specialization evolved from the
concept of division of labor.
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Benefits and limitations of specialization
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Alternatives to specialization
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job rotation
job enlargement
job enrichment
work teams
job characteristics approach
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skill variety
task identity
task significance
autonomy
feedback
Adam Smith
Organizing and Organization Design
Grouping jobs
The process of grouping jobs according to some logical
arrangements is called departmentalization.
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Rationale for departmentalization
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Bases for departmentalization
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function
product
customer
location
other forms
Grouping jobs involving the same or similar activities.
Grouping jobs around products or product groups.
Grouping jobs to respond to and interact with specific
customers or customer groups.
Grouping jobs on the basis of defined geographic sites or areas.
Grouping by time or by sequence.
dr hab. Jerzy Supernat
Organizing and Organization Design
Establishing reporting relationships
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Chain of command
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unity of command
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the scalar principle
Each person within an organization must have
a clear reporting relationship to one superior.
A clear and unbroken line of authority must
extend from the lowest to the highest position in the organization.
Span of management / control
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The number of people who report to a particular manager.
actual span of control
nominal span of control
potential / optimal span of control
dr hab. Jerzy Supernat
Organizing and Organization Design
Harry S. Truman
The sign "The Buck Stops Here" was on USA President Harry S. Truman's
(1884-1972) desk in his White House office. This was meant to indicate that
he didn't "pass the buck" to anyone else but accepted personal responsibility
for the way the country was governed.
The saying "the buck stops here" derives from the slang expression "pass the
buck" which means passing the responsibility on to someone else. The latter
expression is said to have originated with the game of poker, in which a
marker or counter, frequently in frontier days a knife with a buckhorn handle,
was used to indicate the person whose turn it was to deal. If the player did
not wish to deal he could pass the responsibility by passing the "buck," as the
counter came to be called, to the next player.
dr hab. Jerzy Supernat
Organizing and Organization Design
Distributing authority
Authority is power that has been legitimized by the organization.
Richard H. Hall, Pamela S. Tolbert: Authority is a type of power that is
based on the acceptance by others of a given individual’s legitimate
right to issue orders or directives. Thus, orders are followed because
it is believed that they ought to be followed; recipients are expected
to „suspend judgment” and comply voluntarily.
Two specific issues that managers must address when distributing
authority are:
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Delegation
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Decentralization and centralization
dr hab. Jerzy Supernat
Organizing and Organization Design
Delegation
Delegation is the downward transfer of authority from superior to subordinate (or subordinates). The subordinate
is empowered to act for the superior, while the superior
remains accountable for the outcome. Delegation of authority is a person-to-person relationship requiring trust,
commitment, and contracting between the superior and
the subordinate.
dr hab. Jerzy Supernat
Organizing and Organization Design
Good News Bible, Exodus; 18, 13-23:
The next day Moses was settling disputes among the people, and he
was kept busy from morning till night. When Jethro saw everything that
Moses had to do, he asked, „What is all this that you are doing for the people? Why are you doing this all alone, with people standing here from morning till night to consult you?”.
Moses answered, „I must do this because the people come to me to
learn God’s will. When two people have a dispute, they come to me, and I
decide which one of them is right, and I tell them God’s commands and laws”.
Then Jethro said, „You are not doing it the right way. You will wear
yourself out and these people as well. This is too much for you to do alone.
Now let me give you some good advice […] you should choose some capable
men and appoint them as leaders of the people: leaders of thousands, hundreds, fifties, and tens. They must be God-fearing men who can be trusted
and who cannot be bribed. Let them serve as judges for the people on a
permanent basis. They can bring all the difficult cases to you, but they themselves can decide all the smaller disputes. This will make it easier for you, as
they share your burden. If you do this, as God commands, you will not wear
yourself out, and all these people can go home with their disputes settled”.
dr hab. Jerzy Supernat
Organizing and Organization Design
Benefits of delegating:
• leaves delegator (superior) free to concentrate on more important
strategic issues
• increases job satisfaction for delegator and subordinate
• helps subordinate to develop new skills
• helps subordinate to grow in confidence
• provides an opportunity to assess subordinates’ potential
• fosters teamwork
• helps create a more motivated workforce
• enhances morale
• improves communication through feedback
• creates fresh insights into work issues
• helps create a climate for achievement
• ultimately speeds up results
• reduces costs (subordinate’s time is less expensive than delegator’s
time)
• increases chances of promotion for delegator
• ensures smooth succession when delegator is promoted
dr hab. Jerzy Supernat
Organizing and Organization Design
Decentralization
Just as authority can be delegated from one individual to
another, organizations also develop patterns of authority
across a wide variety of positions and departments. Decentralization is the process of systematically delegating
power and authority throughout the organization to middle and lower-level managers. Hence, a decentralized organization is one in which decision-making power and
authority are delegated as far down the chain of command as possible. Decentralization, of course, is just one
end of a continuum anchored at the other end by centralization, the process of systematically retaining power and
authority in the hands of higher-level managers.
dr hab. Jerzy Supernat
Organizing and Organization Design
Coordinating activities
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Forms of interdependence
• pooled interdependence
• sequential interdependence
• reciprocal interdependence
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Structural coordination techniques
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The primary reason for coordination is that departments are
interdependent. Reciprocal interdependence requires the closest
coordination, sequential interdependence less, pooled interdependence least.
managerial hierarchy
rules and procedures
liaison roles
task forces
integrating departments
dr hab. Jerzy Supernat
Organizing and Organization Design
Differentiating between positions
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Line positions
A line position is a position in the direct chain of
command that is responsible for the achievement
of an organization’s goals.
A staff position is intended to provide expertise,
advice, and support for line positions.
Forms of staff authority:
• the authority to advise
• compulsory advice
• functional authority
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Staff positions
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Administrative intensity
Administrative intensity is the degree to which
managerial positions are concentrated in staff
positions.
dr hab. Jerzy Supernat
Organizing and Organization Design
II
Organization design
Organization design is the overall configuration of structural elements and the relationships among those elements used to manage the total organization. Thus organization design is a means to implement strategies and
plans to achieve organizational goals.
It worth to remember that organizations are not designed and then left intact. Most organizations change almost continuously as a result of factors such as events
and people.
dr hab. Jerzy Supernat
Organizing and Organization Design
Universal perspectives on organization design
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mechanistic model / bureaucracy
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organic model / adhocracy
dr hab. Jerzy Supernat
Organizing and Organization Design
Tom Burns: A mechanistic system is appropriate to stable conditions. It is characterized by:
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The specialized differentiation of functional tasks into which the problems and tasks
facing the concern as a whole are broken down.
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The abstract nature of each individual task, which is pursued with techniques and
purposes more or less distinct from those of the concern as a whole.
The reconciliation, for each level in the hierarchy, of these distinct performances by the
immediate superiors.
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The precise definition of rights and obligations and technical methods attached to each
functional role.
The translation of rights and obligations and methods into the responsibilities of a
functional position.
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Hierarchic structure of control, authority, and communication.
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A reinforcement of the hierarchic structure by the location of knowledge of actualities
exclusively at the top of the hierarchy.
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A tendency for vertical interaction between members of the concern, i.e. between
superior and subordinate.
A tendency for operations and working behaviour to be governed by superiors.
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10. Insistence on loyalty to the concern and obedience to superiors as a condition of mem11.
bership.
A greater importance and prestige attaching to internal (local) then to general (cosmopolitan) knowledge, experience and skill.
dr hab. Jerzy Supernat
Organizing and Organization Design
Tom Burns: The organic form is appropriate to changing conditions, which give rise constantly to fresh problems and unforeseen requirements for action which cannot be broken down or distributed automatically arising from the functional roles defined within a
hierarchic structure. It is characterized by:
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The contributive nature of special knowledge and experience to the common task of the
concern.
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The realistic nature of the individual task, which is seen as set by the total situation of
the concern.
The adjustment and continual redefinition of individual tasks through interaction with
others.
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The shedding of responsibilities as a limited field of rights, obligations, and methods.
The spread of commitment to the concern beyond any technical definition.
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A network structure of control, authority, and communication.
Omniscience no longer imputed to the head of the concern; knowledge may be located
anywhere in the network; this location becoming the centre of authority.
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A lateral rather than a vertical direction of communication through the organization.
A content of communication which consists of information and advice rather than
instructions and decisions.
10. Commitment to the concern’s tasks and to the ‘technological ethos’ of material progress
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and expansion is more highly valued than loyalty.
Importance and prestige attach to affiliations and expertise valid in the industrial and
technical and commercial milieux external to the firm.
dr hab. Jerzy Supernat
Organizing and Organization Design
Bureaucracy as seen by Max Weber (1864-1920)
1. Official functions are fulfilled on continuous basis.
2. Jurisdictional areas are clearly specified; activities are distributed
as official duties.
3. Organization follows hierarchical principle.
4. Intentional, abstract rules govern decisions and actions. Rules are
stable, exhaustive, and can be learned.
5. Decisions are recorded in permanent files.
6. Means of production or administration belong to office. Personal
property is separated from office property.
7. Officials are selected on basis of technical qualifications, appointed not elected, and compensated by salary.
8. Employment by the organization is a career. The official is a fulltime employee and looks forward to a life-long career. After a trial
period they get tenure of position and are protected from
arbitrary dismissal.
dr hab. Jerzy Supernat
Organizing and Organization Design
Adhocracy
Adhocracy is the diametric opposite of M. Weber’s
bureaucracy. It disregards the accepted, classical
principles of management under which each and
every one has a carefully defined and permanent
role. Adhocracy:
is flexible and free flowing
• is non-hierarchical
• is based on participation
• is creative and entrepreneurial
• is based round networks
• is driven by corporate goals – rather than narrowly defined functional ones
• utilizes information and communication technology (ICT) as a key resource
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Max Weber in 1894
dr hab. Jerzy Supernat
Organizing and Organization Design
Situational determinants of organization design
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strategy and organizational functions
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core technology
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environment
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organizational size
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organizational life cycle
dr hab. Jerzy Supernat
Organizing and Organization Design
Technology
Technology is the conversion process an organization uses to transform inputs (various resources) into outputs (products or services).
Joan Woodward (1916-1971), one of the first researchers to identify
the link between technology and organization design, defined three
basic types of technology:
unit or small-batch technology: products are custom-made or produced in small quantities
• large-batch or mass production technology: products are manufactured in assembly-line manner
• continuous-process technology: products are transformed from raw
materials into finished goods through a series of machine or process
transformations that change the composition of the materials
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When Joan Woodward classified organizations by technology, the organizations within each set had similar designs. Joan Woodward thus
concluded that different forms of technology are likely to necessitate
different types of organization design.
dr hab. Jerzy Supernat
Organizing and Organization Design
Organizational size and life cycle
Organizational size refers to how large the organization is, usually in
terms of the number of full-time employees. Organizational size can
affect organization design.
Researchers at the University of Aston found that large organizations
tend to have more job specialization, more standard operating procedures, more rules and regulations, and more decentralization than
small organizations. Organizational size is related to its life cycle.
Life cycle is the organization's maturity relative to that of other organizations. Organizations tend to follow a fairly predictable pattern of
growth. This pattern is one of creation, growth, and stability.
dr hab. Jerzy Supernat
Organizing and Organization Design
Forms of organization design
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functional (U-form) design
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conglomerate (H-form) design
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divisional (M-form) design
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matrix design
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hybrid designs
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team organization
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virtual organization
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learning organization
Organizations adopt many
different kinds of design.
Most designs, however,
fall into one of four basic
categories. Others are
hybrids based on two
or more of the basic forms.
dr hab. Jerzy Supernat
Organizing and Organization Design
Functional (U-form) design
The functional design is an arrangement based on the functional
approach to departmentalization. The design has been termed the
U-form (for unitary) by Oliver E. Williamson. Under the U-form design, the members and units in the organization are grouped into
functional departments such as finance, marketing and production.
Functionally based designs are most commonly used in small organizations.
dr hab. Jerzy Supernat
Organizing and Organization Design
Conglomerate (H-form) design
Conglomerate design or H-form (H stands for holding) is used by an
organization made up of a set unrelated businesses. In other words,
the H-form is used to implement a corporate strategy of unrelated
diversification. The conglomerate design is based loosely on the
product approach to departmentalization. A general manager operates each business or set of businesses and is responsible for its profits or losses, and each general manager functions independently of
the others.
dr hab. Jerzy Supernat
Organizing and Organization Design
Divisional (M-form) design
The M-form (M stands for multidivisional) design is similar to the Hform design (the product approach to departmentalization is also
used), but most or all of its businesses are in the same or related
industries (in the case above a firm is specializing in mechanical contracting). The M-form organization is used to implement a corpora-te
strategy of related diversification.
dr hab. Jerzy Supernat
Organizing and Organization Design
Matrix design. A matrix organization is created by overlapping product-based
departmentalization onto a functional structure. Each member of a matrix organization has a functional 'home' but may be assigned at any given time to one or
more groups working on special projects (project teams / product groups / temporary departments). Note that a matrix relies on a multiple-command structure.
Finance
Marketing
Production
Administra
-tion
Project X
Project Y
Project Z
dr hab. Jerzy Supernat
Organizing and Organization Design
Advantages
of the matrix design
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flexibility
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employees participation
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opportunity to learn new skills
opportunity to take full advantage
of the organization’s human
resources
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enhanced cooperation
opportunity to delegate
and decentralize
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Disadvantages
of the matrix design
uncertainty about reporting
relationships
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conflict of loyalties
problems associated with
the dynamics of group behavior
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a matrix organization may have
to devote more time to coordinating
task-related activities
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dr hab. Jerzy Supernat
Organizing and Organization Design
Hybrid designs
Some organizations use a design that represents a hybrid
(blend) of two or more of the common forms of organization design. For example, an organization may have five
related divisions and one unrelated division, making its
design a cross between an M-form and an H-form.
Indeed, few organizations use a design in its pure form.
Most organizations, in fact, have one basic organization
design as a foundation but maintain sufficient flexibility so
that they can make temporary or permanent modifications
for strategic purposes.
dr hab. Jerzy Supernat
Organizing and Organization Design
Team organization
An approach to organization design that relies almost exclusively on project-type teams, with little or no underlying functional hierarchy. Within such an organization people float from project to project, according to their skills
and the demands of those project.
dr hab. Jerzy Supernat
Organizing and Organization Design
Virtual organization
The virtual organization is closely related to the team organization. A virtual organization has little or no formal
structure. Such an organization typically has only a handful of permanent employees and a very small staff and
administrative headquarters facility. As the needs of the
organization change, its managers bring in temporary
workers, lease facilities, and outsource basic support services to meet the demands. As the situation changes, the
temporary workforce also changes, with some people
leaving the organization and others entering. Facilities and
the services subcontracted to others change as well.
dr hab. Jerzy Supernat
Organizing and Organization Design
Learning organization
Organizations that adopt this approach work to integrate
their own improvement with ongoing employee learning
and development. Specifically, a learning organization is
one that works to facilitate the lifelong learning and personal development of all its employees while continually
transforming itself to respond to changing demands and
needs.
dr hab. Jerzy Supernat
Concluding Remark
An empowered organization is one in which individuals
have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organizational success.
Stephen R. Covey
dr hab. Jerzy Supernat