designing effective organizations

Chapter 7 Ready Notes

Designing Effective Organizations

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Chapter Objectives

1. Identify and describe four characteristics common to all organizations, and explain the time dimension of organizational effectiveness.

2. Explain the concept of contingency organization design, distinguish between mechanistic and organic organizations, and summarize Burns and Stalker’s findings.

3. Identify and briefly describe the five basic departmentalization formats, and distinguish between centralized and decentralized organizations.


Chapter Objectives (cont’d)

4. Define the term delegation and list at least five common barriers to delegation.

5. Explain how the traditional pyramid organization is being reshaped.

6. Describe at least three characteristics of organizational culture and explain the cultural significance of stories.


What is an Organization?

• An Organization– A cooperative and coordinated social system of two

or more people with a common purpose.

– When people gather and formally agree to combine their efforts for a common purpose.


What is an Organization? (cont’d)

• Common Characteristics of Organizations1. Coordination of effort: multiplying individual

contributions to achieve results greater than those possible by individuals working alone.

2. Common goal or purpose: having a focus to strive for something of mutual interest.

3. Division of labor: dividing tasks into specialized jobs that use human resources efficiently.

4. Hierarchy of authority: using a chain of command to control and direct the actions of others.


Organization Charts

• Organization Chart (Table)– A visual display of an organization’s positions and

lines of authority that is useful as a blueprint for deploying human resources.

• Vertical and Horizontal Dimensions– Vertical hierarchy establishes the chain of command

which coordinates the efforts of the organization.

– Horizontal specialization denotes the division of labor.

– A balance between hierarchy and specialization is necessary if the organization is to be effective.


Organizational Effectiveness

• Evaluation of Effectiveness – There is no single approach to that is appropriate in

all circumstances or for all organizational types.

• The Time Dimension of Organizational Effectiveness Involves– Meeting organizational objectives and prevailing

societal expectations in the near future.

– Adapting to environmental demands and developing as a learning organization in the intermediate future.

– Surviving as an effective organization into the future.


Contingency Design

• Organizing– 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.


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.


Contingency Design Alternatives

• 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.


Basic Structural Formats

• 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.


Figure 7.2Alternative Departmentalization Formats


Figure 7.2Alternative Departmentalization Formats (cont’d)


Basic Structural Formats (cont’d)

• Reengineering into Cross-Functional Teams– Lowering costs, improving quality, increasing speed,

incorporating IT, and improving customer satisfaction

• Work Flow Process Departments in Reengineered Organizations– Creating horizontal organizations that emphasize

speedy work flow between two key points:

– Identifying customer needs

– Satisfying customer needs

– Focus is outward rather than inward.


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.


Figure 7.3Narrow and Wide Spans of Control


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.


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).


Effective Delegation

• 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.


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.


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.


Organizational Cultures

• Organizational Culture– The collection of shared beliefs, values, rituals,

stories, myths, and specialized language that creates a common identity and sense of community.

– The “social glue” that binds an organization’s members together.


Organizational Cultures (cont’d)

• Characteristics of Organizational Cultures1. Collective: organizations are social entities.

2. Emotionally charged: the organization’s culture serves as a security blanket to its members.

3. Historically based: trust and loyalty result from long-term organizational associations.

4. Inherently symbolic: actions often speak louder than words.

5. Dynamic: culture promotes stability and control.

6. Inherently fuzzy: ambiguity, contradictions, and multiple meanings are part of culture.



• Forms and Consequences of Organizational Cultures– Organizational values: shared beliefs about what

the organization stands for.

– The degree of sharing and intensity determine whether an organization’s culture is strong or weak.



• The Organizational Socialization Process– Organizational socialization: the process of

transforming outsiders into accepted insiders.

– Orientations

– Programs that familiarize new employees with the organization’s history, culture, competitive realities, and compensation and benefits.

– Storytelling

– Recitations of heroic or inspiring deeds provide “social roadmaps” for new employees.



• Strengthening Organizational Cultures– Symptoms of a weak organizational culture

– Inward focus

– Morale problems

– Fragmentation/inconsistency

– Ingrown subcultures

– Warfare among subcultures

– Subculture elitism