Organizational Design Chapter 10 MANAGEMENT Meeting and Exceeding

learning objectives 1. Explain the meaning of organizational design 2. Describe the four objectives

1 Organizational Design The creation of or change to an organization’s structure . Develop

2 Common Elements of Organizations Chapter 10 . They operate with authority. They have

2 Objectives of Organizational Design Respond to Change Integrate New Elements Chapter 10 Coordinate

3 Organizational Structures Mechanistic Structure Chapter 10 Organic Structure A tight organizational structure characterized

Chapter 10 3 Organizational Structures Copyright © 2005 by South-Western, a division of Thomson

4 Contingency Factors Affecting Organizational Design Strategy Environment Size Chapter 10 Age Technology Copyright

Chapter 10 4 Influence of Strategy on Structure Copyright © 2005 by South-Western, a

Environment 4 Requirements for an Unstable Environment 1. The organization must be able to

Chapter 10 4 Environment and Structure Copyright © 2005 by South-Western, a division of

Environment 4 Stable Environment . Mechanistic structure . Centralized decision making . Wide spans

4 Size of the Organization Small Organizations Large Organizations . Organic structure. Little division

Age of the Organization 4 Organizational Life Cycle Chapter 10 Birth Youth Midlife Copyright

Chapter 10 4 Organizational Life Cycle Copyright © 2005 by South-Western, a division of

4 Technology Small Batch Mass Production Continuous Process Chapter 10 Flexible Manufacturing Systems Copyright

Chapter 10 4 Technology Copyright © 2005 by South-Western, a division of Thomson Learning.

Structural Options 5 Functional Matrix Divisional Chapter 10 Team Network Copyright © 2005 by

Chapter 10 5 Structural Options Copyright © 2005 by South-Western, a division of Thomson

5 Functional Structure Advantages Disadvantages . Economies of scale. Minimizes duplication. Comfortable . Employees

Chapter 10 5 Functional Structure Copyright © 2005 by South-Western, a division of Thomson

Divisional Structure 5 Advantages . Focuses the attention on results . Flexible and responsive

Chapter 10 5 Divisional Structure Copyright © 2005 by South-Western, a division of Thomson

Matrix Structure 5 Advantages . Flexible. Increase in communication and coordination . Increase in

Chapter 10 5 Matrix Structure Copyright © 2005 by South-Western, a division of Thomson

Team Structure 5 Advantages . Breaks down departmental barriers . Speeds up decision making

Chapter 10 5 Team Structure Copyright © 2005 by South-Western, a division of Thomson

Network Structure 5 Advantages . Flexibility. Low administrative overhead . Communication by e-mail Disadvantages

Chapter 10 5 Network Structure Copyright © 2005 by South-Western, a division of Thomson

Slides: 29

Download presentation

Organizational Design Chapter 10 MANAGEMENT Meeting and Exceeding Customer Expectations EIGHTH EDITION Prepared by Deborah Baker Texas Christian University Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 1

learning objectives 1. Explain the meaning of organizational design 2. Describe the four objectives of organizational design 3. Distinguish between mechanistic and organic organizational structures 4. Discuss the influence that contingency factors —organizational strategy, environment, size, age, and technology—have on organizational design Chapter 10 5. Describe the characteristics, advantages, and disadvantages of functional, divisional, matrix, team, and network structural designs Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 2

1 Organizational Design The creation of or change to an organization’s structure . Develop the overall layout of positions and departments . Develop the interrelationships of the departments Chapter 10 . Create the means to implement plans, achieve goals, and ultimately satisfy the customer Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 3

2 Common Elements of Organizations Chapter 10 . They operate with authority. They have departments. They use line and staff positions Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 4

2 Objectives of Organizational Design Respond to Change Integrate New Elements Chapter 10 Coordinate Components Encourage Flexibility Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 5

3 Organizational Structures Mechanistic Structure Chapter 10 Organic Structure A tight organizational structure characterized by rigidly defined tasks, formalization, many rules and regulations, and centralized decision making A flexible, free-flowing organizational structure that has few rules and regulations and decentralizes decision making right down to the employees performing the job Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 6

Environment 4 Requirements for an Unstable Environment 1. The organization must be able to adapt to change 2. The organization needs greater Chapter 10 coordination between departments Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 10

Environment 4 Stable Environment . Mechanistic structure . Centralized decision making . Wide spans of control Unstable Environment . Organic structure. Flexibility. Coordination. Less formal procedures Chapter 10 . Specialization Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 12

4 Size of the Organization Small Organizations Large Organizations . Organic structure. Little division of labor. Few rules and . Mechanistic structure. Greater division of regulations . Informal procedures labor . More rules and regulations . More elaborate Chapter 10 internal systems to control Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 13

5 Functional Structure Advantages Disadvantages . Economies of scale. Minimizes duplication. Comfortable . Employees have little environment for employees . Simplifies training understanding of or concern for areas outside their own area . Barriers in communication, cooperation, and coordination Chapter 10 . Slow response time to changes in the environment Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 20

Divisional Structure 5 Advantages . Focuses the attention on results . Flexible and responsive to change . Responsibility and accountability are easier to target . Excellent vehicle for Chapter 10 developing senior executives Disadvantages . Duplication of activities and resources . Loss of efficiency and economies of scale . Lack of technical specialization, expertise, and training . Different divisions may feel they are competing with one another Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 22

Matrix Structure 5 Advantages . Flexible. Increase in communication and coordination . Increase in employee motivation . Sense of commitment and satisfaction Disadvantages . Dual chain of command. Pits divisional objectives against functional objectives . Time loss to meetings. Balance of power between functional and divisional sides . Training in functional Chapter 10 and management skills . General perspective Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 24

Team Structure 5 Advantages . Breaks down departmental barriers . Speeds up decision making . Motivates employees. Lower administrative Disadvantages . Performance suffers if training is not provided . Time required for team meetings costs Chapter 10 . Does not involve the problem of double reporting . Team membership Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 26

Network Structure 5 Advantages . Flexibility. Low administrative overhead . Communication by e-mail Disadvantages . Lack of control. Reliance on contractors . Supply unreliability. Lack of technical Chapter 10 expertise Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved 28