Organizational Design Fundamentals Contemplative Questions In what type

Organizational Design Fundamentals

Contemplative Questions • In what type of company would I like to work? • How do organizations process information? • Are all organizations the same? • How are they different? • What career paths can I pursue?

Management Functions Designing organizational structures is part of organizing, one of the four basic management functions. Planning Defining goals, establishing strategy, and developing subplans to coordinate activities Organizing Determining what needs to be done, how it will be done, and who is to do it Leading Controlling Lead to Directing and motivating all involved parties and resolving conflicts Achieving the Monitoring organization’s activities stated to ensure purpose that they are accomplished as planned

Org chart example Chief Executive Officer Executive Vice-President Vice. President Region 1 District A District B Region 2 District C President Vice. President Region 3 District D Executive Vice-President Vice. President Region 4 District E Vice. President Region 5 District F District G

Alternate Org. Form: A Matrix Organization Design Manu. Engineering facturing Contract Admin. Purchasing Accounting Human Resources Alpha Project Design Group 1 Mftg. Group 1 Contract Group 1 Purch. Group 1 Acctg. Group 1 HR Group 1 Beta Project Design Group 2 Mftg. Group 2 Contract Group 2 Purch. Group 2 Acctg. Group 2 HR Group 2 Gamma Project Design Group 3 Mftg. Group 3 Contract Group 3 Purch. Group 3 Acctg. Group 3 HR Group 3 Omega Project Design Group 4 Mftg. Group 4 Contract Group 4 Purch. Group 4 Acctg. Group 4 HR Group 4

An IS Department Org Chart Fig. 1 -3. IS professionals frequently work in project-based teams. Only 1 team works on a project, usually. People work on many projects, however (e. g. a matrix organization). Teams are comprised of diverse group of members from several areas, and may include users, managers, analysts, programmers, etc.

Organizations v Whether you are a programmer, analyst, user or manager, it will help your career if you can understand how organizations work. v v Analysts, especially, need to understand how organizations process information. There are literally millions of organizations in the world. v v When is a group of people considered an organization? An organization is a ____ with some form of ______ who collectively possess some ______.

Organizations v v In what type of organization would you like to work? All organizations vary in terms of their strategy, their structure, their processes, their culture. Organizational structure is almost always predetermined. It is there on your first day on the job. What works at one company may not work in another, therefore it would be helpful to classify organizations into certain types. v Then we can make general statements about the types.

Organizations v v In what type of organization would you like to work? Think of organizations in terms of 3 dimensions: v v Degree of complexity Formalization Centralization These dimensions will help you assess prospective employers v v They generate great questions for job interviews. They also help to determine how information is processed within the organization.

Degree of Complexity v Two dimensions of organizational design v Vertical (the number of layers of management) v Span of control = avg. # employees / manager v Horizontal (how jobs are differentiated) Unity of Command says everyone should report to one and only one superior (this is often not the case in IS). v IS positions commonly require team work v You may have a superior who advises you and team leaders or project managers who give you specific direction

Vertical complexity Contrasting Spans of Control Organization Level (Highest) Assuming Span of 4 Assuming Span of 8 1 1 1 2 3 4 8 16 64 64 512 256 4, 096 4 5 1, 024 6 7 4, 096 Span of 4: (Lowest) 4, 096 Operatives. 1, 365 Managers Span of 8: 4, 096 Operatives. Only 585 Managers! Which organization looks more appealing to you?

Horizontal complexity Functional Departmentalization Plant Manager, Engineering Castings Dept. Mgr. Manager, Accounting Manufacturing Manager, Human Resources Manager, Purchasing Press Dept. Mgr. Finishing Dept. Mgr. Inspection Dept. Mgr. Tube Dept. Mgr.

Horizontal complexity Product Departmentalization Bombardier, Inc. Mass Transit Sector Mass Transit Division Recreational Products Division Recreational and Utility Vehicles Sector Bombardier-Rotax (Vienna) Logistic Equipment Division Rail Products Sector Rail and Diesel Products Division Industrial Equipment Division Bombardier. Rotax (Gunskirchen)

Horizontal complexity Customer Departmentalization Figure 10 -7 Director of Sales Manager, Manager Retail Accounts Manager, Manager Wholesale Accounts Manager, Manager Government Accounts

Horizontal complexity Geographic Departmentalization Vice President for Sales Director, Western Region Sales Director Southern Region Sales Director, Midwest Region Sales Director Eastern Region

Centralization and Decentralization DEGREE OF CENTRALIZATION DEGREE OF DECENTRALIZATION Judging by the size of the desk, where do decisions get made? Which organization looks more appealing to you?

Two Extremes for Organizational Types Mechanistic Rigid hierarchical relationships Fixed duties High formalization Organic Vertical and horizontal collaboration Adaptable duties Low formalization Formalized communication channels Informal communication Centralized decision authority Decentralized decision authority

Types of Organizations Mechanistic Rigid hierarchical relationships Fixed duties High formalization Formalized communication channels Centralized decision authority Organic Vertical and horizontal collaboration Adaptable duties Low formalization Informal communication Decentralized decision authority In which type of organization would you like to work? Do you like to take orders? Are you risk-averse, i. e. do you avoid risk? Do you prefer to be aware of the ‘big picture’?

Woodward’s Findings on Technology, Structure, and Effectiveness Unit Production Mass Production Process Production Structural characteristics Low vertical differentiation Low horizontal differentiation Low formalization Moderate vertical differentiation High horizontal differentiation High formalization High vertical differentiation Low horizontal differentiation Low formalization Most effective structure Organic Mechanistic Organic