Introduction to Organization

Design and Dynamics

Major Stakeholder Groups

and What They Expect

 Difference between Individual and Group

Dynamics and Organizational Design

Levels in the Study of OB

OD vs OB
Organizational Dynamics

Individual and Group

Dynamics

Macro
Behavior of organization
Organizations ability to
learn, adapt and achieve
its goals

Micro
Behavior in organization
Individual and small groups
Employee productivity,
absenteeism, turnover, job
satisfaction
Learning motivation
personality
Role status, leadership, power,
communication, interpersonal
conflict

Reasons of Organizational Failure

Failure to respond to external elements

Inappropriate Strategy and Structure
Inability to achieve internal efficiency
Slow decision making
Negative use of power and politics
ethical lapses
outmoded corporate culture
Inability to manage internal conflicts
Inability to change and innovate

What is an Organization?
Social entities that are goal-directed
Designed as deliberately structured and coordinated
activity systems
Linked to the external environment
Includes large multinational corporations, family
owned businesses as well as nonprofits

Interacting Structural Dimensions of

Design and Contingency Factors

 Two sets of factors merge into interactive systems,

that the design parameters cause the so called
contingency factors just as much of the contingency
factors influence the choice of design parameters

Environment
Environment: the set of forces surrounding an
organization that have the potential to affect the
way it operates and its access to scarce resources
Two ways environment influences organizations

The Need for information about the environment

The need for resources from the environment

An Organizations Environment
(a) Competitors, industry size and
competitiveness, related issues
(b) Suppliers,
manufacturers, real
estate, services
(i)
(c) Labor market,
Sociocultural
Sector
employment agencies,
universities, training
schools, employees
(h)
in other companies,
Government
unionization
Sector
(d) Stock markets,
banks, savings and
(g)
loans, private
Economic
Conditions
investors
Sector
(e) Customers, clients,
potential users of products
and services
(f) Techniques of production, science,
computers, information technology

(g) Recession, unemployment rate,

inflation rate, rate of investment,
(j)
(a)
economics, growth
International
Industry
(h) City, state laws
Sector
Sector
and regulations, taxes,
(b)
services, court system,
DOMAIN
Raw Materials
political processes
Sector
(i) Age, values, beliefs,
education, religion,
(c)
work ethic, consumer
Human
Resources
and green
ORGANIZATION
Sector
movements
(j) Competition from
(d)
Financial
and acquisition by
Resources
foreign firms,
Sector
entry into overseas
(e)
(f)
Market
markets, foreign
Technology
Sector
Sector
customs, regulations,
exchange rates

Goal and
Strategy

Culture

Goal Company intent Organizational

culture: the set
Strategy a plan of
of shared
action that describes
values and
resource allocation
norms that
controls
and activities for
organizational
dealing with the
members
organization and for
interactions
reaching the
with each other
organizations goals
and with
people outside
the
Low Cost
organization
Differentiation

Technology
Refers to the
tools,
techniques,
and actions
used to
produce the
organization
s products
or services

Differences Between Large and

Small Organizations
organization's
magnitude as
reflected in the
number of people in
the organization

Organization Size: Is Bigger Better?

Pressures for Growth
Companies in all industries strive for growth to acquire the
size and resources needed to compete globally
Size enables companies to take risks

Dilemmas of Large Size

Large organizations are able to get back to business more
quickly following a disaster
Large companies are standardized, mechanistic, and
complex
Small companies are flexible and can be responsive
Many companies aim to have a big company/smallcompany hybrid
14

Structural Dimensions
Formalization
Specialization
Horizontal specialization number of task and breadth of it
Vertical specialization control of these task
Unskilled job highly specialized in both vertical and horizontal
dimensions
Professionals specialized horizontally but enlarged vertically

Hierarchy of Authority
Centralization

The Evolution of Organization

Theory and Design
Historical perspectives provide insight into
how organization design and management
practices have varied over time in response
to changes in society.

16
2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Historical Perspectives
Efficiency is Everything
Scientific Management: Pioneered by Frederick Winslow Taylor

How to Get Organized

Administrative Principles
Contributed to Bureaucratic Organizations

What about People?

Hawthorne Studies

Can Bureaucracies Be Flexible?

Flexible and lean; focused on service, quality, and engaged employees
(1908s)

It All Depends: Key Contingencies

Contingency: there is no one best way

Henry Mintzberg
(Canada, 1939)

Organization Design: Fashion or Fit? (HBR, 1981)

18

Mintzberg distinguished five components of an organization:

The strategic apex:
ensuring that the
organization serve its
mission in an effective way,
and also that it serve the
needs of those people who
controls.
The technostructure: The
analysts who serve the
organization by affecting
the work of others. They
may design it, plan it,
change it, or train the
people who do it, but they
do not do it themselves.

The Middle Line: Form a

chain joining the strategic
apex to the operating core
by the use of delegated
formal authority

The supporting staff:

Composed of specialized
units that exist to provide
support to the organization
outside the operating work
flow

The operational core: Those who perform the basic work related
directly to the production of products and services

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Each of these five parts has a tendency to direct the organization

in a particular direction.

Strategic Apexes centralization

Technostructures - standardization

Support Staff - collaboration

Middle Line - balkanisation

Operating Core professionalization

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Five Generic Structures

There are five generic organisation structures which

can be described in terms of the five-part theory:
- Simple structure,
- Machine bureaucracy,
- Professional bureaucracy,
- Divisionalised form,
- Adhocracy.

Mintzbergs typology

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Simple Structure

Simple Structure a
centralized form of
organization that
emphasizes the upper
echelon and direct
supervision

The simple structure, typically, has:

-little or no technostructure,
- few support staffers,
-a loose division of labour,
-minimal differentiation among its units,
-and a small managerial hierarchy.
Most organizations pass through the simple structure in their formative years.

Simple Structure

Machine Bureaucracy
"performance organizations"
not
"problem solving"

The design of a machine bureaucracy tends to be as follows:

-highly specialised routine operating tasks;
-very formalised procedures in the operating core;
-a proliferation of rules, regulations, & formalised communication;
-large-sized units at the operating level;
-reliance on the functional basis for grouping tasks;
-relatively centralised power for decision making;
an elaborate administrative structure with sharp distinctions
between line and staff.
The machine bureaucracies are typically found in the mature organizations.

Machine Bureaucracy
a moderately
decentralized form of
organization that
emphasizes the
technical staff and
standardization of
work processes

Machine Bureaucracy

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Professional Bureaucracy

"the power of expertise".

The professional bureaucracy relies for coordination on:

-The standardization of skills and its associated parameters such
as design, training and indoctrination.
-In professional bureaucracy type structures duly trained and
indoctrinated specialists -professionals- are hired for the
operating core, and then considerable control over their
work is given to them.
Most of the necessary coordination between the operating
professionals is handled by the standardization of skills and
knowledge .
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The professional bureaucracy emphasizes authority of a professional nature .

Professional
Bureaucracy
a decentralized
form of
organization that
emphasizes the
operating level
and standardization
of skills

27

Professional Bureaucracy

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Divisionalised Form

"the power of expertise".

Divisionalised form type organizations are composed of

semi-autonomous units - the divisions.
An operational solution to co-ordinate and controls a large
conglomerate delivering:
-Horizontally diversified products or services
-In a straight-forward, stable environment
-Where large economies of scale need not apply.

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Divisional Form a
moderately decentralized
form of organization
that emphasizes the
middle level and
standardization of outputs

29

Adhocracy

Adhocracy a
selectively
decentralized
form of
organization that
emphasizes
mutual adjustment
among people

Adhocracy includes a highly organic structure, with:

-little formalization of behaviour;
-job specialization based on formal training;
--a reliance on liaison devices to encourage mutual adjustment,
the key coordinating mechanism, within and between these teams

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Adhocracy

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Simple
Structure

Machine
Professional
Bureaucracy Bureaucracy

Adhocracy

Division of
Labor

Functional

Functional

Functional

Project/
Teams

Differentiation

Small

Large

Large

Variable

Hierarchy

Director/
Founder

Technostructure

Professionals

Experts

Centralization

High

High

High

Low

Formalization

Low

High

Low

Low

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Organizational
Alignment:
The 7-S Model

Organizational Alignment

Organizational alignment occurs when a firms organization is aligned

with firm strategy, so that firms structure, systems, staffing, etc
supports its strategy

Hard" elements
Easier to define or identify
and management can
directly manipulate and
change them
Can be found in strategy
statements, corporate plans,
organizational charts and
other documentations.
Leader first try to change
these in order to improve
performance

soft Ss
Harder to change directly,
and typically take longer to
do so.
They are harder to
describe since capabilities,
values and elements of
corporate culture are
continuously developing and
changing.

The 7-S model

Tool for analysis and action
Emerged from a stream of research that sought to identify the best way to
manage and organize firms

Team McKinsey & company consultants, Harvard Business school, and Stanford
business school professors

The 7-S model

Conclusions

No single best way to organize

Ideal organization aligned with or fits its environment
Organization complex system with inter-related elements each contributes
to its effectiveness
Seven key elements critical to understanding organization effectiveness
To be effective, an organization must have a high degree of fit or internal
alignment, among these seven elements

Commonly Found Misalignments

Strategy Is Out of Line with External Competitive Environment
Organisation and Competencies Fail to Support Strategy
Incompatibilities and Tensions Within the Organisation Level
Rewarding One Thing but Expecting Another
Failure to Realign Strategy and Organisation with Environmental
Changes

Managing Change
A leader is wise to recognize the full range of elements that may need to be changed
and focus on the ones that will have the greatest effect
All seven variables are interconnected. It is often difficult to make progress on one
without making adjustments in the other as well
The model does not imply any natural starting point for a change effort. Only by going
through a diagnosis of the alignment of the organization determine where you need
to focus attention
Hard S Strategy, structure, Systems
Soft S Style, staffing, skills, shared values