You are on page 1of 36

Managing Organization

Design
Chapter 12

City University of Science and Information


Technology

Faisal Ghani

The Nature of Organization Design


Organization Design
The overall set of structural elements and
the relationships among those elements
used to manage the total organization.
Organizations are in a continuous state of
change.
Organization design for larger
organizations is extremely complex.

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design
Universal perspective of organizational
design is based on two models:
Bureaucratic Model
Behavioral Model

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design
Bureaucratic Model
A model of organization design based on a
legitimate and formal system of authority.
Max Weber the German Sociologist, who
was the pioneer of Behavioral Model of
organization, gave the idea of
bureaucratic Model of organization.

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design

Bureaucratic Model
According to Weber, the ideal
bureaucracy exhibits five basic
characteristics:
Division of labor
Rules and procedures
Organizational hierarchy
Impersonal Relationships among workers
Expertise-based promotions

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design

Bureaucratic Model
Advantages
Efficiency in function due to well-defined
practices and procedures.
Organizational rules prevent favoritism.
Recognition of and requirement for
expertise stresses the value of an
organizations employees.

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design

Bureaucratic Model
Disadvantages
Organizational inflexibility and rigidity
due to rules and procedures.
Neglects the social and human
processes within the organization.
Belief in one best way to design an
organization does not apply to all
organizations and their environments.

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design
Behavioral Model
A model of organization design consistent
with human relations movement and
stressing attention to developing work
groups and concern with interpersonal
processes.
Rensis Likert, a management researcher.

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design
Behavioral Model
Likert developed a framework that characterized
organization in terms of eight important process:
1.
2.
3.
4.
5.
6.
7.
8.

Leadership
Motivation
Communication
Interaction
Decision making
Goal setting
Control and
Performance goals

Chapter 12

Managing Organization Design

City University of Science and Information


Technology

Faisal Ghani

Universal Perspective on Organization


Design
Behavioral Model

System

System

System

System

Exploitative

Benevolent

Consultative

Participative

Authoritative

Authoritative

Job-centered
leader
behavior

Chapter 12

Employeecentered
leader
behavior
For details see page 378
table 12.1

Managing Organization Design

10

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Situational View of Organizational
Design
Based on the assumption that the optimal
design for any given organization
depends on a set of relevant situational
factors.

Chapter 12

Managing Organization Design

11

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Situational View of Organizational Design

Core Technology

Environment

Organizational
Size

ORGANIZATIO
N
DESIGN

Organizational
Life Cycle
Chapter 12

Managing Organization Design

12

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Core Technology
Technology
Conversion processes used to transform inputs
into outputs.
A core technology is an organizations most
important technology.

Chapter 12

Managing Organization Design

13

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Core Technology
Woodwards Basic Forms of Technology

Unit or Small-Batch Technology


Produce custom-made products to customer
specifications, or else produce in small quantities.
Large Batch/Mass Production
Uses assembly-line production methods to manufacture
large quantities of products.
Continuous Process
Use continuous-flow processes to convert raw
materials by process or machine into finished products.

Chapter 12

Managing Organization Design

14

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Environment
Two kinds of design emerges from the
environment:
Mechanist Organizations
Similar to the bureaucratic or system 1 model,
most frequently found in stable environment.
Organic Organizations
Very flexible and informal model of
organization design, most often found in
unstable and unpredictable environment.
Chapter 12

Managing Organization Design

15

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Environment
Mechanisti

c Rigid hierarchical
relationships
Fixed duties
Many rules
Formalized
communications
channels
Centralized decision
authority
Taller structures
Chapter 12

Organic
Collaboration
Adaptable rules
Informal
communication
Decentralized
decision authority
Flatter structures

Managing Organization Design

16

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Environment
Organizations could be characterized along
two primary dimensions:
Differentiation
Extent to which the organization is broken
down into subunits.
Integration
Degree to which the various subunits must
work together in a coordinated fashion.

Chapter 12

Managing Organization Design

17

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design

Organizational Size
Total number of full-time or full-time
equivalent employees.
Research findings:
Small firms tend to focus on their core
technology.
Large firms have more job specialization,
standard operating procedures, more
rules and regulations.

Chapter 12

Managing Organization Design

18

City University of Science and Information


Technology

Faisal Ghani

Situational Influences on Organization


Design
Organizational Life Cycle
A progression through which
organizations evolve as they grow and
maturebirth, youth, midlife, and
maturity.

Chapter 12

Managing Organization Design

19

City University of Science and Information


Technology

Faisal Ghani

Strategy and Organization Design

Corporate-Level Strategy
Single-product strategy
Related or unrelated diversification
Portfolio approach to managing strategic
business units

Chapter 12

Managing Organization Design

20

City University of Science and Information


Technology

Faisal Ghani

Strategy and Organization Design

Chapter 12

Business-Level Strategy
Defender
Prospecting
Analyzer
Differentiation
Cost leadership
Focus

Managing Organization Design

21

City University of Science and Information


Technology

Faisal Ghani

Strategy and Organization Design


Organizational Functions
Major functions of the organization (e.g.
marketing, finance, research and
development, & manufacturing) influence
an organizations design.

Chapter 12

Managing Organization Design

22

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design

1.
2.
3.
4.

Organization design fall into four


categories:
Functional (U-Form) Design Unitary
Conglomerate (H-Form) Design Holding
Company
Divisional (M-Form) Design
Multidivisional
Matrix Design

Chapter 12

Managing Organization Design

23

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design

Functional (U-Form) Design Unitary


Based on the functional approach to
departmentalization.
Organizational members and units are grouped
into functional departments such as marketing
and production.
Coordination is required across all departments.
Design approach resembles functional
departmentalization in its advantages and
disadvantages.

Chapter 12

Managing Organization Design

24

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design


Functional (U-Form) Design Unitary
CEO

Vice president,
operations

Vice president,
marketing

Vice president, Vice president,


Vice president,
finance
human resources R&D

Plant
managers

Regional
sales managers

Controller

Shift
supervisors

District
sales managers

Accounting
supervisor

Chapter 12

Labor relations
director

Scientific
director

Plant human
Lab manager
resource manager

Managing Organization Design

25

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design

Conglomerate (H-Form) Design Holding


Used by an organization made up of a set of
unrelated businesses.
Based on product based departmentalization
Each business unit will have its own general
manager who is responsible for its profits and
losses.
Each manager functions independently then
others.
Complexity is associated with diversification
nature of the design.

Chapter 12

Managing Organization Design

26

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design


Conglomerate (H-Form) Design Holding

Samsung
Electronics Co.

TeleSemiconductors
Appliances
communications

Chapter 12

Managing Organization Design

Media

27

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design

Divisional (M-Form) Design Multidivisional


Based on multiple businesses in related areas
operating within a larger organizational
framework.
The design results from a strategy of related
diversification.
Some activities are extremely decentralized down
to the divisional level; others are centralized at
the corporate level.
The largest advantages of the M-form design are
the opportunities for coordination and sharing of
resources.

Chapter 12

Managing Organization Design

28

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design


Divisional (M-Form) Design Multidivisional

HP

Computers Printers

Chapter 12

Elec Medical Other


Scanners
EquipmentElectronics

Managing Organization Design

29

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design


Matrix Design
Based on two overlapping bases of
departmentalization The design results from a
strategy of related diversification.

A set of product groups or temporary departments are


superimposed across the functional departments.
Employees in the resulting matrix are members of both
their departments and a project team under a project
manager.
The matrix creates a multiple command structure in
which an employee reports to both departmental and
project managers.

Chapter 12

Managing Organization Design

30

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design


Matrix Design
Matrix Design Advantages

Enhances organizational flexibility.


Involvement creates high motivation and increased
organizational commitment.
Team members have the opportunity to learn new skills.
Provides an efficient way for the organization to use its
human resources.
Team members serve as bridges to their departments
for the team.
Useful as a vehicle for decentralization.

Chapter 12

Managing Organization Design

31

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design

Matrix Design
Matrix Design Disadvantages
Employees are uncertain about reporting
relationships.
Managers may view design as an anarchy in
which they have unlimited freedom.
The dynamics of group behavior may lead to
slower decision making, one-person domination,
compromise decisions, or a loss of focus.
More time may be required for coordinating taskrelated activities.

Chapter 12

Managing Organization Design

32

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design


Matrix Design

CEO
VP
VP
Engineering Production

VP
Finance

VP
Marketing

Project
Manager A
Project
Manager B
Project
Manager C
Chapter 12

Managing Organization Design

33

City University of Science and Information


Technology

Faisal Ghani

Basic Forms of Organization Design

Hybrid Designs
An organizational arrangement based on
two or more common forms of organization
design.
An organization may have a mixture of
related divisions and a single unrelated
division.
Most organizations use a modified form of
organization design that permits it to have
sufficient flexibility to make adjustments for
strategic purposes.

Chapter 12

Managing Organization Design

34

City University of Science and Information


Technology

Faisal Ghani

Emerging Issues in Organization


Design

The Team Organization


An approach to organizational design that relies
almost exclusively on project-type teams, with
little or no underlying functional hierarchy.
The Virtual Organization
An organizational design that has little or no
format structure with few permanent employees,
leased facilities, and outsourced basic support
services.
It may conduct its business entirely on-line and
exists only to meet for a specific and present
need.

Chapter 12

Managing Organization Design

35

City University of Science and Information


Technology

Faisal Ghani

Emerging Issues in Organization


Design

The Learning Organization


An organization that works to facilitate
the lifelong learning and development
of its employees while transforming
itself to respond to changing demands
and needs.

Chapter 12

Managing Organization Design

36

You might also like