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Organizational Design

Organizational design
The structures, systems, and processes that enable an
organization to implement its plans and achieve its
goals.

Copyright 2002 by South-Western 131


Dimensions of Organizational Design
Organizational Decentralization of
structure authority
Those attributes Formalization
that characterize
the interaction
Standardization
patterns that link Task specialization
people to people Person specialization
and people to work.
Complexity
Stratification
Configuration

Copyright 2002 by South-Western 132


Dimensions of Organizational Design
(contd)
Organizational Processes
Decision making
Dictatorial or participative
Coordinating
Personal or impersonal
Communicating
Open exchange or restricted

Copyright 2002 by South-Western 133


Centralization and Decentralization of
AuthorityA Closer Look
Influence and Power
Influencethe ability to produce a change in ones
environment.
Interpersonal influencethe ability to produce a change
in others.
Powerthe means to achieve influence.
Authoritythe legitimate use of influence and
organizationally sanctioned power.

Copyright 2002 by South-Western 134


Centralization and Decentralization of
AuthorityA Closer Look (contd)
Types of authority and authority relationships
Line authoritycommand authority to make decisions
and direct the organization.
Staff authorityadvisory authority in the form of
counsel, advice, and recommendation.
Functional authoritythe right to direct or control
specific activities that are under the span of
control of other managers.

Copyright 2002 by South-Western 135


Variations in Staff Authority

Advisory Command
Authority Authority

Pure Compulsory Concurring Functional


Staff Staff Authority Authority
Consultation

FIGURE 131
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Functional Authority

Human Finance Western Maritimes Central


Resources Canada Canada

Operations Marketing Operations Marketing

FIGURE 132
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Centralization and Decentralization of
AuthorityA Closer Look (contd)
Delegating Authority
Delegationtransferring formal authority from one
position to another in an organization.

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The Assign Tasks
Stage 1
Delegation
Process
Stage 2 Transfer Task Authority

Reject

Stage 3 Acceptance
Condition

Accept

Stage 4 Creation of Responsibility

FIGURE 133
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Centralization and Decentralization of
AuthorityA Closer Look (contd)
Centralization
Formal authority is concentrated at the top of the
organizational hierarchy.

Decentralization
Formal authority is diffused throughout an organization,
and specific authority for decision making is lodged at
the level where that decision gets executed.

Copyright 2002 by South-Western 1310


Benefits of Decentralization
More flexibility and Better placement and
greater speed in reacting utilization of the
to changes in the expertise of
environment. organizational members.
Better able to deal with Relieves managers of
complex combinations of information and decision
business activities overload.
Increased ability to cope Increases a sense of
with growth and change. ownership and for work
Motivates and improves and for the organization.
human resources.

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Determinants of the Decentralization
Decision
The external environment
Stability versus uncertainty
The organization
Strategy, history/culture, growth/change rate, size,
complexity
The work
Cost/risks decisions, technology, task interdependence
The people
Upper-level managers, lower-level managers

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Controls on Decentralization
Formalization of operating norms
Rules, policies, operating procedures
Benefits
Consistency
Coordination
Economy
Standardization

Personalization (professionalization)
Control delegated authority

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Structures of Organic and Mechanistic
Organizations

Organic Mechanistic

High Complexity Low Complexity


Low Centralization High Centralization
Low Formalization High Formalization
Low Standardization High Standardization
High Person Specialization Low Person Specialization
High Task Specialization Low Task Specialization

FIGURE 135
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The Range of Organizational Designs

Closed Open
Rigid Flexible
Structured Unstructured
Mechanistic Organic

Classical Models Behavioral Models Organic Models


(e.g., Webers (e.g., Socio-technical) (e.g., Self-Designing
Bureaucracy) Organization)

FIGURE 136
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Strategic Choice and Organizational Design

Environment

Culture

Technology
Managements Organizational
Strategic Design
Goals Choices

Size

People

Organizational Context
FIGURE 137
Copyright 2002 by South-Western 1316
Employee Responses to Organizational
Design and Context
Complexity
Managers like tall organizations (high complexity),
lower-level employees prefer flat organizations (low
complexity).
Formalization
The higher the formalization, the lower the job
satisfaction.
Centralization and decentralization
Decentralization is preferable to centralization.

Copyright 2002 by South-Western 1317


Employee Responses to Organizational
Design and Context (contd)
Stratification (status incongruence)
The higher the stratification, the lower the job
satisfaction (somewhat supported).
Size
Size increases job dissatisfaction and withdrawal
behaviors.
Technology
Routine, boring jobs result in job dissatisfaction.
Properly implemented technology increases employee
satisfaction.
Copyright 2002 by South-Western 1318
Employee Responses to Organizational
Design and Context (contd)
PeopleManagements attitudes and
behaviors
The norm of reciprocityan organizations
commitment to its employees and favorable treatment
of their needs is a significant determinant of the
employees commitment to the organization.
Empowerment
The result of a process that enhances organizational
members feelings of self-efficacy about their work and
motivates their work performance.

Copyright 2002 by South-Western 1319


The Commitment-Commitment
Relationship
Absenteeism

Attendance

Organizational Commitment Employees Employees


to the Employee: Support, Perception of Commitment
Organizational to the Motivation
Rewards, Positive Experiences
Support Organization

Citizenship Behavior

Performance

FIGURE 138
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The Empowerment Model

Delegation

Skills and Abilities


Decentralization

Participation Feeling Intrinsic


Empowerment Performance
Energized Motivation

Personal Control

Accurate Role
Autonomy Perceptions

FIGURE 139
Copyright 2002 by South-Western 1321

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