PowerPoint Presentation
to Accompany Chapter 11 of
Management Fundamentals
Canadian Edition
Schermerhorn  Wright
Prepared by: Michael K. McCuddy
Adapted by: Lynda Anstett & Lorie Guest
Published by: John Wiley & Sons Canada, Ltd.
Planning Ahead — Chapter 11 Study Questions
 What are the essentials of organizational design?
 How do contingency factors influence
organization design?
 What are the major issues in subsystems design?
 How can work processes be reengineered?
Management Fundamentals - Chapter 11
2
Study Question 1: What are the essentials of
organizational design?
 Organizational design
– Choosing and implementing structures that best
arrange resources to serve the organization’s
mission and objectives.
– A problem-solving activity that should be
approached from a contingency perspective.
Management Fundamentals - Chapter 11
3
Figure 11.1 A framework for
organizational design—aligning structures
with situational contingencies.
Management Fundamentals - Chapter 11
4
Study Question 1: What are the essentials of
organizational design?
 Organizational effectiveness
– Sustainable high performance in using resources to
accomplish mission and objectives.
– Approaches:
• Systems resource approach  focuses on inputs.
• Internal process approach  focuses on transformation
process.
• Internal process approach  focuses on outputs.
• Internal process approach  focuses on environment.
Management Fundamentals - Chapter 11
5
Study Question 1: What are the essentials of
organizational design?
 Short-run, medium-run and long-run criteria for
evaluating organizational effectiveness:
– Short-run focus.
• Goal accomplishment.
• Performance efficiency in resource utilization.
• Stakeholder satisfaction.
– Medium-run focus.
• Adaptability in the face of changing environments.
• Development of people and systems to meet new challenges.
– Long-run focus.
• Survival under conditions of uncertainty.
Management Fundamentals - Chapter 11
6
Study Question 1: What are the essentials of
organizational design?
 Bureaucracy
– A form of organization based on logic, order, and the
legitimate use of formal authority.
– Bureaucratic designs feature …
• Clear-cut division of labor.
• Strict hierarchy of authority.
• Formal rules and procedures.
• Promotion based on competency.
Management Fundamentals - Chapter 11
7
Study Question 1: What are the essentials of
organizational design?
 Contingency perspective on bureaucracy asks the
questions:
– When is a bureaucratic form a good choice for an
organization?
– What alternatives exist when it is not a good choice?
 Environment determines the answers to these
questions.
– A mechanistic design works in a stable environment
– An organic design works in a rapidly changing and
uncertain environment.
Management Fundamentals - Chapter 11
8
Figure 11.2 A continuum of organizational design
alternatives: from bureaucratic to adaptive organizations.
Management Fundamentals - Chapter 11
9
Study Question 1: What are the essentials of
organizational design?
 Structural characteristics associated with design
alternatives:
–
–
–
–
–
–
–
Goal  predictability versus adaptability.
Authority  centralized versus decentralized.
Rules and procedures  many versus few.
Spans of control  narrow versus wide.
Tasks  specialized versus shared.
Teams and task forces  few versus many.
Coordination  formal and impersonal versus informal
and personal.
Management Fundamentals - Chapter 11
10
Study Question 1: What are the essentials of
organizational design?
 Mechanistic Designs
– Predictable goals
– Centralized authority
– Many rules and
procedures
– Narrow spans of
control
– Specialized tasks
– Few teams and task
forces
– Formal and impersonal
means of coordination
 Organic Designs
– Adaptable goals
– Decentralized authority
– Few rules and
procedures
– Wide spans of control
– Shared tasks
– Many teams and task
forces
– Informal and personal
means of coordination
Management Fundamentals - Chapter 11
11
Study Question 2: How do contingency
factors influence organization design?
 Checklist for identifying contingency factors in
organizational design:
– Does the design fit well with the major problems and opportunities
of the external environment?
– Does the design support implementation of strategies and the
accomplishment of key operating objectives?
– Does the design support core technologies and allow them to be
used to best advantage?
– Can the design handle changes in organizational size and different
stages in the organizational life cycle?
– Does the design support and empower workers and allow their
talents to be used to best advantage?
Management Fundamentals - Chapter 11
12
Study Question 2: How do contingency
factors influence organization design?
 Environment and organizational design —
– Certain environment …
• Relatively stable and predictable elements.
• Bureaucratic organizations and mechanistic designs
are appropriate.
– Uncertain environment …
• More dynamic and less predictable elements.
• Adaptive organizations and organic designs are
appropriate.
Management Fundamentals - Chapter 11
13
Study Question 2: How do contingency
factors influence organization design?
 Strategy and organizational design —
– Structure follows strategy.
– Stability strategy is supported by:
– Bureaucratic organizations using mechanistic
designs.
– Growth strategies are is supported by:
– Adaptive organizations using organic designs.
Management Fundamentals - Chapter 11
14
Figure 11.3 Environmental uncertainty
and the performance of vertical and horizontal
designs.
Management Fundamentals - Chapter 11
15
Study Question 2: How do contingency
factors influence organization design?
 Technology
– The combination of knowledge, skills,
equipment, computers, and work methods
used to transform resource inputs into
organization outputs.
Management Fundamentals - Chapter 11
16
Study Question 2: How do contingency
factors influence organization design?
 Core manufacturing technologies:
– Small-batch production.
• A variety of custom products are tailor-made to order.
– Mass production.
• A large number of uniform products are made in an assemblyline system.
– Continuous-process production.
• A few products are made by continuously feeding raw
materials through a highly automated production system with
largely computerized controls.
Management Fundamentals - Chapter 11
17
Study Question 2: How do contingency
factors influence organization design?
 Technology and organization design —
– The technological imperative
• Technology is a major influence on organizational
structure.
• The best small-batch and continuous process plants
have more flexible organic structures.
• The best mass-production plants have more rigid
mechanistic structures.
Management Fundamentals - Chapter 11
18
Study Question 2: How do contingency
factors influence organization design?
 Core service technologies:
– Intensive technology
• Focuses the efforts of many people with special expertise on
the needs of patients or clients.
– Mediating technology
• Links together parties seeking a mutually beneficial exchange
of values.
– Long-linked technology
• Functions like mass production, where a client is passed from
point to point for various aspects of service delivery.
Management Fundamentals - Chapter 11
19
Study Question 2: How do contingency
factors influence organization design?
 Organization size, life cycle, and design —
– Larger organizations tend to have more mechanistic
designs, but it is not always best.
– Organizational life cycle:
• Birth stage — small size, simple structure.
• Youth stage — rapid growth in size, simple structure
experiences stress.
• Midlife stage — growing to large size, more complex and
formal structure.
• Maturity stage — stabilizes at large size, mechanistic structure.
Management Fundamentals - Chapter 11
20
Figure 11.4 Simultaneous “loose-tight”
properties of team structures support
efficiency and innovation.
Management Fundamentals - Chapter 11
21
Study Question 2: How do contingency
factors influence organization design?
 Coping with the disadvantages of large size:
– Downsizing.
• Reducing the scope of operations and number of employees.
– Intrapreneurship.
• The pursuit of entrepreneurial behavior by individuals and
subunits within large organizations.
– Simultaneous structures.
• Organizations that combine mechanistic and organic designs.
Management Fundamentals - Chapter 11
22
Study Question 2: How do contingency
factors influence organization design?
 Human resources and good organization
design —
– Provides people with supporting structures
needed for both high performance and work
satisfaction.
– Produces a good “fit” between organization
structures and human resources.
– Allows the expertise and talents of organization
members to be unlocked and utilized.
Management Fundamentals - Chapter 11
23
Study Question 3: What are the major issues
in subsystems design?
 Basics of subsystem design …
– Subsystem —
• A department or work unit headed by a manager.
• Operates as a smaller part of the larger
organization.
– Ideally, each subsystem supports other
subsystems, working toward interests of entire
organization.
Management Fundamentals - Chapter 11
24
Figure 11. 5 Subsystems differentiation among research and
development (R&D), manufacturing, and sales divisions.
Management Fundamentals - Chapter 11
25
Study Question 3: What are the major issues
in subsystems design?
 Lawrence and Lorsch’s findings on
subsystems design …
– The total system structures of successful firms
match the challenges of their environments.
– The subsystems structures of successful firms
match the challenges of their respective
subenvironments.
– Subsystems in successful firms worked well
with each other.
Management Fundamentals - Chapter 11
26
Study Question 3: What are the major issues
in subsystems design?
 Managing subsystem differentiation:
– Differentiation is the degree of difference that
exists among the internal components of an
organization.
– Common sources of subsystems differentiation:
•
•
•
•
Time orientation
Objectives
Interpersonal orientation
Formal structure
Management Fundamentals - Chapter 11
27
Study Question 3: What are the major issues
in subsystems design?
 Managing subsystem integration:
– Integration is the level of coordination achieved
among an organization’s internal components.
– Organization design paradox —
• Increased differentiation creates the need for greater
integration.
• Integration is more difficult to achieve as
differentiation increases.
Management Fundamentals - Chapter 11
28
Study Question 3: What are the major issues
in subsystems design?
 Mechanisms for achieving subsystem integration:
– Rules and procedures
– Hierarchical referral
– Planning
– Direct contact
– Liaison role
– Task forces
– Teams
– Matrix organizations
Management Fundamentals - Chapter 11
29
Study Question 4: How can work processes be
reengineered?
 Process reengineering
– Systematic and complete analysis of work processes.
– Design of new and better work processes.
 Work process
– “A related group of tasks that create a result of value
for the customer.” (Michael Hammer)
 Workflow
– Movement of work from one point to another in the
manufacturing or service delivery process.
Management Fundamentals - Chapter 11
30
Study Question 4: How can work processes be
reengineered?
 Steps in reengineering core processes:
– Identify core processes.
– Map core processes in respect to workflows.
– Evaluate all tasks for core processes.
– Search for ways to eliminate unnecessary tasks or work.
– Search for ways to eliminate delays, errors, and
misunderstandings.
– Search for efficiencies in how work is shared and
transferred among people and departments.
Management Fundamentals - Chapter 11
31
Figure 11.6 How reengineering can
streamline core business processes.
Management Fundamentals - Chapter 11
32
COPYRIGHT
Copyright © 2007 John Wiley & Sons Canada, Ltd. All rights
reserved. Reproduction or translation of this work beyond that
permitted by Access Copyright (The Canadian Copyright Licensing
Agency) is unlawful. Requests for further information should be
addressed to the Permissions Department, John Wiley & Sons
Canada, Ltd. The purchaser may make back-up copies for his or her
own use only and not for distribution or resale. The author and the
publisher assume no responsibility for errors, omissions, or damages
caused by the use of these programs or from the use of the
information contained herein.