Summary
Chapter 7: Designing Effective Organizations
1. Whatever their purpose, all organizations have four characteristics: (1)
coordination of effort, (2) common goal or purpose, (3) division of labor, and (4)
hierarchy of authority. If even one of these characteristics is absent, an
organization does not exist. Because there is no one criterion for organizational
effectiveness, for-profit as well as nonprofit organizations need to satisfy different
effectiveness criteria in the near, intermediate, and distant future. Effective
organizations are effective, efficient, and satisfying in the near term. They are
adaptive and developing in the intermediate term. Ultimately, in the long term,
effective organizations survive.
2. The idea behind contingency design is to structure the organization to fit
situational demands. Consequently, contingency advocates contend that there is
no one best organizational setup for all situations. Diagnosing the degree of
environmental uncertainty is an important first step in contingency design. Burns
and Stalker discovered that mechanistic (rigid and bureaucratic) organizations are
effective when the environment is relatively stable and that organic (flexible and
adaptable) organizations are best when unstable conditions prevail.
3. There are five basic departmentalization formats, each with its own combination
of advantages and disadvantages. Functional departmentalization is the most
common approach. The others are product-service, geographic location, customer
classification, and work-flow process departmentalization. In actual practice,
these pure types of departmentalization are usually combined in various ways.
4. Delegation of authority, although generally resisted for a variety of reasons, is
crucial to decentralization. Effective delegation permits managers to tackle
higher-priority duties while helping to train and develop lower-level managers.
Although delegation varies in degree, it never means abdicating primary
responsibility. Successful delegation requires plenty of initiative from lower-level
managers. Barriers to delegation include doing everything yourself, lack of
confidence and trust in employees, low self-confidence, fear of being called lazy,
vague job definition, fear of competition from those below, not wanting to risk
depending on others, lack of early-warning signs of problems with delegated
duties, and poor role models who do not delegate.
5. Many factors, with global competition leading the way, are forcing management
to reshape the traditional pyramid bureaucracy. These new organizations are
characterized by fewer layers, extensive use of teams, and manageably small
subunits. Three emerging organizational configurations are the hourglass
organization, the cluster organization, and virtual organizations. Each has its own
potentials and pitfalls.
6. Organizational culture is the “social glue” that binds people together through
shared symbols, language, stories, and practices. Organizational cultures can
commonly be characterized as collective, emotionally charged, historically based,
inherently symbolic, dynamic, and inherently fuzzy (or ambiguous). Diverse
outsiders are transformed into accepted insiders through the process of
organizational socialization. Orientations and stories are powerful and lasting
socialization techniques. Stories have been called social roadmaps that guide
employees in certain directions.