Chapter Two
Simple Ideas, Complex
Organizations
Properties of Organizations
Organizations are Complex
Human behavior is difficult to predict
Almost anything can affect anything else in
collective activity
Organizations are Surprising
Yesterday’s solutions creating future
impediments
Organizations are Deceptive
Defy expectations, camouflage surprises
Tendency to attribute things to personality
Cultural taboos
Properties of Organizations
Organizations are Ambiguous
We aren’t sure what the problem is. . .
We aren’t sure what is really happening. . .
We aren’t sure what we want . . .
We don’t have the resources we need. . .
We aren’t sure who is supposed to to what. . .
We aren’t sure how to get what we want. . .
We aren’t sure how to determine if we’ve
succeeded. . .
Fallacies in Organizational
Diagnosis
People Blaming
Blame the Bureaucracy
Thirst for Power
The Structural Frame
Structural Imperatives
Size
Age
Core Processes
Environment
Strategy and Goals
Information Technology
Nature of the Workforce
Structural Dilemmas
Differentiation
Integration
Gaps and overlaps
Personnel underuse vs. overload
Lack of clarity versus lack of
creativity
Autonomy vs. interdependence
Structural Dilemmas
Loose/tight
Diffuse authority vs.
overcentralization
Goalless vs. goalbound
Irresponsible/unresponsive
Organizational Design Defined
The way in which the activities of an
organization are arranged and coordinated so
that its mission can be fulfilled and its goals
achieved
Components of Organizational
Design
Organizational Structure
Defines the primary reporting relationships
that exist within an organization.
Common forms of organizational structure:
Functional structure
Divisional structure
Matrix structure
Network structure
Mintzberg’s Fives
Elements of Design
Operating Core
Middle Line
Strategic Apex
Technostructure
Support Staff
Mintzberg’s Fives
Five Basic Structures
Simple Structure
Machine Bureaucracy
Professional Bureaucracy
Divisionalized Form
Adhocracy
Functional Structure
Slide 1 of 3
Members of the organization are grouped
according to the particular function that
they perform within the organization
Appropriate when an organization’s
greatest source of complexity comes from
the diverse tasks that must be performed
rather than from its products, geographic
markets or consumer groups
Functional Structure
Slide 2 of 3
Advantages
Facilitates specialization
Cohesive work groups
Improved operational efficiency
Disadvantages
Focus on departmental vs. organizational issues
Difficult to develop generalists needed for top
management
Only top management held accountable for
profitability
Functional Structure
Slide 3 of 3
Coors Brewing Company
CEO
Sales
R&D
HRM
Finance
Divisional Structure
Slide 1 of 6
Members of the organization are grouped
on the basis of common products,
geographic markets, or customers served
Types of divisional structures
Product divisions
Most appropriate for organizations with
relatively diverse product lines that require
specialized efforts to achieve high product
quality.
Divisional Structure
Slide 2 of 6
Types of divisional structures (cont.)
Geographic divisions
Most appropriate for organizations with
limited product lines that either have wide
geographic coverage or desire to grow
through geographic expansion.
Customer divisions
Most appropriate for organizations that have
separate customer groups with very specific
and distinct needs.
Divisional Structure
Slide 3 of 6
Product division
Advantages
Enhanced coordination
Better assessment of manager
performance and responsibility
Development of generalist managers
Disadvantages
Managers may lack expertise to operate
in wide geographic areas
Duplication of resources
Divisional Structure
Slide 4 of 6
Geographic division
Advantages
Allows for focus on specific new markets
Good structure for growth along
geographic lines
Adaptable to local needs
Disadvantages
Duplication of product or
product/technology efforts
Coordination and integration are
difficult
Divisional Structure
Slide 5 of 6
Geographic division (cont.)
Disadvantages
May be difficult to manage diverse
product lines
Divisional Structure
Slide 6 of 6
Bowyer-Singleton and Company
CEO
Land
Development
Envir.
Sciences
Survey &
Mapping
Matrix Structure
Slide 1 of 3
A structure in which the tasks of the
organization are grouped along two
organizational dimensions
simultaneously
Examples include product/function,
product/geographic region, etc.
Matrix Structure
Slide 2 of 3
Advantages
Can achieve simultaneous objectives.
Managers focus on two organizational
dimensions, resulting in more specific job
skills.
Disadvantages
Complex, leading to difficulties in
implementation.
Behavioral difficulties from “two bosses.”
Time consuming from a
planning/coordination perspective.
Matrix Structure
Slide 3 of 3
PGP, Inc.
CEO
VP
Cosmetics
Domestic
Europe
Asia
VP Nail
Care
VP Skin
Care
Network Structure
Slide 1 of 5
A contemporary organizational
structure that is founded on a set of
alliances with other organizations
that serve a wide variety of functions
Types of network structures
Internal network
A network structure that relies on
internally developed units to provide
services to a core organizational unit.
Network Structure
Slide 2 of 5
Types of network structures (cont.)
Stable network
A network structure that utilizes external
alliances selectively as a mechanism for
gaining strategic flexibility.
Dynamic network
A network structure that makes extensive
use of outsourcing through alliances with
outside organizations.
Network Structure
Slide 3 of 5
Advantages
Maximizes the effectiveness of the core unit
Do more with less resources
Flexibility
Disadvantages
Fragmentation makes it difficult to develop
control systems
Success is dependent on ability to locate
sources
Network Structure
Slide 4 of 5
Disadvantages (cont.)
Difficult to develop employee loyalty
Network Structure
Slide 5 of 5
Designers
Producers
Broker
Suppliers
Distributors
Managing Complexity Through
Integration
Interdependence
The degree to which work groups are
interrelated.
Three primary levels of work group
integration
Pooled interdependence
Sequential interdependence
Reciprocal interdependence
Pooled Interdependence
Occurs when organizational units have a
common resource but no interrelationship
with one another
A
F
B
Headquarters
E
C
D
Sequential Interdependence
Occurs when organizational units must coordinate
the flow of information, resources, and tasks from
one unit to another
A
B
C
Reciprocal Interdependence
Occurs when information, resources, and tasks must
be passed back and forth between work groups
A
B
C
D
E
F
Integrating Mechanisms
Slide 1 of 2
Methods for managing the flow of
information, resources, and tasks within
the organization
Three major categories of integrating
mechanisms
General management systems
Methods of increasing coordination potential
Methods of reducing the need for coordination
Integrating Mechanisms
Slide 2 of 2
General
management
systems
Methods of
increasing
coordination
potential
Integrating
mechanisms
Methods of
reducing the need
for coordination
Boundary Spanning Roles
Lateral relationships that help to
integrate and coordinate the
activities of the organization
Examples include:
Liaisons, committees, task forces,
integrating positions, and interfunctional
work teams
Locus of Decision Making
Slide 1 of 2
The degree to which decision making is
centralized versus decentralized
Centralized decision making
Advantage
Gives top management maximum control.
Disadvantage
Limits the organization’s ability to
respond quickly and effectively to
changes in the environment.
Locus of Decision Making
Slide 2 of 2
Centralized vs. Decentralized (cont.)
Decentralized decision making
Advantage
Organizations can respond to
environmental change more rapidly and
effectively because the decision makers
are the people closest to the situation.
Disadvantage
Top managers lose some control.
Mechanistic versus Organic
Systems
Mechanistic systems
Highly centralized organizations in which
decision-making authority rests with top
management.
Organic systems
Decentralized organizations that push decision
making to the lowest levels of the organization
in an effort to respond more effectively to
environmental change.
Stable versus Turbulent
Environments
Stable environments
Environments which experience little
change.
Turbulent environments
Environments which are characterized
by rapid and significant change.
Adaptive Organizations
Organizations that eliminate
bureaucracy that limits employee
creativity and brings the decision
makers of the organization closer to
the customer
Generic Issues in Restructuring
Need to account for specific tensions
specific to structural form
Web of Inclusion