Chapter Fifteen
Designing Effective
Organizations
McGraw-Hill/Irwin
Organizational Behavior: Key Concepts, Skills & Best Practices, 3/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
After reading the material in this chapter,
you should be able to:
• Describe the four characteristics common
to all organizations.
• Explain the difference between closed and
open systems, and contrast the
military/mechanical, biological, and
cognitive systems metaphors for
organizations.
• Describe the four generic organizational
effectiveness criteria.
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After reading the material in this chapter,
you should be able to:
• Explain what the contingency approach to
organizational design involves.
• Discuss Burns and Stalker’s findings
regarding mechanistic and organic
organizations.
• Describe new-style and old-style
organizations, and list the keys to
managing geographically-dispersed
employees in virtual organizations.
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What is an Organization?
• Organization - system of consciously
coordinated activities of two or more
people.
• Four common denominators
- Coordination of effort
- Common goal
- Division of labor
- Hierarchy of authority
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Designing Effective Teams
See an article from
Administrative
Science Quarterly
on designing
effective teams
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What is an Organization?
• Unity of command principle - each
employee should report to a single
manager.
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Organization Charts
• Organization chart - boxes-and-lines
illustration showing chain of formal
authority and division of labor.
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Sample Organization Chart for a Hospital
Figure 15-1
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Organization Charts
• Span of control - the number of people
reporting directly to a given manager.
• Staff personnel - provide research,
advice, and recommendations to line
managers.
• Line Managers - have authority to make
organizational decisions.
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Needed: Open-System Thinking
• Closed System - self-sufficient entity,
closed to the surrounding environment.
• Open System - organism that must
constantly interact with its environment to
survive
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Organizations as Military/Mechanical
Bureaucracies
• Bureaucracy - Max Weber’s idea of the
most rationally efficient form of organization
• Weber’s Bureaucracy
- Division of labor
- A hierarchy of authority
- A framework of rules
- Administrative personality
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The Organization as an Open System:
The Biological Model
Figure 15-2
15-13
Four Dimensions of Organizational
Effectiveness
Figure 15-3
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Question?
Which effectiveness criteria is the most
widely used?
A. Goal accomplishment
B. Resource acquisition
C. Internal processes
D. Strategic constituencies satisfaction
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Generic Effectiveness Criteria
• Goal accomplishment – most widely used
effectiveness criteria
• Resource acquisition – organization is
effective if it acquires necessary factors of
production
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Generic Effectiveness Criteria
• Internal processes – healthy system if
information flows smoothly and if employee
loyalty, commitment, job satisfaction prevail
• Strategic constituencies satisfaction
- Strategic constituency: any group of people
with a stake in the organization’s operation or
success.
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Mixing Effectiveness Criteria:
Practical Guidelines
• Goal accomplishment approach is
appropriate when goals are clear,
consensual, time-bounded, and
measurable
• Resource acquisition approach is
appropriate when inputs have a traceable
effect on results or output
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Mixing Effectiveness Criteria:
Practical Guidelines
• Internal processes is appropriate when
organizational performance is strongly
influenced by specific processes
• Strategic constituencies approach is
appropriate when powerful stakeholders
can significantly benefit or harm the
organization
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The Contingency Approach to
Designing Organizations
• Contingency approach to organization
design - creating an effective organizationenvironment fit.
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Mechanistic versus Organic
Organizations
• Mechanistic organizations - Rigid
bureaucracies with strict rules, narrowly
defined tasks, and top-down
communication.
• Organic organizations - Flexible networks
of multitalented individuals who perform a
variety of tasks
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Question?
In what type of decision making do top
managers make all key decisions?
A. Centralized
B. Decentralized
C. Fundamental
D. Primary
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Different Approaches to Decision Making
• Centralized decision making – top
managers make all key decisions
• Decentralized decision making – lowerlevel managers are empowered to make
important decisions
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New-Style versus Old-Style Organizations
Table 15-1
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How to Manage
Geographically Dispersed Employees
• Hire carefully
• Communicate regularly
• Practice “management by wandering
around”
• Conduct regular audits
• Use technology as a tool, not a weapon
• Achieve a workable balance between
online and live training
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Video: Wal-Mart
Paul Solman reports
on Wal-Mart’s
efforts to improve
its public image.
(9:42)
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