Defining Organization
Organization
Individual
Abilities
& Skills
Transactional
Structure
Desired
Ends
Organization = a cooperative social system requiring the
coordinated efforts of people pursuing a shared purpose
Efficiency
Coordinate
What?
Why?
Economic entity
Social entity
Goal Attainment
Organization
10/17/2000 - v1
How?
Divide Work
Divide Authority
Why Organization: Purposes they Serve
6 Goods and Services
6 Means of Subsistence & Development
6 Means of Representing Interests
6 Means of Reducing Risk &
Uncertainty
Characterizing an Organization
Individual
Abilities
& Skills
Transactional
Structure
, Interlocked Behavior
, Division of Labor
, Hierarchy (of Authority)
Desired
Ends
The Organization: The Classical View
Decisions tend to be Rule Based—Calculated & Preprogrammed
Individual
Abilities
& Skills
Desired
Ends
Classical Weberian Bureaucracy
A Transactional Structure for Managing the Enterprise
President/CEO
VP
VP
VP
Dir.
Dir.
Dir.
Divided Labor / Hierarchy of Authority / Impersonality / Rational Rule Based
Alternative Basis for
Hierarchical Structures
)Product Line
)Geography
)Customer
Collectivistic-Democratic Organization
6 Egaletarian
6 Minimal Formal Rules
6 Control via Social Forces
Is this appropriate/workable? Where (what circumstance) Why?
Organization = a cooperative social system requiring the
coordinated efforts of people pursuing a shared purpose
Coordination = to join together to accomplish
great and exciting things
• The central question is
– How could/should management organize the
enterprise? How can the design of the
organization:
• Enable togetherness?
• Help accomplish great things?
Systems (Organic) View
Organization
Environment
6 Interdependent with Environment
6 Dynamic Equilibrium
6 Emergent Properties
6 Equifinality
Classical vs Open Systems View
Environment
Org.
Classical
Environment
VS
Org.
Open Systems
Mechanistic vs Organic Designs
Centralized
Many
Narrow
Authority
De-centralized
Rules
Few
Span of Control
Wide
Specialized
Tasks
Shared
Few
Teams
Many
Formal &
Impersonal
Coordination
Informal &
Personal
DELEGATION
A Matter of Degree
Low degree of delegation: the responsibility to do
Investigate and report (the findings) back
Investigate and recommend action
Investigate and advise on action to take
Investigate, first seek advice on action, then take
action accordingly
Investigate and take action
High degree of delegation: the responsibility to do and
the authority to act
DELEGATION
(continued)
For Discussion:
1. Does a high degree of delegation make an
organization more mechanistic or more organic?
Explain.
2. What is the relationship between delegation and
the issue of centralization?
SPAN OF CONTROL: the number of people who
report directly to a manager
What are the advantages & disadvantages of a wide span of
control?
Organizational design can range from being quite vertical to
being relatively horizontal (tall vs flat)
How wide should one’s span of control be? What does it
depend on?
(wider spans of control mean less administrative expense and
more self-management, both popular notions today)
SPAN OF CONTROL
How do the following Situational Determinants affect
to Span of Control?
1.
2.
3.
4.
5.
6.
Similarity of work performed by subordinates
Dispersion of subordinates
Complexity of work performed by subordinates
Direction and control required by subordinates
Time spent coordinating with other managers
Time required for planning
CENTRALIZATION AND
DECENTRALIZATION
Two Ends of the Same Continuum
• Centralization: the retention of decision-making
authority by top management.
• Decentralization: management shares decisionmaking authority with lower-level employees.
CENTRALIZATION AND
DECENTRALIZATION
Balance Needed within a Contingency
Approach
• What’s good, what’s bad about Centralization?
• Why would a more organic, decentralized
approach be more appropriate for firms in
complex and changing conditions?
Structural/Organizing Trends:
What effect on organizational design or management
would you expect from each?
6 Less Vertical
6 Less Unity of Command
6 Wider Span of Control
6 Delegation & Empowerment
6 Decentralization (w/ centralization)
The Matrix Organization
Gen. Mgr.
Mgr. Proj.
Mfg. Mgr.
Eng. Mgr.
Proj. Mgr
Proj. Mgr
Proj. Mgr
What’s the good and the bad about this?
Mkt. Mgr.
Team Structures
Gen. Mgr.
Sales Mgr.
New
Prod
Dev.
Mfg. Mgr.
Fin. Mgr.
Mkt. Mgr.
TQI
Team
What’s the good and the bad about this?
Network Structures
Manufac.
Off-Shor
e
Advertising
Promo.
Core
Competencies
Core Business
Legal
HR
Functions
What’s the good and the bad about this?
Acc't &
Finance
Hierarchy
Democracy
&
Oligarchy
is
Form
are Function
Barnard's Challenge
Acceptance Theory of Authority
President/CEO
VP
VP
?
VP
Dir.
Dir.
Dir.
THE LAWRENCE AND LORSCH MODEL
Opposing Organizational Forces
• Differentiation: tendency among specialists
to think and act in restricted ways. (Tends to
fragment the organization.)
• Integration: in direct opposition to
differentiation, it involves the collaboration
among specialists needed to achieve a common
purpose. (Tends to coordinate the
organization.)
THE LAWRENCE AND LORSCH MODEL
(continued)
Key Research Findings:
1. Every organization requires an appropriate
dynamic equilibrium between differentiation and
integration.
2. In successful firms, both differentiation and
integration increased as environmental
complexity increased. Why?
THE LAWRENCE AND LORSCH MODEL
(continued)
Practical Questions:
• How do the issues of Differentiation and
Integration play out for organizational success?
• Can Integration and Differentiation be
simultaneously achieved? How?
• Characterize the ideal organization for today’s
complex and dynamic business environment?
The Push - Pull:
Differentiation & Integration
Pull Apart
Push Together
)Division of Labor
)Departmentalization
)Specialization
)Hierarchical Oligarchy
)Uni-Directional
Communication
)Concretized Job
Descriptions
)Efforts of Coordination
)Cross Functional Team
Work
)Relationship Building
)Coherency of Values &
Sub-Cultures
)Multi-Directional
Communication
The Dual Nature of Oganization
Organizing
Pattern
Organizing
Structure
Organizational Culture
,Order Producing Invisible Pattern
,Collective Map of “the way it ought to be
,Symbolic-Linguistic in its communicatio
,Stock of Shared Knowledge informs
Behavior/Action
Cultures are Multidimensional
Embrace to Avoid
Uncertainty
t
c
i
t
s
i
l c
a
u sti
d
i
iv tivi
d
In llec
Co
o
Authoritarian to
Egaletarian
Aggressive to Nurturing
Yahoo’s Gang of Six
• Why was Yahoo successful? How did its
management structure and corporate culture
contribute to this success?
• How and why should management structure
change as the company grows? Use examples
from the article to illustrate.
• What steps is Yahoo taking to turn itself around?
Do you agree? Will they be successful & why?
Subjective
Objective
I’s
IT’s
Collective
WE’s IT’s
How does this relate to the Management Theories?
Organizational Effectiveness
Culture
&
Structure
Order
}
Reality
Order
Sustainability
Organizational (Self) Destruction
6 Intolerant to Diversity of Ideas
6 Lack of Sensitivity
6 Fragmentation
6 Competitive Culture
Why does each lead to destruction (organizational decline)?
Lennar’s Oddball Culture
• Describe the corporate culture at Lennar.
– What makes it unique?
– How does culture align with strategy?
• What role does the culture play in
– Its management approach
• What management concepts are illustrated
– Its level of success
• How would you feel about working at a place like
Lennar? Do you think most would feel the same?
Exercise:
Can Organizations be structured
in a way that stimulates and
maintains creativity-- providing a
basis for the expression and
development of the individual -while achieving its purpose?
What would it look like?
What would be its characteristics?