2. Organizational Design
Organizational Design – the process of
constructing and adjusting an
organization’s structure to achieve its
goals.
the linking of
departments and
jobs within an
organization
4. The process of deciding
how to divide the work
in an organization
Four Dimensions
• Manager’s goal orientation
• Time orientation
• Interpersonal orientation
• Formality of structure
5. Horizontal
Differentiation
• The degree of differentiation
between organizational
subunits
• Based on employee’s
specialized knowledge,
education, or training
6. Vertical
Differentiation
• The difference in authority
and responsibility in the
organizational hierarchy
• Greater in tall, narrow
organizations than in flat,
wide organizations
7. Spatial
Differentiation
• Geographic dispersion of
an organization’s offices,
plants, and personnel
• Complicates organizational
design, but may simplify
goal achievement or
protection
8. Differentiation Between
Marketing and Engineering
Basis for Difference Marketing Engineering
Goal orientation Sales volume Design
Time orientation Long run Medium run
Interpersonal People Task
orientation oriented oriented
Structure Less formal More formal
9. The process of coordinating
the different parts
of an organization
• Designed to achieve
unity among individuals
and groups
• Supports a state of
dynamic equilibrium –
elements of organization
are integrated, balanced
10. Vertical
Integration
• Hierarchical referral
• Rules and procedures
• Plans and schedules
• Positions added to the
organization structure
• Management information
systems
12. Formalization – the degree Centralization – the degree
to which the organization to which decisions are
has official rules, made at the top of the
regulations, and procedures organization
Hierarchy of Specialization –
Authority – the degree to
the degree of which jobs are
vertical Basic narrowly
differentiation Design defined and
across Dimensions depend on
levels of unique
management expertise
Complexity – the degree to Standardization – the
which many different types degree to which work
of activities occur in the activities are accomplished
organization in a routine fashion
13. Machine Bureaucracy –
Simple Structure – a
a moderately
centralized form of
decentralized form of
organization that
organization that
emphasizes the upper
emphasizes the
echelon and direct
technical staff and
supervision
standardization of
Structural work processes
Adhocracy – a
Configurations
selectively of Professional
decentralized Organizations Bureaucracy –
form of a decentralized
organization that form of
emphasizes the Divisional Form – a organization that
support staff and moderately decentralized emphasizes the
mutual adjustment form of organization operating level
among people that emphasizes the and standardization
middle level and of skills
standardization of outputs
14. Five Structural Configurations of Organization
Structural Prime
Key Part of Type of
Configuration Coordinating
Organization Decentralization
Mechanism
Simple Direct Upper
Structure Centralization
Supervision Echelon
Limited
Machine Standardization of Technical Horizontal
Bureaucracy Work Processes Staff Decentralization
Vertical and
Professional Standardization Operating
Horizontal
Bureaucracy of Skills Level
Decentralization
Divisionalized Standardization Middle Limited Vertical
Form of Outputs Level Decentralization
Adhocracy Mutual Support Selective
Adjustment Staff Decentralization
15. Mintzberg’s
Five Basic
Parts of an Strategic
Strategic
Organization Apex
Apex
Tecc
Te
hno
hno o tt
orr
ssrru
t tucc -- Supp
upp fff
S ta
turre
tu e
Middle Sta
S
Line
Operating Core
Operating Core
From H. Mintzberg, The Structuring of Organizations (Upper Saddle
River, N.J.: Prentice-Hall, 1979): 20. Reprinted with permission.
16. Size Technology
Contextual Variables –
a set of characteristics that
influences the organization’s
design processes
Strategy
and Goals Environment
17. Strategic Dimension Predicted Structural
Characteristics
Innovation—to understand Low formalization
and manage new processes Decentralization
and technologies Flat hierarchy
Market differentiation—to Moderate to high complexity
specialize in customer Moderate to high
preferences formalization
Moderate centralization
Cost control—to produce High formalization
standardized products High centralization
efficiently High standardization
Low complexity
Miller’s Integrative
Strategy Framework of
Strategy
& Goals Structural & Strategic Dimensions
and Goals D. Miller, “The Structural and Environmental Correlates of Business Strategy,” Strategic Management Journal 8 (1987): 55-76. Copyright
@ John Wiley & Sons Limited. Reproduced with permission.
18. The Relationship among Key Organizational
Design Elements
Context of the organization
Correct size
Current technology
Perceived environment
Current strategy and goals
Influences how manager perceive structural needs
Structural dimensions
Level of formalization
Level of centralization
Level of specialization
Level of standardization
Level of complexity
Hierarchy of authority
19. Which characterize the organizational processes
Differentiation and Integration
Which influence how well the structure meets its
Purposes
Designate formal
lines of authority
Designate formal
information-
processing patterns
Which influence how well the structure fits the
Context of the organization
20. Forces Reshaping
Organizations
• Organization Life Cycle – the differing
stages of an organization’s life from
birth to death
• Globalization
• Changes in Information-Processing
Technologies
• Demands on Organizational Processes
• Emerging Organizational Structures
21. Structural Roles of Managers
Roles of Managers Today Roles of Future Managers
1. Strictly adhering to boss– 1. Having hierarchical
employee relationships relationships subordinated
2. Getting things done by 2. Getting things done by
giving orders negotiating
3. Carrying messages up 3. Solving problems and
and down the hierarchy making decisions
4. Performing a set of tasks 4. Creating the job through
according to a job description entrepreneurial projects
5. Having a narrow functional 5. Having a broad cross-
focus functional collaboration
6. Going through channels, 6. Emphasizing speed and
one by one by one flexibility
7. Controlling subordinates 7. Coaching one’s workers
Management Review, January 1991, Thomas R. Horton.
22. Four Symptoms of Structural
Weakness
Overloaded hierarchy;
• Delay in information funneling limited
decision making to too few channels
• Poor quality Right information not
reaching right people in
decision making right format
• Lack of innovative
No coordinating
response to changing effort
environment
• High level of Departments work against
each other, not for
conflict organizational goals
23. Group Activity
• Design an organizational structure
for a startup departmental store
• Make the necessary realistic
assumptions
