ORGANIATIONAL DESIGN
◼ A process for improving the probability
that an organization will be successful.
More specifically, Organization Design is a
formal, guided process for integrating the
people, information and technology of an
organization.
Basic Concepts
Organizational Structure: The formal
configuration between individuals and groups
with respect to the allocation of tasks,
responsibilities, and authorities within
organizations.
Organizational Chart: A diagram representing
the connections between the various
departments within an organization: a
graphic representation of organizational
design.
Sample Organizational Chart
Structure Concepts I
Hierarchy of Authority: A configuration of the
reporting relationships within organizations;
that is, who reports to whom.
Division of Labor: The process of dividing the
many tasks performed within an organization
into specialized jobs.
Span of Control: The number of subordinates
in an organization who are supervised by an
individual manager.
Modern Trends: Delayering
As today’s organizations restructure, the middle layers of organizational
hierarchies tend to get removed. The result is a flatter organizational
structure, which puts managers closer to the issues about which they
have to make decisions.
Division of Labor
Tall vs. Flat Organizations
Structure Concepts II
Line Positions: Positions in organizations in which
people can make decisions related to doing its basic
work.
Staff Positions: Positions in organizations in which
people make recommendations to others but who are
not themselves involved in making decisions
concerning the organization’s day-to-day operations.
Decentralization: The extent to which authority and
decision making are spread throughout all levels of
an organization rather than being reserved
exclusively for top management (centralization).
Decentralization
Departmentalization
The process of breaking up organizations into
coherent units.
Functional Organization: The type of
departmentalization based on the activities or
functions performed (e.g., sales, finance).
Product Organization: The type of
departmentalization based on the products (or
product lines) produced.
Matrix Organization: The type of departmentalization
in which a product or project form is superimposed
on a functional form.
Functional Organization
Product Organization
Matrix Organization
Organizational Design
The process of coordinating the
structural elements of an organization
in the most appropriate manner.
Approaches include
◼ Classical and Neoclassical Approaches
◼ The Contingency Approach
◼ Mintzberg’s Framework
◼ The Boundaryless Organization
Classical vs. Neoclassical Theory
Classical Organizational Theory: The approach that assumes
that there is a single best way to design organizations.
◼ This approach assumes that managers need to have close control
over their subordinates and calls for designing organizations with
tall hierarchies and a narrow span of control.
Neoclassical Organizational Theory: An attempt to improve
on the classical organizational theory that argues that not only
economic effectiveness, but also employee satisfaction, should
be goals of an industrial organization.
◼ This approach assumes that managers do not have to carefully
monitor their subordinates and calls for designing organizations
with flat hierarchies and a wide span of control.
Classical vs. Neoclassical Theory
Design Effectiveness
Boundaryless Organization
An organization in which chains of command are
eliminated, spans of control are unlimited, and rigid
departments give way to empowered teams.
Modular Organization: An organization that surrounds
itself by a network of other organizations to which it
regularly outsources noncore functions.
Virtual Organization: A highly flexible, temporary
organization formed by a group of companies that join
forces to exploit a specific opportunity.
Affiliate Networks: Satellite organizations affiliated with
core companies that have helped them develop.
The Design Process
◼ Organizational size
◼ Organization life cycle
◼ Strategy
◼ Environment - Internal Environment
External Environment
◼ Technology
Office (Position) and Role
Office/ Position Role
Is based on power relations Is based on mutuality
Has related privileges Has related obligation
Is usually hierarchical Is non – hierarchical
Is part of structure Is part of Dynamics
Is created by others Is created by others and the role
occupant
Is evaluative Is descriptive