13–1 c h a p t e r 1 3 organization design jon l. pierce & donald g. gardner with randall b....

13–13–11

C H A P T E R 1 3

Organization Design

Jon L. Pierce &Donald G. Gardnerwith Randall B. Dunham

Management

OrganizationalBehavior

PowerPoint Presentationby Charlie Cook

An Integrated Perspective

Copyright © 2002 by South-Western

Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–22

Learning ObjectivesLearning Objectives1.1. Identify the structural, process, and contextual Identify the structural, process, and contextual

dimensions of organizational design.dimensions of organizational design.2.2. Discuss the concepts of influence, power, and Discuss the concepts of influence, power, and

authority and their relationships.authority and their relationships.3.3. Describe how authority is transferred from one location Describe how authority is transferred from one location

in an organization to another.in an organization to another.4.4. Relate the importance of the classical (bureaucratic), Relate the importance of the classical (bureaucratic),

mechanistic, and organic models to organizational mechanistic, and organic models to organizational design.design.

5.5. Name and discuss two behavioral models of Name and discuss two behavioral models of organizational design.organizational design.


Learning Objectives (cont’d)Learning Objectives (cont’d)6.6. Identify the major features of the high-involvement Identify the major features of the high-involvement

organization.organization.7.7. Describe the relationship between the major contextual Describe the relationship between the major contextual

features and organizational design.features and organizational design.8.8. Discuss employee reactions to organizational design.Discuss employee reactions to organizational design.


Organizational DesignOrganizational Design• Organizational designOrganizational design

The structures, systems, and processes that enable an The structures, systems, and processes that enable an organization to implement its plans and achieve its organization to implement its plans and achieve its goals.goals.


Dimensions of Organizational DesignDimensions of Organizational Design• Organizational Organizational structurestructure Those attributes Those attributes

that characterize that characterize the interaction the interaction patterns that link patterns that link people to people people to people and people to work.and people to work.

• Decentralization of Decentralization of authorityauthority

• FormalizationFormalization• StandardizationStandardization• Task specializationTask specialization• Person specializationPerson specialization• ComplexityComplexity• StratificationStratification• ConfigurationConfiguration


Dimensions of Organizational Design Dimensions of Organizational Design (cont’d)(cont’d)• Organizational ProcessesOrganizational Processes

Decision makingDecision making Dictatorial or participativeDictatorial or participative

CoordinatingCoordinating Personal or impersonalPersonal or impersonal

CommunicatingCommunicating Open exchange or Open exchange or

restrictedrestricted


Centralization and Decentralization Centralization and Decentralization of Authorityof Authority—A Closer Look—A Closer Look• Influence and PowerInfluence and Power

Influence—the ability to produce a change in one’s Influence—the ability to produce a change in one’s environment.environment.

Interpersonal influence—the ability to produce a change Interpersonal influence—the ability to produce a change in others.in others.

Power—the means to achieve influence.Power—the means to achieve influence. Authority—the legitimate Authority—the legitimate

use of influence and use of influence and organizationally organizationally sanctioned power.sanctioned power.


Centralization and Decentralization Centralization and Decentralization of Authorityof Authority—A Closer Look (cont’d)—A Closer Look (cont’d)• Classical view of authority (Weber)Classical view of authority (Weber)

Authority finds its origin and flows from the top of the Authority finds its origin and flows from the top of the organization down to the hierarchy.organization down to the hierarchy.

• Acceptance view of authority (Barnard)Acceptance view of authority (Barnard) Authority finds its origin in subordinates’ acceptance of Authority finds its origin in subordinates’ acceptance of

directives and thus flows from the subordinates upward directives and thus flows from the subordinates upward to the manager.to the manager.

• Situational view of authority (Follett)Situational view of authority (Follett) Orders should flow from the situation, not from the Orders should flow from the situation, not from the

person.person.


Centralization and Decentralization Centralization and Decentralization of Authorityof Authority—A Closer Look (cont’d)—A Closer Look (cont’d)• Types of authority and authority relationshipsTypes of authority and authority relationships

Line authority—command authority to make decisions Line authority—command authority to make decisions and direct the organization.and direct the organization.

Staff authority—advisory authority in the form of Staff authority—advisory authority in the form of counsel, advice, and recommendation.counsel, advice, and recommendation.

Functional authority—the “right” to Functional authority—the “right” to direct or control specific activities direct or control specific activities that are under the span of that are under the span of control of other managers.control of other managers.


Variations in Staff AuthorityVariations in Staff Authority

AdvisoryAuthority

CommandAuthority

PureStaff

CompulsoryStaffConsultation

ConcurringAuthority

FunctionalAuthority

FIGURE 13FIGURE 13–1–1


Functional AuthorityFunctional Authority

HumanResources Finance Western

Canada Maritimes CentralCanada

Operations Marketing Operations Marketing



Centralization and Decentralization Centralization and Decentralization of Authorityof Authority—A Closer Look (cont’d)—A Closer Look (cont’d)• Delegating AuthorityDelegating Authority

Delegation—transferring formal Delegation—transferring formal authority from one position to authority from one position to another in an organization.another in an organization.


TheTheDelegationDelegationProcessProcess

Accept

Stage 1

Stage 2

Stage 3

Stage 4

Assign Tasks

Transfer Task Authority

AcceptanceCondition

Creation of Responsibility

Reject



Centralization and Decentralization Centralization and Decentralization of Authorityof Authority—A Closer Look (cont’d)—A Closer Look (cont’d)• CentralizationCentralization

Formal authority is concentrated Formal authority is concentrated at the top of the organizationalat the top of the organizationalhierarchy.hierarchy.

• DecentralizationDecentralization Formal authority is diffused throughout an Formal authority is diffused throughout an

organization, and specific authority for organization, and specific authority for decision making is lodged at the level decision making is lodged at the level where that decision gets executed.where that decision gets executed.


Benefits of DecentralizationBenefits of Decentralization• More flexibility and More flexibility and

greater speed in reacting greater speed in reacting to changes in the to changes in the environment.environment.

• Better able to deal with Better able to deal with complex combinations of complex combinations of business activitiesbusiness activities

• Increased ability to cope Increased ability to cope with growth and change.with growth and change.

• Motivates and improves Motivates and improves human resources.human resources.

• Better placement and Better placement and utilization of the utilization of the expertise of expertise of organizational members.organizational members.

• Relieves managers of Relieves managers of information and decision information and decision overload.overload.

• Increases a sense of Increases a sense of ownership and for work ownership and for work and for the organization.and for the organization.


Determinants of the Decentralization Determinants of the Decentralization DecisionDecision• The external environmentThe external environment

Stability versus uncertaintyStability versus uncertainty• The organizationThe organization

Strategy, history/culture, growth/change rate, size, Strategy, history/culture, growth/change rate, size, complexitycomplexity

• The workThe work Cost/risks decisions, technology, task interdependenceCost/risks decisions, technology, task interdependence

• The peopleThe people Upper-level managers, lower-level managersUpper-level managers, lower-level managers


Controls on DecentralizationControls on Decentralization• Formalization of operating normsFormalization of operating norms

Rules, policies, operating proceduresRules, policies, operating procedures BenefitsBenefits

ConsistencyConsistency CoordinationCoordination EconomyEconomy StandardizationStandardization

• Personalization (professionalization)Personalization (professionalization) Control delegated authorityControl delegated authority


Basic Models of Organizational Basic Models of Organizational DesignDesign

11 22 33 44

DemocraticDemocraticParticipatoryParticipatory

OrganicOrganicDecentralizedDecentralized

BureaucraticBureaucraticAutocratic Autocratic

MechanisticMechanisticCentralizedCentralized

Rensis Likert’sRensis Likert’sSystem 1System 1––44


A Hierarchy of GroupsA Hierarchy of Groups

Legal Operations Marketing

DirectorPromotions*

DirectorSales*

Wholesale* Retail*

Finance HumanResources

Group 2(The Marketing Group)

Group 5 Group 4

Group 1(The Executive Group)

Group 3

CEO


*Linking pin role


Mechanistic ModelMechanistic Model• Characteristics of the Classical Bureaucratic Characteristics of the Classical Bureaucratic

Model (Weber)Model (Weber) Emphasis on obeying one leader rather than many.Emphasis on obeying one leader rather than many. Reliance on a set of rules that specify employee rights Reliance on a set of rules that specify employee rights

and duties.and duties. Selection based on technical competence.Selection based on technical competence. Advancement is based on longevity and competence.Advancement is based on longevity and competence. Relationships are impersonal.Relationships are impersonal. Labor is divided and individual specialization is Labor is divided and individual specialization is

encouraged.encouraged.


Mechanistic Model (cont’d)Mechanistic Model (cont’d)• Problems with bureaucracyProblems with bureaucracy

People problems are created.People problems are created. Social and psychological aspects of the organization Social and psychological aspects of the organization

are ignored.are ignored. Rules and procedures (means) replace goals (ends).Rules and procedures (means) replace goals (ends). Rigid communication system prevents or slows Rigid communication system prevents or slows

information flows.information flows. Inflexibility inhibits responses to environmental Inflexibility inhibits responses to environmental

changes.changes.


Structures of Organic and Structures of Organic and Mechanistic OrganizationsMechanistic Organizations

Organic Mechanistic

High ComplexityLow CentralizationLow FormalizationLow StandardizationHigh Person SpecializationHigh Task Specialization

Low ComplexityHigh CentralizationHigh FormalizationHigh StandardizationLow Person SpecializationLow Task Specialization



The Range of Organizational DesignsThe Range of Organizational Designs

UnstructuredStructuredOrganicMechanistic

Classical Models(e.g., Weber’sBureaucracy)

Behavioral Models(e.g., Socio-technicaland Likert’s System 4)

Organic Models(e.g., Self-DesigningOrganization)

FlexibleRigid

OpenClosed



Strategic Choice and Organizational Strategic Choice and Organizational DesignDesign

Management’sStrategicChoices

Environment

Culture

Technology

Goals

Size

People

OrganizationalDesign


Organizational Context


Employee Responses to Employee Responses to Organizational Design and ContextOrganizational Design and Context• ComplexityComplexity

Managers like tall organizations (high complexity), Managers like tall organizations (high complexity), lower-level employees prefer flat organizations (low lower-level employees prefer flat organizations (low complexity).complexity).

• FormalizationFormalization The higher the formalization, the lower the job The higher the formalization, the lower the job

satisfaction.satisfaction.• Centralization and decentralizationCentralization and decentralization

Decentralization is preferable to centralization.Decentralization is preferable to centralization.


Employee Responses to Employee Responses to Organizational Design and Context Organizational Design and Context (cont’d)(cont’d)• Stratification (status incongruence)Stratification (status incongruence)

The higher the stratification, the lower the job satisfaction The higher the stratification, the lower the job satisfaction (somewhat supported).(somewhat supported).

• SizeSize Size increases job dissatisfaction and withdrawal Size increases job dissatisfaction and withdrawal

behaviors.behaviors.• TechnologyTechnology

Routine, boring jobs result in job dissatisfaction.Routine, boring jobs result in job dissatisfaction. Properly implemented technology increases employee Properly implemented technology increases employee

satisfaction.satisfaction.


Employee Responses to Employee Responses to Organizational Design and Context Organizational Design and Context (cont’d)(cont’d)• PeoplePeople—Management’s attitudes and —Management’s attitudes and

behaviorsbehaviors The “norm of reciprocity”—an organization’s The “norm of reciprocity”—an organization’s

commitment to its employees and favorable treatment commitment to its employees and favorable treatment of their needs is a significant determinant of the of their needs is a significant determinant of the employees’ commitment to the organization. employees’ commitment to the organization.

• EmpowermentEmpowerment The result of a process that enhances organizational The result of a process that enhances organizational

members’ feelings of self-efficacy about their work and members’ feelings of self-efficacy about their work and motivates their work performance.motivates their work performance.


The Commitment-Commitment The Commitment-Commitment RelationshipRelationship


Employee’sPerception ofOrganizational

Support

Organizational Commitmentto the Employee: Support,Rewards, Positive Experiences

Employee’sCommitment

to theOrganization

Absenteeism

Attendance

Motivation

Citizenship Behavior

Performance


The Empowerment ModelThe Empowerment Model


FeelingEnergizedEmpowerment

Skills and Abilities

Accurate RolePerceptions

IntrinsicMotivation Performance

Delegation

Decentralization

Participation

Personal Control

Autonomy


Turning the Organization Turning the Organization Chart Upside Chart Upside

DownDownLevel ofInfluence andPowerHigh Top Management

Middle Management

Supervisors

Laborers

Customers

Service Agents

Supervisors

Middle Management

Top Management

Low

Position

High

Low

Traditional Organizational Chart

Upside-Down Organizational Chart

ORGANIZATIONAL CHARTS

FIGURE 13FIGURE 13–C1–C1

13–1 c h a p t e r 1 3 organization design jon l. pierce & donald g. gardner with randall b....

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