ch4 of org behavior by jones
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Jones - Organisational Behavior Chapter 4 PPTTRANSCRIPT
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Organizational Theory, Design, and Change Sixth Edition Gareth R. Jones
Chapter 4
Basic Challenges of Organizational
Design
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Learning Objectives
1. Describe the four basic organizational design challenges confronting managers and consultants
2. Discuss the way in which these challenges must be addressed simultaneously if a high-performing organizational structure is to be created
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Learning Objectives (cont.)
3. Distinguish among the design choices that underlie the creation of either a mechanistic or an organic structure
4. Recognize how to use contingency theory to design a structure that fits an organization’s environment
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Differentiation
n The process by which an organization allocates people and resources to organizational tasks
n Establishes the task and authority relationships that allow the organization to achieve its goals
n Division of labor: the degree of specialization in the organization
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Differentiation (cont.)
n In a simple organization, differentiation is low because the division of labor is low n Individuals typically perform all
organizational tasks
n In a complex organization, differentiation is high because the division of labor is high
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Figure 4.1: Design Challenge
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Figure 4.1: Design Challenge (cont.)
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Figure 4.1: Design Challenge (cont.)
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Figure 4.1: Design Challenge (cont.)
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Figure 4.1: Design Challenge (cont.)
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Organizational Roles n Set of task-related behaviors required
of a person by his or her position in an organization n As the division of labor increases,
managers specialize in some roles and hire people to specialize in others
n Specialization allows people to develop their individual abilities and knowledge within their specific role
n Organizational structure is based on a system of interlocking roles
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Organizational Roles (cont.)
n Authority: the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources
n Control: the ability to coordinate and motivate people to work in the organization’s interests
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Subunits: Functions and Divisions n Function: a subunit composed of a group
of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs
n Division: a subunit that consists of a collection of functions or departments that share responsibility for producing a particular good or service
n Organizational complexity: the number of different functions and divisions possessed by an organization
n Degree of differentiation
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Function Types n Support functions: facilitate an
organization’s control of its relations with its environment and its stakeholders
n Purchasing, sales and marketing, public relations, and legal affairs
n Production functions: manage and improve the efficiency of an organization’s conversion processes so that more value is created
n Production operations, production control, and quality control
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Function Types (cont.) n Maintenance functions: enable an
organization to keep its departments in operation
n Personnel, engineering, and janitorial services
n Adaptive functions: allow an organization to adjust to changes in the environment
n Research and development, market research, and long-range planning
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Function Types (cont.)
n Managerial functions: facilitate the control and coordination of activities within and among departments
n Acquisition of, investment in, and control of resources
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Figure 4.2: Building Blocks of Differentiation
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Vertical and Horizontal Differentiation n Hierarchy: a classification of people
according to their relative authority and rank n Vertical differentiation: the way an
organization designs its hierarchy of authority and creates reporting relationships to link organizational roles and subunits
n Establishes the distribution authority between levels
n Horizontal differentiation: the way an organization groups organizational tasks into roles and roles into subunits (functions and divisions)
n Roles differentiated according to their main task responsibilities
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Figure 4.3: Organizational Chart of the B.A.R. and Grille
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Figure 4.4: Organizational Design Challenges
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Balancing Differentiation and Integration n Horizontal differentiation is supposed
to enable people to specialize and become more productive n Specialization often limits communication
between subunits n People develop subunit orientation
n Subunit orientation: a tendency to view one’s role in the organization strictly from the perspective of the time frame, goals, and interpersonal orientations of one’s subunit
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Balancing Differentiation and Integration (cont.)
n When subunit orientation occurs, communication fails and coordination becomes difficult
n Integration: the process of coordinating various tasks, functions, and divisions so that they work together and not at cross-purposes
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Types of Integration Mechanisms
n Hierarchy of authority: dictates “who reports to whom”
n Direct contact: managers meet face to face to coordinate activities
n Problematic that a manager in one function has no authority over a manager in another
n Liaison roles: a specific manager is given responsibility for coordinating with managers from other subunits on behalf of their subunits
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Types of Integration Mechanisms (cont.)
n Task force: managers meet in temporary committees to coordinate cross-functional activities
n Task force members responsible for taking coordinating solutions back to their respective functions for further input and approval
n Teams: a permanent task force used to deal with ongoing strategic or administrative issues
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Types of Integration Mechanisms (cont.)
n Integrating role: a new, full-time role established to improve communications between divisions
n Focused on company-wide integration
n Integrating department: a new department intended to coordinate the activities of functions or divisions
n Created when many employees enact integrating roles
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Table 4.1: Types and Examples of Integrating Mechanisms
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Figure 4.5: Integrating Mechanisms
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Figure 4.5: Integrating Mechanisms (cont.)
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Figure 4.5: Integrating Mechanisms (cont.)
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Balancing Differentiation and Integration n Managers facing the challenge of
deciding how and how much to differentiate and integrate must:
n Carefully guide the process of differentiation so that it develops the core competences that give the organization a competitive advantage
n Carefully integrate the organization by choosing appropriate integrating mechanisms that allow subunits to cooperate and that build up the organization’s core competences
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Balancing Centralization and Decentralization n Centralized organization: the
authority to make important decisions is retained by top level managers n Top managers able to coordinate activities
to keep the organization focused on its goals
n Decentralized organization: the authority to make important decisions is delegated to managers at all levels in the hierarchy n Promotes flexibility and responsiveness
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Balancing Centralization and Decentralization (cont.)
n Ideal balance entails: n Enabling middle and lower managers
who are at the scene of the action to make important decisions
n Allowing top managers to focus on long-term strategy making
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Balancing Standardization and Mutual Adjustment n Standardization: conformity to specific
models or examples that are considered proper in a given situation n Defined by rules and norms
n Mutual adjustment: the process through which people use their judgment rather than standardized rules to address problems, guide decision making, and promote coordination
n Formalization: the use of rules and procedures to standardize operations
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Balancing Standardization and Mutual Adjustment (cont.) n Socialization: Understood Norms
n Rules: formal, written statement that specify the appropriate means for reaching desired goals
n Norms: standards or styles of behavior that are considered typical for a group of people
n May arise informally n External rules may become internalized norms
n Socialization: the process by which organizational members learn the norms of an organization and internalize these unwritten rules of conduct
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Standardization versus Mutual Adjustment n Challenge facing managers is:
n To find a way of using rules and norms to standardize behavior, and
n to allow for mutual adjustment to give managers opportunity to discover new and better ways to achieve goals
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Mechanistic and Organic Organizational Structures n Mechanistic structures: designed to
induce people to behave in predictable, accountable ways n Decision-making authority is centralized n Subordinates are closely supervised n Information flows mainly in a vertical direction along a
clearly defined path n Hierarchy principal integrating mechanism n Tasks and roles coordinated primarily through
standardization and formal written rules n Best suited to organizations that face stable,
unchanging environments
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Mechanistic and Organic Organizational Structures (cont.) n Organic structures: structures that
promote flexibility, so people initiate change and can adapt quickly to changing conditions n Decision making distributed throughout the
hierarchy n Coordination is achieved through mutual
adjustments n Status conferred by ability to provide creative
leadership n Encourages innovative behavior n Suited to dynamic environments
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Figure 4.6: How the Design Challenges Result in Mechanistic and Organic Structures
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Figure 4.7: Task and Role Relationships
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Contingency Approach
n A management approach in which the design of an organization’s structure is tailored to the sources of uncertainty facing an organization
n Organization should design its structure to fit its environment
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Figure 4.8: Fit Between the Organization and Its Environment
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Lawrence & Lorsch: Differentiation, Integration, and the Environment
n Investigated how companies in different industries differentiate and integrate their structures to fit the environment
n Three industries that experienced different levels of uncertainty: n The plastics industry n The food-processing industry n The container or can-manufacturing industry
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Table 4.2: The Effect of Uncertainty on Differentiation and Integration in Three Industries
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Findings: Lawrence and Lorsch n When environment is perceived as
more unstable and uncertain: n Effective organizations are less
formalized, more decentralized, and rely more on mutual adjustment
n When environment is perceived as stable and certain: n Effective organizations have a more
centralized, standardized, and formalized structure
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Figure 4.9: Functional Differentiation and Environmental Demands
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Burns and Stalker
n Also found that organizations need different kinds of structure to control their activities based on the environment n Organic structures are more effective
when the environment is unstable and changing
n Mechanistic structures are more effective in stable environments
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Figure 4.10: Relationship Between Environmental Uncertainty and Structure