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Organizational Behavior:An Introduction to

Your Life in Organizations

Chapter 15

Designing Effective Organizations

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Preview

Who designs organizations and, in general, what dothese designers do?

What are the major factors influencing organizationaldesign?

What do managers actually design? How can you predict whether an organizational design

will be effective?

What are some unconventional approaches to

organizational design? How can you identify the fundamental organizational

types and anticipate their strengths and weaknesses?

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Who designs organizations and, ingeneral, what do these designers

do? Organizational design is the way in whichan organization divides its labor intodistinct tasks and then achieves

coordination of these tasks

Answer the question: What is the optimalcombination of organizational

characteristics to achieve organizationalgoals?

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The three historical factors thatdrive organizational design

1. Who was the founder? The founders influenceon company design and culture may last fordecades

2. What characterized organizational design

during the historic period in which the companywas founded?

3. What has been the historic size of thecompany?

An organizations history, culture, values andentrenched ways of doing things are referredto as its administrative heritage

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The three business factors(constraints) that drive

organizational design The environment in which it does business

The work that it performs

The people it employs

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What type of work does thecompany do?

Work can be characterized as programmed (sostandardized that it can be described with aformula) or nonprogrammed (work that iscreative).

Unit work: perform custom work, producingindividualized units

Mass production: produce hundreds of

thousands of identical or nearly identical items Continuous production: continues around the

clock and has to be constantly monitored

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Who are the employees?

Formal organizations require people whothrive on formality

Flexible organizations require people whothrive on change

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The theory of organizational design

Specialization is differentiating the tasksindividuals do in order to produce better work

Formalization is the means by which an

organization determines who, when and howtasks are performed

Centralization is the degree to whichorganizational members participate in decisionmaking

The factors are synergistic

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The practice of organizationaldesign

Inputs to the model are the organizationalconstraints of environment, type of work, andpeople

Output to the model is organizationaleffectiveness, usually efficiency, quality ofoutput, quality of work culture or responsiveness

Throughputs are five design variables: decisionmaking, structure, control & motivation, workdesign and organizational culture

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How synergy is reduced

If one or more design factors defy the logicof the rest of the organization

Examples:

a highly creative, energetic employee ends upin a highly programmed, scheduled job

a company emphasizes the design

characteristics suitable to a flexibleorganization while trying to compete on costand quality

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Should you adopt the contingentdesign or the fashionable design?

Contingency theory of organizationaldesign: the idea that organizations shouldbe designed to meet their unique

constraints, states that not allorganizations should be enterprises

Fashionable design: ideal design formodern times-- the organic/learning/highperformance/new organization, e.g. theenterprise

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What are some unconventionalapproaches to organizational

design? Theory of equifinality: given the sameconstraints, there is more than one way todesign organizations to achieve effectiveness

The subjective side of organizational design:Metaphor and the collective paradigm: whatactually causes the creation, maintenance andchange of organizations is the invisibleagreement in consciousness of theorganizations members, known as themembers collective paradigm, sometimesdescribed using metaphors

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The bureaucracy

A highly systematized organization aimed atefficiency

Daily work is planned, programmed, prescribed,

scheduled, and directed by the book Often found in mature markets in which demand

for their product is well established or perhapseven falling

Efficiency and, often, quality are the mainstrategies on which they compete

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The enterprise

Adapt quickly in business environmentsthat are dynamic, complex, and uncertain

Daily work is extemporaneous,improvised, spontaneous, and directed bydiscussion and teamwork

Goals and results are custom-designedand creative/innovative

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The hybrid organization

An organization which is comprised ofdistinct elements, some of which arebureaucratic and some of which are

enterprising, with one overarching culture Designed to meet the different constraints

on its subunits

Highly adaptive organizations whosedesigns match the different types of workperformed

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Apply what you have learned

World Class Company: IDEO ProductDevelopment

Advice from the Pros

Gain Experience

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Summary Who designsorganizations and, in general, what

do these designers do? Organizational designers are typically topmanagers or consultants

They look for optimal combinations oforganizational characteristics to achieveorganizational outcomes

S

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Summary What are the majorfactors influencing organizational

design? Three primary factors in the companys historyaffect its design: the personality and values offounder, the era in which the company was

founded, and the historic size of the company. Company designs are also affected by such

constraints as: the companys (external)

environment, the nature of its employees, and

the type of work that it does

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Summary What do managersactually design?

Theoretically, designers consider formalization,centralization, and specialization whendesigning their organizations

Typically, when one of these changes, theothers should also change.

In practice, organizational designers focus onfive factors (called design variables): decisionmaking, structure, control and motivation, workdesign, and organizational culture

S H di

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Summary How can you predictwhether an organizational design

will be effective? In a synergistic organizational design differentelements of the company interact together in acoherent pattern

Examples of synergistic designs arebureaucracies and enterprises

According to contingency theory, as long as itsorganizational design fits its organizationalconstraints, either a bureaucracy or anenterprise can be effective

S Wh

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Summary What are someunconventional approaches to

organizational design? Theory of equifinality argues that there aremany designs that can be effective

The collective paradigm states that whilethe effects of organizational constraints ondesign are important, it is only throughchanges in the collective consciousness of

organizational members that organizationdesign changes can really be made

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Summary How can you identify thefundamental organizational types and

anticipate their strengths and weaknesses?

A bureaucracy is a highly systematizedorganization aimed at efficiency

Classic bureaucracies differ from professional

bureaucracies An enterprise is a highly flexible organizationthat adapts quickly in dynamic businessenvironments

A hybrid is an organization comprised of distinctelements, some of which are bureaucratic andsome of which are enterprising