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Copyright © 2002 by South-Western 13–3 Learning Objectives (cont’d) 6.Identify the major features of the high-involvement organization. 7.Describe the relationship between the major contextual features and organizational design. 8.Discuss employee reactions to organizational design.
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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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–33
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–44
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–55
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
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–66
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
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–77
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–88
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–99
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1010
Variations in Staff AuthorityVariations in Staff Authority
AdvisoryAuthority
CommandAuthority
PureStaff
CompulsoryStaffConsultation
ConcurringAuthority
FunctionalAuthority
FIGURE 13FIGURE 13–1–1
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1111
Functional AuthorityFunctional Authority
HumanResources Finance Western
Canada Maritimes CentralCanada
Operations Marketing Operations Marketing
FIGURE 13FIGURE 13–2–2
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1212
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1313
TheTheDelegationDelegationProcessProcess
Accept
Stage 1
Stage 2
Stage 3
Stage 4
Assign Tasks
Transfer Task Authority
AcceptanceCondition
Creation of Responsibility
Reject
FIGURE 13FIGURE 13–3–3
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1414
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1515
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1616
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
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1717
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
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1818
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
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–1919
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
FIGURE 13FIGURE 13–4–4
*Linking pin role
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2020
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2121
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2222
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
FIGURE 13FIGURE 13–5–5
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2323
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
FIGURE 13FIGURE 13–6–6
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2424
Strategic Choice and Organizational Strategic Choice and Organizational DesignDesign
Management’sStrategicChoices
Environment
Culture
Technology
Goals
Size
People
OrganizationalDesign
FIGURE 13FIGURE 13–7–7
Organizational Context
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2525
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2626
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2727
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.
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2828
The Commitment-Commitment The Commitment-Commitment RelationshipRelationship
FIGURE 13FIGURE 13–8–8
Employee’sPerception ofOrganizational
Support
Organizational Commitmentto the Employee: Support,Rewards, Positive Experiences
Employee’sCommitment
to theOrganization
Absenteeism
Attendance
Motivation
Citizenship Behavior
Performance
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–2929
The Empowerment ModelThe Empowerment Model
FIGURE 13FIGURE 13–9–9
FeelingEnergizedEmpowerment
Skills and Abilities
Accurate RolePerceptions
IntrinsicMotivation Performance
Delegation
Decentralization
Participation
Personal Control
Autonomy
Copyright © 2002 by South-WesternCopyright © 2002 by South-Western 13–13–3030
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