Managing Organizations

1. Managing Organizations ORGANIZATIONAL DESIGN FOR STRATEGIC COMPETENCY (OD = THE CONSTRUCTION OR CHANGING OF AN ORGANIZATION’S STRUCTURE) Objectives: DESCRIBE AND EXPLAIN THE ORGANIZATION DESIGN OPTIONS IDENTIFY THE PRINCIPLES OF ORGANIZATION DESIGN (THE CLASSICAL OR THE „OLD MODEL“ OF ORGANIZATION) CONTRAST MECHANISTIC VERSUS ORGANIC ORGANIZATIONS EXERCISE – ORGANIZING (XYZ paper company)

2. Organization Design Options • ORGANIZING AS A MANAGERIAL FUNCTION (P, O, L, C) DEALS WITH ORGANIZATION STRUCTURES • Organization structure definitions • OS IS A FORMAL SYSTEM OF WORKING RELATIONSHIP THAT BOTH SEPARATES AND INTEGRATES TASKS • OS ENABLES EMP-ees TO WORK TOGETHER EFFECTIVELY BY: • ALLOCATING PEOPLE AND RESOURCES TO TASKS • CLARIFYING RESPONSIBILITIES THROUGH JOB DESCRIPTIONS, ORGANIZATIONS CHARTS & LINES OF AUTHORITY • LETTING EMPLOYEES KNOW WHAT IS EXPECTED OF THEM BY ESTABLISHING RULES, REGULATIONS, OPERATING PROCEDURES & PERFORMANCE STANDARDS • CREATING CONDITIONS FOR COLLECTING AND EVALUATING INFORMATION TO HELPMANAGERS MAKE DECISIONS AND SOLVE PROBLEMS

3. Basic Elements of OS • SPECIALIZATION: The process of identifying specialized tasks and assigning them to individuals or work groups who have been trained specifically to do them • STANDARDIZATION: Developing the procedures an organization uses to ensure that employees perform their jobs in a uniform and consistent manner. Standardization promotes predictable behaviors • COORDINATION: The formal and informal procedures that integrate both managerial and employee activities • AUTHORITY: The right to make decisions and take actions • COMPLEXITY: Considers how much differentiation (division of labor, number of vertical levels, etc.) there is in the organization • FORMALIZATION: The degree to which an organization relies on rules and procedures to direct the behavior of employees • CENTRALIZATION: The concentration of decision-making authority in upper management.

4. Organization Chart • DESCRIBES FIVE (5) MAJOR POINTS ABOUT AN ORGANIZATION STRUCTURE: • 1.    TASKS • 2.    SUBDIVISIONS • 3.    TYPE OF WORK • 4.    LEVEL OF MANAGEMENT • 5.    LINES OF AUTHORITY

5. Basic Principles of Organization Design 1.    DIVISION OF LABOR 2.    UNITY OF COMMAND 3.    AUTHORITY AND RESPONSIBILITY 4.    SPAN OF CONTROL 5.    DEPARTMENTALIZATION

6. Basic Principles of Organization Design • Division of Labor: • INDIVIDUALS SPECIALIZE IN DOING PART OF AN ACTIVITY RATHER THAN THE ENTIRE ACTIVITY

7. Basic Principles of Organization Design • Unity of Command: • NO PERSON SHOULD REPORT TO TWO OR MORE BOSSES • This is the classical view – when organizations were comparatively simple. Strict adherence to this principle creates a degree of inflexibility, and then lower efficiency

8. Basic Principles of Organization Design • Authority & Responsibility: • AUTHORITY IS A RIGHT, THE LEGITIMACY WHICH IS BASED ON THE PERSON’S POSITION IN THE ORGANIZATION (Legitimate power) • POWER – AN INDIVIDUAL’S CAPACITY TO INFLUENCE DECISIONS (Other people) • RESPONSIBILITY - AN OBLIGATION TO PERFORM

9. Basic Principles of Organization Design • Span of Control: • A NUMBER OF SUBORDINATES A MANAGER CAN DIRECT EFFECTIVELY AND EFFICIENTLY

10. Basic Principles of Organization Design • Departmentalization: • THE WAY HOW ACTIVITIES SHOULD BE GROUPED INTO DEPARTMENTS • THERE ARE FIVE WAYS: ·      FUNCTIONAL ·      PRODUCT ·      CUSTOMER ·      GEOGRAPHIC ·      PROCESS

11. Organization Design Concepts • THERE ARE TWO BASIC ORGANIZATION DESIGN CONCEPTS TODAY: • 1.    MECHANISTIC ORGANIZATION • 2.    ORGANIC ORGANIZATION

12. Mechanistic Organization (Bureaucracy) • STRUCTURE CREATED BY APPLICATION OF THE CLASSICAL PRINCIPLES. • THIS STRUCTURE SCORES HIGH ON: • Complexity • Formalization • Centralization

13. Organic Organization (Adhocracy) • IS A DIRECT CONTRAST TO THE MECHANISTIC FORM • THIS STRUCTURE SCORES LOWON: • Complexity • Formalization • Centralization (DECENTRALIZED)

14. Mechanistic vs. Organic Concept • KEY CONTINGENCIES(factors that influence the decision what form of the structure is best suitable in certain conditions): ·      ORGANIZATION’S STRATEGY ·      SIZE OF AN ORGANIZATION ·      USEDTECHNOLOGY ·      ENVIRONMENT

15. Mechanistic Design Options • DIVISIONAL structure • CREATES SELF-CONTAINED, AUTONOMOUS UNITS THAT ARE USUALLY ORGANIZED ALONG MECHANIC LINES • Each unit / division is generally autonomous, with a division manager responsible for performance and holding complete strategic and operating decision-making authority • FUNCTIONAL structure • IS A DESIGN THAT GROUPSSIMILAR OR RELATED OCCUPATIONAL SPECIALITIES TOGETHER

16. Divisional Structure:Major Advantage / Disadvantage • Focus on results • Frees HQ staff from operating details • Duplication of activities & resources

17. Divisional Structure:Example

18. Organic Design Options • ·      SIMPLE STRUCTURE • ·      MATRIX STRUCTURE • ·      NETWORK STRUCTURE • ·      TASK FORCE STRUCTURE • ·      COMMITTEE STRUCTURE

19. Organization Design Options (Summary)