The Structural View of Things

1. The Structural View of Things

2. Organization Structure How work is formally divided, grouped and then-hopefully-coordinated

3. The Metaphor: The Organization as an Efficient Machine Reliability Efficiency Effectiveness Clarity Speed

4. The Fundamental Assumptions • 1. Organizations exist to achieve established goals and objectives. • 2. Organizations work best when rationality prevails over personal preferences and external pressures. • 3. Structures must be designed to fit an organization’s circumstances (including its goals, technology and environment). • 4. Organizations increase efficiency and enhance performance through specialization and division of labor. • 5. Appropriate forms of coordination and control are essential to ensuring that individuals and units work together in the service of organizational goals. • 6. Problems and performance gaps arise from structural deficiencies and can be remedied through restructuring.

5. The Structural View • Metaphor: complex machine • Leader: analyst, architect • Strategy: do your homework, analyze, design, weigh, measure, be rational, manage • Focus: data, logic, structure, plans, policies,(the stuff that makes up most of the MBA degree )

6. Key elements in org.structure • Work specialization: how much should one person know? • Departmentalization: how to put people together with similar tasks • Chain of command: line of authority • Span of control: how many to manage • Centralization and decentralization: tall or flat • Formalization: how many rules, formal policies

7. The Organization Chart Organization Chart is a box-and-lines illustration showing the formal lines of authority and the organization’s official positions or division of labor

8. There are many ways, different options, and various rationale for dividing up the work…all with different consequences

9. Simple Structure

10. TOWER BUILDING: AN EXERCISE IN LEADING,CENTRALIZING- DECENTRALIZING AUTHORITY, AND SPAN OF CONTROL

11. Chain of command: to establish authority • To whom individuals and groups report? • Chain of command is an unbroken line of authority than extends from the top to the lowest level of organization • Don’t confuse authority with influence • There are many other patterns of influence Such as>>> you tell me.

12. Span of Control How many individuals can a manager direct? The following factors are often considered: • Required Contact • Degree of Specialization • Ability to Communicate

13. Key: T = Top manager M = Middle manager F = First-line (supervisory) manager CEO Narrow T T T M M M M M M M M M M M M M M M M M M F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F F CEO Wide Spans of Control: Narrow versus Wide

14. Centralized Authority important decisions are made by higher-level managers Decentralized Authority important decisions are made by middle-level and supervisory-level managers Centralized Vs. Decentralized Organizations

15. TOWER BUILDING: AN EXERCISE IN LEADING, STRUCTURE, AND SPAN OF CONTROL • Task: Build a tower of sugar cubes as high as you think you can with your non-dominant hand, in five minutes, e.g. if you are right handed use your left hand or vice-versa. Your group score is based upon the number of cubes standing at the end of each round for the two builders. Then add up the three rounds. No practicing  before the exercise begins. • Form groups of three for three rounds of tower building. • Change leaders for each round. • The other two, who are the builders, blindfold themselves. • If you are done or your tower falls before the end of five minutes, remain silent until the end of the five minutes. • Begin building your tower as instructed by your group leader when the instructor says to begin. • If the tower falls, the score is zero. Score the number of cubes that remain standing at the end of each five minutes. Each group keeps track of total score per round,  then sums all three rounds. • Between rounds two and three there are three minutes to talk tactics and/or time to practice. Time for training and integration.

16. 1. How did the tactics of the leader change from round to round? What helped? What hindered? • 2. Was more help given than asked for? Did this change? • 3. Were the structures flat or tall?  Rank each of the three structures 1 to  10 • 1Tall: almost all action directed by the leader.    • 10 Flat: builders work with little direction • 4. Return to your  regular groups Discuss: What do you think would be the maximum span of control with what kind of structure, flat or tall, to maximize the score? Max number of workers is five. Try a round with the structure you think works best. We'll see which group wins.

17. Then There is Functional Structure? So What Is it?

18. Functional Organization: One of the Most Common Ways to Structure

19. Other options for dividing the work (continued):

20. Cost Containment Staff President Legal Counsel Chief Executive Officer Strategic Planning Advisor Board of Directors Executive Medical Director Executive Administrative Director Director of Pharmacy Director of Personnel Director of Outpatient Services Director of Surgery Director of Accounting Director of Patient & Public Relations Chief Physician Director of X-Ray & Laboratory Services Director of Nutrition & Food Services Director of Admissions Organization Chart for a Hospital: A Basic Example of a Function Structure Designed to Assure Tension and Conflict

21. How Might You Lessen the Conflict In Groups Discuss What Might You Do? For example, is there a structural change that might help?

22. Baldrige performance excellence criteria are a framework that any organization can use to improve overall performance. Seven areas of examination Baldrige National Quality Program • Leadership—Examines how senior executives guide the organization and how the organization addresses its responsibilities to the public and practices good citizenship. • Strategic planning—Examines how the organization sets strategic directions and how it determines key action plans. • Customer and market focus—Examines how the organization determines requirements and expectations of customers and markets; builds relationships with customers; and acquires, satisfies, and retains customers. • Measurement, analysis, and knowledge management—Examines the management, effective use, analysis, and improvement of data and information to support key organization processes and the organization’s performance management system. • Human resource focus—Examines how the organization enables its workforce to develop its full potential and how the workforce is aligned with the organization’s objectives. • Process management—Examines aspects of how key production/delivery and support processes are designed, managed, and improved. • Business results—Examines the organization’s performance and improvement in its key business areas: customer satisfaction, financial and marketplace performance, human resources, supplier and partner performance, operational performance, and governance and social responsibility. The category also examines how the organization performs relative to competitors.

23. 2003 Saint Luke’s Hospital of Kansas CityNational Baldridge Award Winnerhttp://www.nist.gov/public_affairs/baldrige2003/St.Lukes_3.3.04.pdf

24. IN GROUPS:

25. Meet with your group • Among those presently working, someone share with others an answer to the question, on what basis is work divided up at your organization? • With what consequences? Where do things break down?

26. McDonaldization Deskilled Jobs Act as Robots Tightly Controlled Division of Labor Ruthless Efficiency Speed Mass Production Success

27. Basic Factors to Consider *Knowledge or Skill *Time *Customers or Clients Grouped By: *Process *Place or Geography

28. Basic Structural Tensions Division of Labor and Coordination ofEffort How to divide up the work: differentiation How to coordinate different roles and units after responsibilities have been parceled out: integration

29. Vertical Coordination Authority Rules and Policies Planning and Control Systems

30. Strengths of Vertically Integrated Structure *Efficiencies derive from straightforward processes *Works well with a stable environment. *Precision is a premium measured against clear standards *Maximize responses to predictable markets

31. Weaknesses *Slow to change. *Difficulty dealing with idiosyncratic problems. *Stovepipes create subcultures. *Possible dehumanizing effect on employees. *Apathy, carelessness and lack of pride. *Caps on human capacities.

32. So…. • How do we do to integrate?

33. In General We Flatten Ad Hoc Teams Meetings/Committees Task Forces/Teams Matrix Structures Networks Coordinating Roles

34. But……… Lateral Coordination is usually where things usually bog down

35. Bloch School - EMBA First Semester Module I Tools Competitive Analysis Leadership Residency Managerial Accounting Economics Financial Management Quantitative Decision Skills Executive Leadership

36. Bloch School - EMBA First Semester Second Semester Module I Tools Competitive Analysis Leadership Residency Wash D.C. Residency Module II Managing People & Systems Managerial Accounting Economics Financial Management Quantitative Decision Skills Executive Leadership Operations Management Human Resources Management Info. Systems Organizational & Group Behavior

37. Bloch School - EMBA First Semester Third Semester Module III The Enterprise and Its Environment Strategic Assessment Project Entrepreneurship Executive Leadership International Business Strategic Marketing Strategic Management

38. Bloch School - EMBA First Semester Second Semester Third Semester Fourth Semester Module III The Enterprise and Its Environment International Residency Strategic Assessment Project Module IV Strategic Leadership International Business Leadership of Strategic Change Strategic Management of Technology Organizational Behavior Entrepreneurship Executive Leadership International Business Strategic Marketing Strategic Management

39. Contingency Design Contingency Designthe process of fitting the organization to the environment

40. Discuss • What are the major factors to consider in the environment?

41. The Organizational Environment International Forces Demographic / Cultural Forces Political Forces Customers Distributors Suppliers Organization Unions Government Competitors Work Force Issues Technological Forces Economic Forces General Forces Specific Forces

42. Sources of Environmental Uncertainty: complexity, dynamism, and richness As the environment becomes more complex, less stable, and poorer, the level of uncertainty increases.

43. . Contingency theory states that in order to manage its environment effectively, an organization should design its structure to fit with its environment. A poor fit between structure and environment leads to failure, a close fit leads to success

44. Organic organizations The Relationship Between Environmental Uncertainty and Organizational Structure Mechanistic organizations Environmental UncertaintyStable In flux (variable)

45. Types of Organizational Structures • Simple Structure • Functional Structure • Divisional Structure • Conglomerate Structure • Hybrid Structure • Matrix Structure • Team-Based Structure • Virtual Network Structures

46. Product Divisional Structure President President Cadillac President Buick President Pontiac President Chevrolet Vice- President, Production Vice- President, Marketing Vice- President, Finance Vice- President, Human Resources Functional divisional structure Geographical divisional structure Manager Region I Manager Region II Manager Region III Manager Region IV Hybrid Structures A Hypothetical example of what GM might use

47. Functional Structure Project structure President Vice President, Engineering Vice President, Finance Vice President, Production Vice President. Sales Project Managerand Customer Project Manager,and Customer Subordinate reports to both Vice President of Sales & to ProjectManager Project Manager,and Customer Project Manager,and Customer At a Kansas City Manufacturing Co. Matrix Structure: The Customer as a Member of the Company

48. Advantages of Matrix Organization • Efficient use or resources • Flexibility in conditions of change and uncertainty • Technical excellence • Freeing top management for long-run planning • Improving motivation and commitment • Providing opportunities for personal development

49. Functional structure President Vice President, Research & Development Vice President, Design Vice President, Engineering Vice President, Marketing Project teams Product Team Manager, Manufacturing Light Trucks Product Team Manager, Manufacturing Sedans Product Team Manager, Manufacturing Sport Cars Project team members Team-Based Structures

50. Network Structure Design Studio Sweden Components Assembly Mexico, Asia Core of personal computer company USA Engineering Company Japan Distribution Company Canada Accounting & Finance USA