Post on 01-Nov-2014
description
CHAPTERCHAPTER
1212
Managing Organization Design
Managing Organization Design
Copyright Copyright © by Houghton Mifflin Company.© by Houghton Mifflin Company.All rights reserved.All rights reserved.
PowerPoint PresentationPowerPoint Presentation by Charlie Cook by Charlie Cook
Copyright © by Houghton Mifflin Company. All rights reserved. 12–2
Learning ObjectivesLearning Objectives
After studying this chapter, you should be able to:– Identify the basic nature of organization design.– Identify the two basic universal perspectives on organization
design.– Identify and explain several situational influences on
organization design.– Discuss how an organization’s strategy and its design are
interrelated.– Describe the basic forms of organization design that
characterize many organizations.– Describe emerging issues in organization design.
After studying this chapter, you should be able to:– Identify the basic nature of organization design.– Identify the two basic universal perspectives on organization
design.– Identify and explain several situational influences on
organization design.– Discuss how an organization’s strategy and its design are
interrelated.– Describe the basic forms of organization design that
characterize many organizations.– Describe emerging issues in organization design.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–3
Chapter OutlineChapter Outline• The Nature of Organization
Design• Universal Perspectives on
Organization Design– Bureaucratic Model– Behavioral Model
• Situational Influences on Organization
– Core Technology– Environment– Organization Size– Organizational Life Cycle
• Strategy and Organization Design– Corporate-Level Strategy– Business-Level Strategy– Organizational Functions
• The Nature of Organization Design
• Universal Perspectives on Organization Design
– Bureaucratic Model– Behavioral Model
• Situational Influences on Organization
– Core Technology– Environment– Organization Size– Organizational Life Cycle
• Strategy and Organization Design– Corporate-Level Strategy– Business-Level Strategy– Organizational Functions
• Basic Forms of Organization Design
– Functional (U-Form) Design– Conglomerate (H-Form) Design– Divisional (M-Form) Design
• Matrix Design– Hybrid Design
• Emerging Issues in Organization Design
– The Team Organization– The Virtual Organization– The Learning Organization– Issues in International
Organization Design
• Basic Forms of Organization Design
– Functional (U-Form) Design– Conglomerate (H-Form) Design– Divisional (M-Form) Design
• Matrix Design– Hybrid Design
• Emerging Issues in Organization Design
– The Team Organization– The Virtual Organization– The Learning Organization– Issues in International
Organization Design
Copyright © by Houghton Mifflin Company. All rights reserved. 12–4
The Nature of Organization The Nature of Organization DesignDesign
• Organization Design– The overall set of structural elements and the relationships
among those elements used to manage the total organization.
– A means to implement strategies and plans to achieve organizational goals.
• Organization Design Concepts– Organizations are not designed and then left intact.
Organizations are in a continuous state of change.– Organization design for larger organizations is extremely
complex and has many nuances and variations.
• Organization Design– The overall set of structural elements and the relationships
among those elements used to manage the total organization.
– A means to implement strategies and plans to achieve organizational goals.
• Organization Design Concepts– Organizations are not designed and then left intact.
Organizations are in a continuous state of change.– Organization design for larger organizations is extremely
complex and has many nuances and variations.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–5
Universal Perspectives onUniversal Perspectives onOrganization DesignOrganization Design
• Bureaucratic Model (Max Weber)– A logical, rational, and efficient organization design based on
a legitimate and formal system of authority.– Characteristics
• Adopt a division of labor with each position filled by an expert.
• Create a consistent set of rules to ensure uniformity in task performance.
• Establish a hierarchy of positions, which creates a chain of command.
• Engage in impersonal management; with appropriate social distance between superiors and subordinates.
• Employment and advancement to be based on technical expertise, and employees protected from arbitrary dismissal.
• Bureaucratic Model (Max Weber)– A logical, rational, and efficient organization design based on
a legitimate and formal system of authority.– Characteristics
• Adopt a division of labor with each position filled by an expert.
• Create a consistent set of rules to ensure uniformity in task performance.
• Establish a hierarchy of positions, which creates a chain of command.
• Engage in impersonal management; with appropriate social distance between superiors and subordinates.
• Employment and advancement to be based on technical expertise, and employees protected from arbitrary dismissal.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–6
Bureaucratic ModelBureaucratic Model
• Advantages– Efficiency in function due to well-defined practices and
procedures.– Organizational rules prevent favoritism.– Recognition of and requirement for expertise stresses the
value of an organization’s employees.
• Disadvantages– Organizational inflexibility and rigidity due to rules and
procedures.– Neglects the social and human processes within the
organization.– Belief in “one best way” to design an organization does not
apply to all organizations and their environments.
• Advantages– Efficiency in function due to well-defined practices and
procedures.– Organizational rules prevent favoritism.– Recognition of and requirement for expertise stresses the
value of an organization’s employees.
• Disadvantages– Organizational inflexibility and rigidity due to rules and
procedures.– Neglects the social and human processes within the
organization.– Belief in “one best way” to design an organization does not
apply to all organizations and their environments.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–7
SystemSystem
11
ExploitativeExploitative
AuthoritativeAuthoritative
Job-centered Job-centered leader leader
behaviorbehavior
SystemSystem
22
BenevolentBenevolent
AuthoritativeAuthoritative
SystemSystem
33
ConsultativeConsultative
SystemSystem
44
ParticipativeParticipative
Employee-Employee-centered leader centered leader
behaviorbehavior
Behavioral Model: Likert SystemBehavioral Model: Likert System
• Renesis Likert– Organizations that pay attention to work groups and
interpersonal processes are more effective than bureaucratic organizations.
• Renesis Likert– Organizations that pay attention to work groups and
interpersonal processes are more effective than bureaucratic organizations.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–8
Situational Influences Situational Influences onon
Organization Design Organization Design
ORGANIZATIONORGANIZATIONDESIGNDESIGN
Organizational
OrganizationalSizeSize
Organizational
Organizational
Life Cycle
Life Cycle
Core Technology
Core Technology
Environment
Environment
Copyright © by Houghton Mifflin Company. All rights reserved. 12–9
Situational Influences onSituational Influences onOrganization Design (cont’d)Organization Design (cont’d)
• Core Technology– Technology is the conversion processes used to transform
inputs into outputs.– A core technology is an organization’s most important
technology.– Joan Woodward initially sought a correlation between
organization size and design; instead, she found a potential relationship between technology and design.
– As the complexity of technology increases, so do the number of levels of management.
• Core Technology– Technology is the conversion processes used to transform
inputs into outputs.– A core technology is an organization’s most important
technology.– Joan Woodward initially sought a correlation between
organization size and design; instead, she found a potential relationship between technology and design.
– As the complexity of technology increases, so do the number of levels of management.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–10
Situational Influences onSituational Influences onOrganization Design (cont’d)Organization Design (cont’d)
• Woodward’s Basic Forms of Technology– Unit or Small-Batch Technology
• Produce custom-made products to customer specifications, or else produce in small quantities, similar to Likert’s System 4 organization.
– Large Batch/Mass Production• Uses assembly-line production methods to manufacture large
quantities of products; resembles Likert’s System 1.
– Continuous Process• Use continuous-flow processes to
convert raw materials by process or machine into finished products; resembles Likert’s System 4.
• Woodward’s Basic Forms of Technology– Unit or Small-Batch Technology
• Produce custom-made products to customer specifications, or else produce in small quantities, similar to Likert’s System 4 organization.
– Large Batch/Mass Production• Uses assembly-line production methods to manufacture large
quantities of products; resembles Likert’s System 1.
– Continuous Process• Use continuous-flow processes to
convert raw materials by process or machine into finished products; resembles Likert’s System 4.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–11
Situational Influences onSituational Influences onOrganization Design (cont’d)Organization Design (cont’d)
• Burns and Stalker– Forms of the organizational environment
• Stable environments that remain constant over time.
• Unstable environments subject to uncertainty and rapid change.
– Organization Designs• Mechanistic organizations that are similar to bureaucratic or System 1
models; found most frequently in stable environments.
• Organic organizations that are flexible and informal models; usually found in unstable and unpredictable environments.
• Burns and Stalker– Forms of the organizational environment
• Stable environments that remain constant over time.
• Unstable environments subject to uncertainty and rapid change.
– Organization Designs• Mechanistic organizations that are similar to bureaucratic or System 1
models; found most frequently in stable environments.
• Organic organizations that are flexible and informal models; usually found in unstable and unpredictable environments.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–12
Situational Influences onSituational Influences onOrganization Design (cont’d)Organization Design (cont’d)
• Lawrence and Lorsch– Differentiation
• The extent to which the organization is broken down into subunits.
– Integration• The degree to which the various subunits must work together in a
coordinated fashion.
• Lawrence and Lorsch– Differentiation
• The extent to which the organization is broken down into subunits.
– Integration• The degree to which the various subunits must work together in a
coordinated fashion.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–13
Situational Influences onSituational Influences onOrganization Design (cont’d)Organization Design (cont’d)
• Organizational Size– Defined as the total number of full-time or full-time equivalent
employees– Research findings:
• Small firms tend to focus on their core technology.
• Large firms have more job specialization, standard operating procedures, more rules and regulations, and are more decentralized.
• Organizational Life Cycle– A progression through which organizations evolve as they
grow and mature—birth, youth, midlife, and maturity.
• Organizational Size– Defined as the total number of full-time or full-time equivalent
employees– Research findings:
• Small firms tend to focus on their core technology.
• Large firms have more job specialization, standard operating procedures, more rules and regulations, and are more decentralized.
• Organizational Life Cycle– A progression through which organizations evolve as they
grow and mature—birth, youth, midlife, and maturity.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–14
Strategy and Organization DesignStrategy and Organization Design
• Corporate-Level Strategy– Single-product strategy– Related or unrelated diversification– Portfolio approach to managing strategic business units
• Corporate-Level Strategy– Single-product strategy– Related or unrelated diversification– Portfolio approach to managing strategic business units
Copyright © by Houghton Mifflin Company. All rights reserved. 12–15
Strategy and Organization Design Strategy and Organization Design (cont’d)(cont’d)
• Business-Level Strategy– Defender– Prospecting – Analyzer
• Generic Competitive Strategies– Differentiation– Cost leadership– Focus
• Business-Level Strategy– Defender– Prospecting – Analyzer
• Generic Competitive Strategies– Differentiation– Cost leadership– Focus
Copyright © by Houghton Mifflin Company. All rights reserved. 12–16
Strategy and Organization Design Strategy and Organization Design (cont’d)(cont’d)
• Organizational Functions– Major functions of the organization (e.g., marketing, finance,
research and development, and manufacturing) influencean organization’s design.
• Organizational Functions– Major functions of the organization (e.g., marketing, finance,
research and development, and manufacturing) influencean organization’s design.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–17
Basic Forms of Organization Basic Forms of Organization DesignDesign
• Functional or U-form (Unitary) Design– Organizational members and units are grouped into
functional departments such as marketing and production.– Coordination is required across all departments.– Design approach resembles functional departmentalization in
its advantages and disadvantages.
• Functional or U-form (Unitary) Design– Organizational members and units are grouped into
functional departments such as marketing and production.– Coordination is required across all departments.– Design approach resembles functional departmentalization in
its advantages and disadvantages.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–18
Functional or U-Form Design for aFunctional or U-Form Design for aSmall Manufacturing CompanySmall Manufacturing Company
CEO
Vice president,
operations
Vice president,
marketing
Vice president,
finance
Vice president,
human resources
Vice president,
R&D
Scientific
director
Labor relations
director
Plant human
resource manager
Controller
Accounting
supervisor
Regional
sales managers
District
sales managers
Plant
managers
Shift
supervisorsLab manager
Figure 12.1
Copyright © by Houghton Mifflin Company. All rights reserved. 12–19
Basic Forms of Organization Design Basic Forms of Organization Design (cont’d)(cont’d)
• Conglomerate or H-form (Holding) Design– Organization consists of a set of unrelated businesses with
a general manager for each business.– Holding-company design is similar to product
departmentalization.– Coordination is based on the allocation of resources across
companies in the portfolio.– Design has produced only average to weak financial
performance; has been abandoned for other approaches.
• Conglomerate or H-form (Holding) Design– Organization consists of a set of unrelated businesses with
a general manager for each business.– Holding-company design is similar to product
departmentalization.– Coordination is based on the allocation of resources across
companies in the portfolio.– Design has produced only average to weak financial
performance; has been abandoned for other approaches.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–20
Conglomerate (H-Form) Design Conglomerate (H-Form) Design at Pearson PLCat Pearson PLC
CEO
Publishingoperations
Entertainmentoperations
Oil servicesoperations
Fine chinaoperations
Periodicalsoperations
Investmentbankingoperations
Figure 12.2
Copyright © by Houghton Mifflin Company. All rights reserved. 12–21
Basic Forms of Organization Design Basic Forms of Organization Design (cont’d)(cont’d)
• Divisional or M-form (Multidivisional) Design– An organizational arrangement based on multiple businesses
in related areas operating within a larger organizational framework.
– The design results from a strategy of related diversification.– Some activities are extremely decentralized down to the
divisional level; others are centralized at the corporate level.– The largest advantages of the M-form design are the
opportunities for coordination and sharing of resources.– Successful M-form organizations can out perform U-form and
H-form organizations.
• Divisional or M-form (Multidivisional) Design– An organizational arrangement based on multiple businesses
in related areas operating within a larger organizational framework.
– The design results from a strategy of related diversification.– Some activities are extremely decentralized down to the
divisional level; others are centralized at the corporate level.– The largest advantages of the M-form design are the
opportunities for coordination and sharing of resources.– Successful M-form organizations can out perform U-form and
H-form organizations.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–22
Multidivisional (M-form) DesignMultidivisional (M-form) Designat The Limited, Inc.at The Limited, Inc.
CEO
Bath &BodyWorks
Structure The Limited ExpressLernerNew York
Victoria’sSecret
Otherchains
Figure 12.3
Copyright © by Houghton Mifflin Company. All rights reserved. 12–23
Basic Forms of Organization Design Basic Forms of Organization Design (cont’d)(cont’d)
• Matrix Design– An organizational arrangement based on two overlapping
bases of departmentalization (e.g., functional departmentsand product categories).
– A set of product groups or temporary departments are superimposed across the functional departments.
– Employees in the resulting matrix are members of both their departments and a project team under a project manager.
– The matrix creates a multiple command structure in which an employee reports to both departmental and project managers.
– A matrix design is useful when:• There is strong environmental pressure.
• There are large amounts of information to be processed.
• There is pressure for shared resources.
• Matrix Design– An organizational arrangement based on two overlapping
bases of departmentalization (e.g., functional departmentsand product categories).
– A set of product groups or temporary departments are superimposed across the functional departments.
– Employees in the resulting matrix are members of both their departments and a project team under a project manager.
– The matrix creates a multiple command structure in which an employee reports to both departmental and project managers.
– A matrix design is useful when:• There is strong environmental pressure.
• There are large amounts of information to be processed.
• There is pressure for shared resources.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–24
Basic Forms of Organization Design Basic Forms of Organization Design (cont’d)(cont’d)
• Matrix Design Advantages– Enhances organizational flexibility.– Involvement creates high motivation and increased
organizational commitment.– Team members have the opportunity to learn new skills.– Provides an efficient way for the organization to use its
human resources.– Team members serve as bridges to their departments for the
team.– Useful as a vehicle for decentralization.
• Matrix Design Advantages– Enhances organizational flexibility.– Involvement creates high motivation and increased
organizational commitment.– Team members have the opportunity to learn new skills.– Provides an efficient way for the organization to use its
human resources.– Team members serve as bridges to their departments for the
team.– Useful as a vehicle for decentralization.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–25
Basic Forms of Organization Design Basic Forms of Organization Design (cont’d)(cont’d)
• Matrix Design Disadvantages– Employees are uncertain about reporting relationships.– Managers may view design as an anarchy in which they have
unlimited freedom.– The dynamics of group behavior may lead to slower decision
making, one-person domination, compromise decisions, or a loss of focus.
– More time may be required for coordinating task-related activities.
• Matrix Design Disadvantages– Employees are uncertain about reporting relationships.– Managers may view design as an anarchy in which they have
unlimited freedom.– The dynamics of group behavior may lead to slower decision
making, one-person domination, compromise decisions, or a loss of focus.
– More time may be required for coordinating task-related activities.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–26
A Matrix OrganizationA Matrix Organization
Employees
CEO
Projectmanager B
Projectmanager C
Vice president,engineering
Vice president,production
Vice president,finance
Vice president,marketing
Projectmanager A
Figure 12.4
Copyright © by Houghton Mifflin Company. All rights reserved. 12–27
Basic Forms of Organization Design Basic Forms of Organization Design (cont’d)(cont’d)
• Hybrid Designs– An organizational arrangement based on two or more common
forms of organization design.– An organization may have a mixture of related divisions and a
single unrelated division.– Most organizations use a modified form of organization design
that permits it to have sufficient flexibility to make adjustments for strategic purposes.
• Hybrid Designs– An organizational arrangement based on two or more common
forms of organization design.– An organization may have a mixture of related divisions and a
single unrelated division.– Most organizations use a modified form of organization design
that permits it to have sufficient flexibility to make adjustments for strategic purposes.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–28
Emerging Issues in Organization Emerging Issues in Organization DesignDesign
• The Team Organization– An approach to organizational design that relies almost
exclusively on project-type teams, with little or no underlying functional hierarchy.
• The Virtual Organization– An organizational design that has little or no format structure
with few permanent employees, leased facilities, and outsourced basic support services.
– It may conduct its business entirely on-line and exists only to meet for a specific and present need.
• The Learning Organization– An organization that works to facilitate the lifelong learning
and development of its employees while transforming itself to respond to changing demands and needs.
• The Team Organization– An approach to organizational design that relies almost
exclusively on project-type teams, with little or no underlying functional hierarchy.
• The Virtual Organization– An organizational design that has little or no format structure
with few permanent employees, leased facilities, and outsourced basic support services.
– It may conduct its business entirely on-line and exists only to meet for a specific and present need.
• The Learning Organization– An organization that works to facilitate the lifelong learning
and development of its employees while transforming itself to respond to changing demands and needs.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–29
Issues in InternationalIssues in InternationalOrganization DesignOrganization Design
• The trend toward internationalization of business• How to design a firm to deal most effectively with
international forces and to compete in global markets:– Create an international division?– Establish an international operating group?– Make international operations an autonomous subunit?
• The trend toward internationalization of business• How to design a firm to deal most effectively with
international forces and to compete in global markets:– Create an international division?– Establish an international operating group?– Make international operations an autonomous subunit?
Copyright © by Houghton Mifflin Company. All rights reserved. 12–30
Common Common Organization Organization Designs for Designs for
International International OrganizationsOrganizations
CEO
A. Separate International Division
Production Marketing FinanceInternational
division
B. Location Departmentalization
NorthAmericanoperations
Europeanoperations
Asianoperations
CEO
Figure 12.5a
Copyright © by Houghton Mifflin Company. All rights reserved. 12–31
Common Organization Designs forCommon Organization Designs forInternational Organizations (cont’d)International Organizations (cont’d)
D. Multidivisional Structure
CEO
Subsidiary A(in Germany)
Subsidiary C(in France)
Subsidiary E(in Taiwan)
Subsidiary D(in Japan)
Subsidiary B(in UnitedStates)
C. Product Departmentalization
Productmanager A
CEO
Productmanager B
Productmanager C
AsiaNorthAmerica
Europe
Figure 12.5b
Copyright © by Houghton Mifflin Company. All rights reserved. 12–32
Mintzberg’s StructuresMintzberg’s Structures
According to Henry Mintzberg the structural configuration of an organization can be differentiated by:
– Prime Coordinating Mechanism
– Key Part of Organization
– Type of Decentralization
According to Henry Mintzberg the structural configuration of an organization can be differentiated by:
– Prime Coordinating Mechanism
– Key Part of Organization
– Type of Decentralization
Copyright © by Houghton Mifflin Company. All rights reserved. 12–33
Mintzberg’s StructuresMintzberg’s Structures
• Prime Coordinating Mechanism
– Direct Supervision
One individual is responsible for the work of others
– Standardization of work processes
The content of the work is specified or programmed – Standardization of skills
Explicitly specifies the kind of training necessary to do the work
– Standardization of outputs
Specifies the results, or output, of the work
– Mutual adjustment
Coordinates activities through informal communications
• Prime Coordinating Mechanism
– Direct Supervision
One individual is responsible for the work of others
– Standardization of work processes
The content of the work is specified or programmed – Standardization of skills
Explicitly specifies the kind of training necessary to do the work
– Standardization of outputs
Specifies the results, or output, of the work
– Mutual adjustment
Coordinates activities through informal communications
Copyright © by Houghton Mifflin Company. All rights reserved. 12–34
Mintzberg’s StructuresMintzberg’s Structures
• Key Part of Organization
– Strategic apex
Top management and its support staff
– Technostructure
Analysts such as industrial engineers, accountants, planners, and human resource managers
– Operating core
Workers who actually carry out the organization’s tasks
– Middle line
Middle and lower-level management
– Support staff
Units that provide support to the organization outside of the operating workflow (for example, legal counsel, executive dining room staff, and consultants.)
• Key Part of Organization
– Strategic apex
Top management and its support staff
– Technostructure
Analysts such as industrial engineers, accountants, planners, and human resource managers
– Operating core
Workers who actually carry out the organization’s tasks
– Middle line
Middle and lower-level management
– Support staff
Units that provide support to the organization outside of the operating workflow (for example, legal counsel, executive dining room staff, and consultants.)
Copyright © by Houghton Mifflin Company. All rights reserved. 12–35
Mintzberg’s StructuresMintzberg’s Structures
• Types of Decentralization
– Vertical and horizontal centralization
– Limited horizontal decentralization
– Vertical and horizontal decentralization
– Limited vertical decentralization
– Selective decentralization
• Types of Decentralization
– Vertical and horizontal centralization
– Limited horizontal decentralization
– Vertical and horizontal decentralization
– Limited vertical decentralization
– Selective decentralization
Copyright © by Houghton Mifflin Company. All rights reserved. 12–36
Structural ConfigurationStructural Configuration
The Simple Structure
The simple structure uses direct supervision as its primary
coordinating mechanism, has as its most important part its strategic apex, and employs vertical and horizontal centralization. Relatively small corporations controlled by aggressive entrepreneurs, new government departments, and medium-sized retail stores are all likely to exhibit a simple structure. These organizations tend to be relatively young. The CEO (often the owner) retains much of the decision-making power. The organization is relatively flat and does not emphasize specialization. Many smaller U-form organizations are structured in this fashion. Trilogy Software would be an example of a firm using this approach.
The Simple Structure
The simple structure uses direct supervision as its primary
coordinating mechanism, has as its most important part its strategic apex, and employs vertical and horizontal centralization. Relatively small corporations controlled by aggressive entrepreneurs, new government departments, and medium-sized retail stores are all likely to exhibit a simple structure. These organizations tend to be relatively young. The CEO (often the owner) retains much of the decision-making power. The organization is relatively flat and does not emphasize specialization. Many smaller U-form organizations are structured in this fashion. Trilogy Software would be an example of a firm using this approach.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–37
Structural ConfigurationStructural Configuration
The Machine Bureaucracy
The machine bureaucracy uses standardization of work processes as
its prime coordinating mechanism; the technostructure is its most important part; and limited horizontal decentralization is established. The machine bureaucracy is quite similar to Burns and Stalker’s mechanistic design discussed in Chapter 12 of Griffin’s Management, Seventh Edition. Examples include McDonald’s and most large branches of the U.S. government. This kind of organization is generally mature in age, and its environment is usually stable and predictable. A high level of task specialization and a rigid pattern of authority are also typical. Spans of management are likely to be narrow, and the organization is usually tall. Large U-form organizations are also likely to fall into this category.
The Machine Bureaucracy
The machine bureaucracy uses standardization of work processes as
its prime coordinating mechanism; the technostructure is its most important part; and limited horizontal decentralization is established. The machine bureaucracy is quite similar to Burns and Stalker’s mechanistic design discussed in Chapter 12 of Griffin’s Management, Seventh Edition. Examples include McDonald’s and most large branches of the U.S. government. This kind of organization is generally mature in age, and its environment is usually stable and predictable. A high level of task specialization and a rigid pattern of authority are also typical. Spans of management are likely to be narrow, and the organization is usually tall. Large U-form organizations are also likely to fall into this category.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–38
Structural ConfigurationStructural Configuration
The Professional Bureaucracy
The third form of organization design suggested by Mintzberg is the
professional bureaucracy. Examples of this form of organization include universities, general hospitals, and public accounting firms. The professional bureaucracy uses standardization of skills as its prime coordinating mechanism, has the operating core as its most important part, and practices both vertical and horizontal decentralization. It has relatively few middle managers. Further, like some staff managers, its members tend to identify more with their professions than with the organization. Coordination problems are common.
The Professional Bureaucracy
The third form of organization design suggested by Mintzberg is the
professional bureaucracy. Examples of this form of organization include universities, general hospitals, and public accounting firms. The professional bureaucracy uses standardization of skills as its prime coordinating mechanism, has the operating core as its most important part, and practices both vertical and horizontal decentralization. It has relatively few middle managers. Further, like some staff managers, its members tend to identify more with their professions than with the organization. Coordination problems are common.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–39
Structural ConfigurationStructural Configuration
The Divisionalized Form
The divisionalized form, Mintzberg’s fourth design, exhibits
standardization of output as its prime coordinating mechanism, the middle line as its most important part, and limited vertical decentralization. This design is the same as both the H-form and the M-form described earlier. Limited and Disney are illustrative of this approach. Power is generally decentralized down to middle management—but no further. Hence each division itself is relatively centralized and tends to structure itself as a machine bureaucracy. As might be expected, the primary reason for an organization to adopt this kind of design is market diversity.
The Divisionalized Form
The divisionalized form, Mintzberg’s fourth design, exhibits
standardization of output as its prime coordinating mechanism, the middle line as its most important part, and limited vertical decentralization. This design is the same as both the H-form and the M-form described earlier. Limited and Disney are illustrative of this approach. Power is generally decentralized down to middle management—but no further. Hence each division itself is relatively centralized and tends to structure itself as a machine bureaucracy. As might be expected, the primary reason for an organization to adopt this kind of design is market diversity.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–40
Structural ConfigurationStructural Configuration
The Adhocracy
The adhocracy uses mutual adjustment as a means of coordination,
has at its most important part the support staff, and maintains selective patterns of decentralization. Most organizations that use a fully-developed matrix design are adhocracies. An adhocracy avoids specialization, formality, and unit of command. Even the term itself, derived from “ad hoc,” suggests a lack of formality. Sun Microsystems is an excellent example of an adhocracy.
The Adhocracy
The adhocracy uses mutual adjustment as a means of coordination,
has at its most important part the support staff, and maintains selective patterns of decentralization. Most organizations that use a fully-developed matrix design are adhocracies. An adhocracy avoids specialization, formality, and unit of command. Even the term itself, derived from “ad hoc,” suggests a lack of formality. Sun Microsystems is an excellent example of an adhocracy.
Copyright © by Houghton Mifflin Company. All rights reserved. 12–41
Mintzberg’s Five DesignsMintzberg’s Five Designs