Defining Organization

Organization

TransactionalStructure

IndividualAbilities& Skills

DesiredEnds

What?Why?

How?

Organization = a cooperative social system requiring the coordinated efforts of people pursuing a shared purpose

Why Organization: Purposes they Serve

Goods and Services

Means of Subsistence & Development

Means of Representing Interests

Means of Reducing Risk & Uncertainty

Characterizing an Organization

Interlocked Behavior

Division of Labor

Hierarchy (of Authority)

TransactionalStructure

IndividualAbilities& Skills

DesiredEnds

The Organization: The Classical View

IndividualAbilities& Skills

DesiredEnds

Decisions tend to be Rule Based—Calculated & Preprogrammed

Classical Weberian BureaucracyA Transactional Structure for Managing the Enterprise

President/CEO

VP VP VP

Dir. Dir. Dir.

Divided Labor / Hierarchy of Authority / Impersonality / Rational Rule Based

Alternative Basis for Hierarchical Structures

Product Line

Geography

Customer

Collectivistic-Democratic Organization

Egaletarian

Minimal Formal Rules

Control via Social Forces

Is this appropriate/workable? Where (what circumstance) Why?

Coordination = to join together to accomplish great and exciting things

• The central question is– How could/should management organize the

enterprise? How can the design of the organization:

• Enable togetherness?

• Help accomplish great things?

Organization = a cooperative social system requiring the coordinated efforts of people pursuing a shared purpose

Systems (Organic) View

Interdependent with Environment

Dynamic Equilibrium

Emergent Properties

Equifinality

Organization Environment

Classical vs Open Systems View

VS

Environment Environment

Org. Org.

Classical Open Systems

Mechanistic vs Organic Designs

Centralized

Many

Narrow

Specialized

Few

Formal &Impersonal

De-centralized

Few

Wide

Shared

Many

Informal &Personal

Authority

Rules

Span of Control

Tasks

Teams

Coordination

DELEGATION

A Matter of Degree

Low degree of delegation: the responsibility to do

Investigate and report (the findings) back

Investigate and recommend actionInvestigate and advise on action to takeInvestigate, first seek advice on action, then take action accordinglyInvestigate and take action

High degree of delegation: the responsibility to do and the authority to act

DELEGATION(continued)

For Discussion:

1. Does a high degree of delegation make an organization more mechanistic or more organic? Explain.

2. What is the relationship between delegation and the issue of centralization?

SPAN OF CONTROL: the number of people who report directly to a manager

What are the advantages & disadvantages of a wide span of control?

Organizational design can range from being quite vertical to being relatively horizontal (tall vs flat)

How wide should one’s span of control be? What does it depend on?

(wider spans of control mean less administrative expense and more self-management, both popular notions today)

SPAN OF CONTROL

How do the following Situational Determinants affect to Span of Control?

1. Similarity of work performed by subordinates2. Dispersion of subordinates3. Complexity of work performed by subordinates4. Direction and control required by subordinates5. Time spent coordinating with other managers6. Time required for planning

CENTRALIZATION AND DECENTRALIZATION

Two Ends of the Same Continuum• Centralization: the retention of decision-making

authority by top management.• Decentralization: management shares decision-

making authority with lower-level employees.

CENTRALIZATION AND DECENTRALIZATION

Balance Needed within a Contingency Approach

• What’s good, what’s bad about Centralization? • Why would a more organic, decentralized

approach be more appropriate for firms in complex and changing conditions?

Structural/Organizing Trends:What effect on organizational design or management

would you expect from each?

Less Vertical

Less Unity of Command

Wider Span of Control

Delegation & Empowerment

Decentralization (w/ centralization)

The Matrix Organization

Mgr. Proj. Mfg. Mgr. Eng. Mgr. Mkt. Mgr.

Proj. Mgr

Proj. Mgr

Proj. Mgr

Gen. Mgr.

What’s the good and the bad about this?

Team Structures

Sales Mgr. Mfg. Mgr. Fin. Mgr. Mkt. Mgr.

Gen. Mgr.

New Prod Dev.

TQITeam

What’s the good and the bad about this?

Network Structures

Core CompetenciesCore Business

Manufac.Off-Shore

LegalHR

Functions

Acc't & Finance

AdvertisingPromo.

What’s the good and the bad about this?

Hierarchy is Form

Democracy & are Function

Oligarchy

Barnard's Challenge

Acceptance Theory of Authority

President/CEO

VP VP VP

Dir. Dir. Dir.

?

THE LAWRENCE AND LORSCH MODEL

Opposing Organizational Forces

• Differentiation: tendency among specialists to think and act in restricted ways. (Tends to fragment the organization.)

• Integration: in direct opposition to differentiation, it involves the collaboration among specialists needed to achieve a common purpose. (Tends to coordinate the organization.)

THE LAWRENCE AND LORSCH MODEL (continued)

Key Research Findings:

1. Every organization requires an appropriate dynamic equilibrium between differentiation and integration.

2. In successful firms, both differentiation and integration increased as environmental complexity increased. Why?

THE LAWRENCE AND LORSCH MODEL (continued)

Practical Questions:• How do the issues of Differentiation and

Integration play out for organizational success? • Can Integration and Differentiation be

simultaneously achieved? How? • Characterize the ideal organization for today’s

complex and dynamic business environment?

Division of LaborDepartmentalizationSpecializationHierarchical OligarchyUni-Directional CommunicationConcretized Job Descriptions

The Push - Pull: Differentiation & Integration

Efforts of CoordinationCross Functional Team WorkRelationship BuildingCoherency of Values & Sub-CulturesMulti-Directional Communication

Pull Apart Push Together

The Dual Nature of Oganization

OrganizingPattern

OrganizingStructure

Organizational Culture

Order Producing Invisible Pattern

Collective Map of “the way it ought to be”

Symbolic-Linguistic in its communication

Stock of Shared Knowledge informsBehavior/Action

Cultures are Multidimensional

Individualistic

to

Collecti

vistic

Authoritarian to Egaletarian

Aggressive to Nurturing

Embrace to Avoid Uncertainty

Yahoo’s Gang of Six

• Why was Yahoo successful? How did its management structure and corporate culture contribute to this success?

• How and why should management structure change as the company grows? Use examples from the article to illustrate.

• What steps is Yahoo taking to turn itself around? Do you agree? Will they be successful & why?

Subjective ObjectiveIn

divi

dual

Col

lect

ive

I’s IT’s

WE’s IT’s

How does this relate to the Management Theories?

Organizational Effectiveness

Culture&

Structure} Order

Order Reality Sustainability

Organizational (Self) Destruction

Intolerant to Diversity of Ideas

Lack of Sensitivity

Fragmentation

Competitive Culture

Why does each lead to destruction (organizational decline)?

Lennar’s Oddball Culture• Describe the corporate culture at Lennar.

– What makes it unique?

– How does culture align with strategy?

• What role does the culture play in – Its management approach

• What management concepts are illustrated

– Its level of success

• How would you feel about working at a place like Lennar? Do you think most would feel the same?

Exercise: Can Organizations be structuredin a way that stimulates and maintains creativity-- providing a basis for the expression and development of the individual -- while achieving its purpose? What would it look like? What would be its characteristics?