ORGANIZATIONAL STRUCTURE SIX DIMENSIONS

1
ORGANIZATIONAL STRUCTURE SIX DIMENSIONS

• WORK SPECIALIZATION (Division of Labor)
• To what degree are activities subdivided into
  separate jobs?
• DEPARTMENTALIZATION
• On what basis are jobs grouped together?
• CHAIN OF COMMAND (Hierarchy of Authority)
• To whom do individuals and groups report?
• SPAN OF CONTROL
• How many workers can a manager efficiently
  effectively direct?
• CENTRALIZATION / DECENTRALIZATION
• Where does discretionary (exceptional) decision
  making authority lie?
• FORMALIZATION
• To what degree are written rules, regulations
  procedures established?

2
WEBERS BUREAUCRACY

• DIVISION OF LABOR
• HORIZONTAL SPECIALIZATION
• HIRARCHY OF AUTHORITY
• VERTICAL SPECIALIZATION
• RULES PROCEDURES
• ESTABLISHED ENFORCED
• TECHNICAL COMPETENCE
• SELECTION PROMOTION CRITERIA
• IMPERSONAL TREATMENT
• NO FAVORITISM
• CENTRALIZED DECISION-MAKING
• UNIFORM CONTROL
• FORMALIZATION

3
PRINCIPLES BASED ON AUTHORITY(FAYOL)

• PARITY PRINCIPLE
• Authority and Responsibility must coincide
• UNITY OF COMMAND
• Workers should have only one immediate
  supervisor to report to
• SCALAR PRINCIPLE (Chain of Command)
• When exceptions are encountered, one should
  communicate through the chain of command, one
  link (level) at a time
• SPAN OF CONTROL
• The number of subordinates a manager can
  effectively supervise
• FACTORS WHICH AFFECT THE SPAN OF CONTROL
• JOB COMPLEXITY NARROWS SPAN
• VARIETY OF TASKS NARROWS SPAN
• PROXIMITY WIDENS SPAN
• QUALITY OF SUBORDINATES WIDENS SPAN
• ABILITY OF THE MANAGER WIDENS SPAN

4
WORK DESIGN DECISIONS

• WHAT ARE THE TASKS TO BE PERFORMED?
• HOW SHOULD THEY BE COMBINED INTO JOBS?
• HOW SHOULD THE JOBS BE PERFORMED?
• ANALYSIS DESIGN OF WORK METHODS
• STANDARDS OF PERFORMANCE
• HOW SHOULD PEOPLE RESPOND TO THE JOB?
• ATTITUDES
• JOB SATISFACTION
• MOTIVATION
• HOW TO STRUCTURE THE JOBS TO BE EFFICIENT
  SATISFYING?

5
JOB REDESIGN POSSIBILITIES

• MAKING THE WORK LESS BORING MORE INTERESTING
• JOB DESIGN JOB SCOPE JOB DEPTH
• APPROACH (VARIETY) (AUTONOMY)
• JOB SPECIALIZATION LOW LOW
• JOB ROTATION INCREASES LOW
• JOB ENLARGEMENT INCREASES LOW
• AUTOMATION LOW INCREASES
• JOB ENRICHMENT INCREASES INCREASES
• - - - - - - - - - - - - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
  - - - - - - -
• WALKER GUEST (52) SATISFACTION ON THE
  ASSEMBLY LINE
• SATISFIED WITH DISSATISFIED WITH
• PAY MECHANICAL PACING OF THE LINE
• WORKING CONDITIONS REPETITIVE NATURE OF THE
  WORK
• QUALITY OF SUPERVISION LOW SKILL REQMTS
  DEMANDS
• LIMITED SOCIAL INTERACTION

6
SPECIALIZATION (Division of Labor)

• ADVANTAGES
• FEWER SKILLS REQUIRED PER PERSON
• EASIER TO STAFF POSITIONS TRAIN WORKERS
• JOBS CAN BE MASTERED IN LESS TIME
• PRODUCTIVITY WORK OUTCOMES CAN BE INCREASED
• PRODUCTS SERVICES ARE MORE UNIFORM
• MANAGERS CAN SUPERVISE A LARGER NUMBER OF
  WORKERS
• DISADVANTAGES
• OVERSIMPLIFIED JOBS ARE REPETITIVE, BORING,
  STRESSFUL, FRUSTRATING
• SKILL DEVELOPMENT IS NOT ENHANCED --- NO
  CHALLENGES
• LEADS TO PRODUCTIVITY DECLINES, ABSENTEEISM,
  POOR QUALITY WORK

7
ALTERNATIVES TO JOB SPECIALIZATION

• Job Rotation
• Systematically moving employees from one job to
  another. Most frequent use today is as a training
  device for skills and flexibility.
• Job Enlargement
• An increase in the total number of tasks
  performed.
• Increases training costs, unions want workers
  paid more pay for doing more tasks, and work may
  still be dull and routine.
• Job Enrichment
• Increasing both the number of tasks the worker
  does and the control the worker has over the job.

8
ALTERNATIVES TO SPECIALIZATION - 2

• Job Characteristics Approach (HACKMAN OLDHAM,
  76)
• Core Dimensions
• Skill varietythe number of tasks a person does
  in a job.
• Task identitythe extent to which the worker does
  a complete or identifiable portion of the total
  job.
• Task significancethe perceived importance of the
  task.
• Autonomythe degree of control the worker has
  over how the work is performed.
• Feedback the extent to which the worker knows
  how well the job is being performed.
• Growth-Need Strength
• The desire of some people to grow, develop, and
  expand their capabilities that is their response
  to the core dimensions.
• Autonomous Work Teams
• An alternative to job specialization that allows
  the entire group to design the work system it
  will use.

9
TWO-FACTOR THEORYHERZBERG (59)

• ASSUMPTIONS
• TWO DIFFERENT TYPES OF FACTORS INFLUENCE
  USHYGIENES MOTIVATORS
• THE OPPOSITE OF SATISFACTION IS NO
  SATISFACTION
• THE OPPOSITE OF DISSATISFACTION IS NO
  DISSATISFACTION
• ONLY MOTIVATING FACTORS LEAD TO SATISFACTION
• HYGIENES AT BEST LEAD TO NO DISSATISFACTION
• HYGIENES (EXTRINSIC) MOTIVATORS (INTRINSIC)
• WORKING CONDITIONS RESPONSIBILITY
• COMPANY POLICIES CHALLENGE OF WORK
• SUPERVISIOR MEANINGFUL WORK
• COWORKERS ACHIEVEMENT
• SALARY BENEFITS ACCOMPLISHMENT
• STATUS SYMBOLS GROWTH OPPORTUNITIES
• IMPLICATIONS
• ABUNDANT HYGIENES DO NOT MOTIVATE WORKERS, THEY
  ONLY PREVENT DISSATISFACTION
• ENRICH JOBS TO PROVIDE MOTIVATING, CHALLENGING
  WORK AND HIGH SATISFACTION

10
JOB DESIGN THEORYHACKMAN OLDHAM (76)

• JOB CHARACTERISTICS MODEL
• FIVE JOB DIMENSIONS PSYCHOLOGICAL STATES
• SKILL VARIETY
• TASK IDENTITY ? MEANINGFULNESS
• TASK SIGNIFICANCE (Leads to high internal work
  motivation)
• AUTONOMY ? PERSONAL RESPONSIBILITY
• (Leads to high quality work satisfaction)
• FEEDBACK ? KNOWLEDGE OF RESULTS
• (Leads to high satisfaction low turnover)
• - - - - - - - - - - - - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
  - - - - - - - -
• EFFECTIVENESS IS MODERATED BY EMPLOYEE
  GROWTH-NEED STRENGTH
• CALCULATE THE MOTIVATING POTENTIAL SCORE TO
  DETERMINE IF THE JOB NEEDS TO BE REDESIGNED
• ARE YOUR WORKERS MOTIVATED BY INTRINSIC WORK
  FACTORS AND A STRONG NEED FOR ACHIEVEMENT (AN
  ENRICHED JOB)?

11

• HERZBERGS VERTICAL LOADING FACTORS
• (ACHIEVEMENT, GROWTH, RECOGNITION,
  RESPONSIBILITY)
• ACCOUNTABILITYHeld responsible for performance
• ACHIEVEMENT---Doing something worthwhile
  (Meaningful)
• FEEDBACK---Gets direct performance information
• WORK PACE---Able to set own work speed and rhythm
• CONTROL OVER RESOURCES---Controls how and when to
  do the job
• PERSONAL GROWTH DEVELOPMENT---Opportunity to
  learn new skills
• HACKMANS IMPLEMENTING CONCEPTS
• (Create a sense of MEANINGFULNESS,
  RESPONSIBILITY, KNOWLEDGE)
• COMBINE TASKS SKILL VARIETY
• FORM NATURAL WORK UNITS TASK IDENTITY
• ESTABLISH CLIENT RELATIONSHIPS TASK SIGNIFICANCE
• VERTICAL LOADING AUTONOMY
• OPEN FEEDBACK CHANNELS FEEDBACK

12
CRITICISMS OF JOB ENRICHMENT(JOB REDESIGN)

• HIGH COSTS
• TRAINING, DUPLICATE EQUIPMENT, PLANT REDESIGN
• SOME JOBS ARE ELIMINATED
• FEWER OPERATIVES, SUPERVISORS NEEDED
• ASSUMES WORKERS WANT RESPONSIBILITY, ETC.
• WHAT ABOUT WORKERS WITH LOW N-ACH?
• ENRICHMENT IS RELATIVE--EFFECTS MAY BE TEMPORARY
• DO WE NEED OCCASIONAL BOOSTER SHOTS TO KEEP
  GOING?
• SOME JOBS CANT BE ENRICHED
• WHAT DO WE DO TO AVOID JEALOUSY?
• USED AS A QUICK FIX FOR IMMEDIATE PROBLEMS
• HAVE WE REALLY CHANGED OUR PHILOSOPHY OF MGMT?
• IMPLEMENTED CHANGES ARE OFTEN WEAK MODEST
• COMPROMISES FROM WHAT WAS PLANNED
• INNOVATIONS ARE ERODED VANISH OVER TIME

13
WHEN MIGHT REDESIGN WORK?

• WHEN NEW UNITS ARE FIRST ESTABLISHED
• NO PAST HISTORY TO DEAL WITH
• NEW FACILITIES AND WORKERS
• WHEN THE SYSTEM BECOMES UNSTABLE
• (Seizing the opportunity!)
• TECHNOLOGICAL CHANGE
• CHANGE IN SENIOR MANAGEMENT
• NEW PRODUCT OR SERVICE INTRODUCED
• LEGISLATIVE OR REGULATORY CHANGES
• FLUCTUATIONS IN THE ECONOMY OR ENVIRONMENT
• 3. WHEN THE IMMEDIATE MANAGER WANTS IT
• LOCAL CHANGES (JUST WITHIN THE DEPARTMENT)
• MICRO REDESIGN
• MANAGEMENT MUST BE COMMITTED TO A NEW PHILOSOPHY

14
FLEXIBILITY WORKER CONTROL

• WORK SCHEDULE FLEXIBILITY
• 1. COMPRESSED WORK WEEK
• WORKER FATIGUE
• ISSUE OF OVERTIME
• DIFFICULTIES IN WORK SCHEDULING
• 2. FLEXTIME
• SUPERVISION COORDINATION IS MORE DIFFICULT
• ADEQUATE COVERATE OF WORK---HOW TO SCHEDULE?
• JOBS THAT REQUIRE ALL TO BE PRESENT
• 3. JOB SHARING / PART-TIME WORK
• COORDINATING WITH OTHER WORKERS
• INCREASED COST OF BENEFITS
• 4. TELECOMMUTING
• NO CONTACTS WITH OTHER WORKERSNO COORDINATION
• NO SUPERVISIONNOT EASY TO GET HELP WHEN
  NEEDED
• HOW PRODUCTIVE ARE YOU WHEN WORKING AT HOME?
• ISSUE OF LIABILITY WHEN WORK IS DONE AT HOME

15
DEPARTMENTALIZATION

• HOW TO GROUP JOBS TOGETHER SO THE TASKS CAN BE
  COORDINATED
• BY FUNCTION (or TASK)
• MANUFACTURING, MARKETING, HUMAN RESOURCES,
  ACCOUNTING
• BY GEOGRAPHY OR TERRITORY
• WESTERN DIVISION, CANADIAN DIVISION, EUROPEAN
  DIVISION
• BY PRODUCT OR BUSINESS LINE
• BICYCLES, MUSICAL INSTRUMENTS, TABLEWARE,
  BUILDING SUPPLIES
• BY PROCESS (Sequential)
• CASTING, GRINDING, SANDING, FINISHING, PACKING
• BY CUSTOMER
• RETAIL, WHOLESALE, GOVERNMENT, INDUSTRIAL
• WITHIN A SINGLE COMPANY, SEVERAL DIFFERENT
  APPROACHES TO DEPARTMENTALIZATION MAY
  CO-EXISTFOR EXAMPLE
• Accounting is functionally organized, Marketing
  is by customer within territory, Manufacturing is
  by process, and Research Development is by
  product.

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CENTRALIZED DECISION MAKINGDISCRETIONARY
AUTHORITY ONLY AT THE TOP

• ADVANTAGES
• UNIFORM POLICIES ACTIONS ARE MAINTAINED
• TOP MANAGEMENT KNOWS EVERYTHING THATS GOING ON
  (Awareness)
• CONTROL IS MAINTAINED OVER COSTLY/RISKY
  DECISIONS
• ENVIRONMENTAL THREATS ARE HANDLED BY EXPERIENCED
  MANAGERS
• STAFF EXPERTS ARE NEEDED TO ADVISE TOP
  MANAGEMENT
• DISADVANTAGES
• DECISIONS MAY BE SLOW IN COMING MUST WAIT FOR
  AN ANSWER
• TOP MANAGEMENT TOO INVOLVED IN DAY-TO-DAY
  DECISIONS
• LOWER-LEVEL MANAGERS ARE NOT LEARNING HOW TO
  MAKE DECISIONS
• INFLEXIBILITY CHANGE IS VERY DIFFICULT AND SLOW

17
DELEGATION OF RESPONSIBILITY AND AUTHORITY

• ADVANTAGES
• Communication time is shortened faster company
  decisions and reactions
• Decision makers are now closer to the action,
  thus better decisions result
• Frees up top managements time allows them to
  focus on strategic matters
• Develops skills of lower-level managers and
  personnel
• CAUTIONS
• Are levels of responsibility and authority
  clearly defined?
• Is a reliable and accurate feedback system in
  place?Does the person have the ability and
  skills necessary to make these decisions?
• Does the level of responsibility come with an
  appropriate level of authority to act?
• Have exceptional situations been clarified as to
  how they are to be handled?

18
WHY DO MANAGERS RESIST DELEGATION?

• FEAR THAT SUBORDINATES WILL FAIL
• If you want something done right --- do it
  yourself!!
• BELIEF THAT ITS EASIER TO DO THE TASK YOURSELF
• Its too time consuming to teach others how to do
  this task correctly
• A FEAR THAT SUBORDINATES WILL LOOK TOO GOOD
• The manager is insecure --- afraid the
  subordinate may take his/her job
• MANAGERS LIKE THE POWER THEY WIELD
• I enjoy the influencewhen others must come to me
  for advice or help
• WE LIKE DOING THE TASKS OURSELVES
• The work itself is enjoyableits fun for me!!

19
SIMPLE STRUCTURES

• STRUCTURAL CHARACTERISTICS
• Low specialization and departmentalization
• Wide span of control and a flat structure
• Centralized authority with little formalization
• ADVANTAGES
• Fast, flexible, inexpensive to maintain
• Accountability is clear
• Workers are generalists
• DISADVANTAGES
• Workers require guidance on a regular basis
• No specialists or experts
• Owner can become overloadedtoo many things to
  decide daily
• Works best if the firm is small --- and stays
  that way

20
Functional Design for aSmall Manufacturing
Company
21
FUNCTIONAL ORGANIZATION

• CHARACTERISTICS
• Specialization and formalized rules and
  regulations
• A tall structure, grouped functionally, with
  narrow spans of control
• Centralized authority and decision making that
  follows the chain
• ADVANTAGES
• Highly efficient and effective in a predictable,
  routine environment
• Promotes skill specialization career
  development within departments
• Rules and procedures maintain consistency, only
  exceptions referred up
• DISADVANTAGES
• Develops experts (managers) in narrow fields,
  not generalist managers
• If theres no rule to follow, we dont know what
  to do! (No discretion)
• Doesnt adapt well to change, or unexpected
  events in the environment

22
DIVISIONALIZED BY GEOGRAPHY OR TERRITORY

• DIVISIONALIZED BY TERRITORY OR LOCATION
• ADVANTAGES
• A branch location means faster, convenient
  service to customers
• Each branch location is identical to the others
  each has full service
• De-emphasizes expertise specialization makes
  generalist managers
• DISADVANTAGES
• All functions are duplicated at each location
  (inefficient?)
• Conflicts may arise between local and corporate
  objectives
• Discretionary decisions may vary at each
  location how to maintain uniform policies and
  actions?

23
DIVISIONALIZED BY PRODUCT, SERVICE OR CUSTOMER

• DIVISIONALIZED BY PRODUCT OR SERVICE
• ADVANTAGES
• Allows greater product / service visibility and
  customer sensitivity
• Develops managers who can think across
  functional lines
• DISADVANTAGES
• Difficult to coordinate across product or
  service lines (no similarity)
• Resource allocation decisions become more
  political
• DIVISIONALIZED BY CUSTOMER
• ADVANTAGES
• Skilled specialists can deal with unique
  customers or customer groups.
• DISADVANTAGES
• The number of salespeople appears to be
  excessive (inefficient)
• A large administrative staff is needed to
  integrate activities of the various departments.

24
A Matrix Organization
25
MATRIX STRUCTURES

• ADVANTAGES
• Uses functional experts on special projects (
  both function product)
• Very flexible, adaptable to environmental
  changes
• Emphasizes cooperation and coordination to get
  the job done
• Reduces the amount of vertical communication
  needed within the firm
• DISADVANTAGES
• Violates the Unity of Command principle (one
  boss)
• A costly, inefficient structure with overlap,
  duplication and waste
• Conflict potential is high due to power
  struggles between units
• Workers can experience much stress with dual
  assignments overloads

26
NETWORK (VIRTUAL) STRUCTURES

• CHARACTERISTICS
• HIGHLY CENTRALIZED
• LITTLE OR NO DEPARTMENTALIZATION
• ADVANTAGES
• Dont have to actually own or operate all
  business functions
• Outsources (contracts) with experts to provide
  cutting-edge services
• Can focus your energy and capital at what you do
  best
• Very flexible, can get in and /or out of
  business quickly
• Can be very sensitive to cost and quality
• DISADVANTAGES
• No ability to expedite or control many of the
  key operations
• Contracts must be negotiated terms are not
  permanent
• No managerial expertise is developed in managing
  contracted areas
• Hard to identify where the organization is
  located

27
TEAM STRUCTURESHORIZONTAL, CROSS-FUNCTIONAL TEAMS

• ADVANTAGES
• Experts from several areas assembled into one
  autonomous team
• Able to respond quickly to customers fast
  service (one-stop?)
• Team selects its leader, delegates roles and
  makes its own decisions
• Participative, free communication within, no
  hierarchies to follow
• Strong sense of ownership, commitment
• DISADVANTAGES
• Specialists are cut off from their peers
  (isolated)
• Inconsistencies in actions and policies across
  teams (no uniformity)
• Difficult to coordinate and control from the top
• ARE COORDINATING MECHANISMS NEEDED?
• LIAISON ROLES -- informal contacts v. contact
  managers
• TASK FORCES -- temporary problem-solving
  groups
• COMMITTEES -- Ad Hoc v. Permanent standing
  committees

28
THE NEED FOR COORDINATION

• If departments and work groups are
  interdependent the greater the need for
  coordinationespecially if the departments are
  decentralized.
• Pooled interdependence
• When units operate with little interaction their
  output is simply pooled at the organizational
  level.
• Sequential interdependence
• When the output of one unit becomes the input of
  another unit in sequential fashion.
• Reciprocal interdependence
• When activities flow both ways between units.
• ARE STRUCTURAL COORDINATING MECHANISMS NEEDED?
• Can we rely on the hierarchy, rules and
  procedures, and an occasional committee meeting
  to coordinate across these boundaries?

29
STRUCTURAL COORDINATING MECHANISMS

• The Managerial Hierarchy
• Going up the hierarchy (chain of command) to find
  a manager with the authority to make the
  decisions that affect the interdependent units.
• Rules and Procedures
• Coordinating routine activities via rules and
  procedures that set priorities and guidelines for
  actions.
• Liaison Roles
• Designating a specific manager who will
  facilitate the flow of information to the
  interdependent units by acting as a common point
  of contact.
• Task Forces (Temporary problem-solving groups)
• Used with multiple units when coordination is
  complex requiring more than one individual and
  the need for coordination is acute.
• Committees disbanded when the need for
  coordination has been met.
• Integrating Departments (Permanent structures)
• Permanent organizational units that maintain
  internal integration and coordination on an
  ongoing basis.
• May have authority and budgetary controls.

30
ORGANIZATIONAL STRUCTURE IS STRONGLY INFLUENCED
BY

• ENVIRONMENTAL UNCERTAINTY
• BURNS STALKER (61)
• THOMPSON (67)
• DUNCAN (72)
• ORGANIZATIONAL TECHNOLOGY
• WOODWARD (65)
• THOMPSON (67)
• PERROW (67)
• INTERNAL INFORMATION-PROCESSING NEEDS
• LAWRENCE LORSH (67)
• GALBRAITH (73)
• MANAGERIAL STRATEGY
• CHANDLER (62)
• ORGANIZATIONAL HISTORY MATURITY
• GREINER (72)
• SCHWARTZ DAVIS (81)

31
MECHANISTIC v. ORGANIC STRUCTURESBURNS STALKER
(61)

• IF ENVIRONMENT IS ? STABLE DYNAMIC
• TASKS SPECIALIZED SHARED
• INTEGRATING ROLES FEW MANY
• AUTHORITY HIERARCHICAL EXPERTISE
• RULES PROCEDURES MANY, WRITTEN FEW
• COMMUNICATION VERTICAL HORIZONTAL
• CHAIN OF COMMAND CLEAR FREE
• SPAN OF CONTROL NARROW WIDE
• DECISION MAKING CENTRALIZED DECENTRALIZED
• FORMALIZATION HIGH LOW
• PRIMARY OBJECTIVE EFFICIENCY ADAPTABILITY
• IDEAL STRUCTURE IS MECHANISTIC ORGANIC
• MAJOR PROBLEMS CANT ADAPT QUICKLY NOT EFFICIENT
• NONPARTICIPATIVE HARD TO COORDINATE

32
ORGANIZATIONAL RATIONALITYTHOMPSON (67)

• Seal off (protect) the core technology from
  environmental influences
• REDUCE UNCERTAINTY -- PROTECT THE CORE
• Buffer the core technology by surrounding it with
  specialized input and output components
• FORM DEPARTMENTS TO INTERFACE WITH THE
  ENVIRONMENT
• (SO THE CORE DOESNT HAVE TO DEAL WITH THE
  ENVIRONMENT)
• Smooth out the input and output transactions
• THE MORE INDEPENDENT THESE BUFFERS BECOME, THE
  GREATER THE
• NEED TO DEVELOP COORDINATING MECHANISMS ACROSS
  DEPARTMENTS
• Anticipate and adapt to environmental changes
• THE ORGANIZATION MUST BE FLEXIBLE AND ADAPTABLE
  TO SURVIVE

33
THE MACRO ENVIRONMENT

• POLITICAL
• Supports
• Controls
• Pending Legislation
• ECONOMIC
• Inflation
• Unemployment
• Productivity
• Growth
• SOCIO-CULTURAL
• Geographic Location
• Customs Values
• Demographics
• TECHNOLOGICAL
• Basic Research, New Knowledge
• New Products, Processes, Services

34
THE TASK ENVIRONMENTINDUSTRY

• THE SPECIFIC ENVIRONMENT OF THE FIRM
• THIS FIRMS
• CUSTOMERS
• SUPPLIERS
• CREDITORS
• COMPETITORS
• GOVERNMENT AGENCIES
• UNIONS
• STOCKHOLDERS
• COMMUNITIES
• SPECIAL INTEREST GROUPS

35
ENVIRONMENTAL UNCERTAINTYDUNCAN (72)

• COMPLEXITY
• SIMPLE COMPLEX
• STATIC - - - - - - - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
• LOW MODERATELY
• UNCERTAINTY LOW
• UNCERTAINTY
• DYNAMISM - - - - - - - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
• (CHANGE)
• MODERATELY HIGH
• HIGH UNCERTAINTY
• UNCERTAINTY
• DYNAMIC - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
  - - - - - -
• COMPLEXITY of Entities the Firm must deal
  with?
• DYNAMISM How Frequently do these entities (or
  their demands) change?

36
ENVIRONMENTAL UNCERTAINTYSCHWAB (80)

• THREE ISSUES TO ADDRESS
• IMPORTANCE (Significance)
• What is the impact of this environmental
  segment on the firm?
• PREDICTABILITY
• Can the firm anticipate pending shifts and
  changes in this segment?
• CONTROL (Influence)
• Can the firm manipulate or control this
  segment?
• PREDICTABILITY
• HIGH LOW
• HIGH - - - - - - - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
• LOW MODERATELY
• UNCERTAINTY LOW
• UNCERTAINTY
• CONTROL - - - - - - - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
• (INFLUENCE) MODERATELY HIGH
• HIGH UNCERTAINTY
• UNCERTAINTY
• LOW - - - - - - - - - - - - - -
  - - - - - - - - - - - - - - - - - - - - - - - - -
  - - - - - -

37
ENVIRONMENTAL UNCERTAINTY AND STRUCTURE

• POSSIBLE FITS BETWEEN ENVIRONMENT AND STRUCTURE
• LOW UNCERTAINTY MOD LOW UNCERTAINTY
• SIMPLE FUNCTIONAL
• FUNCTIONAL MECHANISTIC
• MECHANISTIC DIVISIONALIZED
• MOD HIGH UNCERTAINTY HIGH UNCERTAINTY
• Mechanistic/Functional DIVISIONALIZED
• DIVISIONALIZED MATRIX
• MATRIX ORGANIC
• ORGANIC

38
TECHNOLOGICAL DETERMINISM

• CAPITAL INTENSITY
• WOODWARD (65) UNIT MASS PROCESS
• HIERARCHICAL LEVELS 3 4 6
• RATIO OF WORKERS/ADMINISTRATORS 9/1 4/1 1/1
• NUMBER OF RULES Few Many Few
• FIRST-LINE SPAN OF CONTROL 23 48 15
• EXECUTIVE SPAN OF CONTROL 4 7 10
• LABOR COSTS AS OF TOTAL High Medium Low
• CAPITAL INVESTMENT IN EQUIPMENT Low Medium High
• OPTIMAL STRUCTURE ORG MECH ORG
• INTERDEPENDENCE
• THOMPSON (67)
• LONG-LINKED (Serial) -- Assembly Line X1 ?
  X2 ? X3 ? X4 ? X5
• MEDIATING (Pooled) -- Bank C1 ? B ? C2
• INTENSIVE (Reciprocal) -- Hospital (Phase
  1) T ? X1 ? Dr
• (Phase 2 ) T ? X1 ? Dr

39
TECHNOLOGYPERROW (67)

• KNOWLEDGE OR INFORMATION USED IN THE CONVERSION
  PROCESS
• DIMENSIONS
• 1. NUMBER OF UNFORSEEN PROBLEMS ENCOUNTERED
  (EXCEPTIONS)
• 2. AVAILABILITY OF READY ANSWERS OR SOLUTIONS
  (ANALYZABILITY)
• OF UNFORSEEN PROBLEMS
• FEW MANY
• ----------------------------------------------
  -------------------------------------------------
• DIFFICULT
• EASE OF LOCATING CRAFT NON-ROUTINE
• AN ACCEPTABLE ------------------------------------
  ----------------------------------------------
• SOLUTION ROUTINE ENGINEERING
• EASY
• ----------------------------------------------
  ------------------------------------------------
• TECHNOLOGICAL DETERMINISM TECHNOLOGY DETERMINES
  STRUCTURE

40
INFORMATION PROCESSINGGALBRAITH (73)

• TRADITIONAL COORDINATING MECHANISMS
• INFORMAL CONTACT
• RULES PROCEDURES (Standard Operating
  Procedures)
• HIERARCHY (Exceptions)
• GOALS TARGETS (Specify outcomes, not
  behaviors)
• AS INFORMATION PROCESSING NEEDS INCREASE, THE
  ORGANIZATION MUST WORK HARDER TO STAY IN CONTACT
  WITH ITS VARIOUS UNITS.
• STRATEGY 1 -- REDUCE THE AMOUNT OF INFORMATION
  PROCESSED
• RELY ON SLACK
• ESTABLISH SELF-CONTAINED UNITS
• STRATEGY 2 -- INCREASE CAPACITY TO HANDLE MORE
  INFORMATION
• INSTALL MORE VERTICAL INFORMATION SYSTEMS
• STRUCTURE MORE LATERAL RELATIONSHIPS
• SOME LATERAL COORDINATING MECHANISMS
• LIAISON ROLES, TASK FORCES, STANDING COMMITTEES,
  
• CROSS-FUNCTIONAL TEAMS, MATRIX STRUCTURES

41
FACTORS THAT AFFECT THE DIFFICULTY OF ACHIEVING
INTEGRATIONLORSCH (77)

• THE DEGREE OF DIFFERENTIATION
• THE NUMBER OF UNITS REQUIRING INTEGRATION
• PATTERNS OF INTERDEPENDENCE BETWEEN THE UNITS
• SEQUENTIAL
• POOLED
• RECIPROCAL
• THE FREQUENCY OF INTERACTION REQUIRED AMONG THE
  UNITS
• THE COMPLEXITY AND IMPORTANCE OF THE INFORMATION
  SHARED

42
STRATEGY DETERMINES STRUCTURECHANDLER (62)

• STRUCTURES ARE ENACTED BY MANAGEMENT
• WHAT IS YOUR STRATEGIC OBJECTIVE?
• INNOVATION
• You need a loose structure, with low
  specialization, low formalization and
  decentralized decision making. ORGANIC
  STRUCTURE
• COST MINIMIZATION
• You need tight control, extensive work
  specialization, high formalization and high
  centralization. MECHANISTIC STRUCTURE
• IMITATION
• You need tight controls over current activities
  and looser controls for new undertakings. COMBINA
  TION STRUCTURE

43
FORCES THAT SHAPE THE ORGANIZATIONGREINER (72)

• ORGANIZATIONAL AGE
• ORGANIZATIONAL SIZE
• GROWTH RATE OF THE INDUSTRY
• STAGE OF EVOLUTION
• CREATIVITY
• DIRECTION
• DELEGATION
• COORDINATION
• STAGE OF REVOLUTION (Current Crisis)
• LEADERSHIP
• AUTONOMY
• CONTROL
• RED TAPE

44
ORGANIZATIONAL LIFE CYCLE STAGESTANSIK (80)

• STAGE STRATEGY STRUCTURE
• BIRTH CONCENTRATION SIMPLE
• GROWTH INTEGRATION FUNCTIONAL
• MATURITY DIVERSIFICATION DIVISIONAL
• DECLINE RETRENCHMENT CONSOLIDATION
• DEATH LIQUIDATION DISMEMBERMENT