Organization Theory and Organization Design

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Organization Theory and Organization Design

• Jan Probst, PhD

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Twinned concepts

• Organization theory
• Structural influences on the shape a firm may
  take
• Organization design
• Elements to be considered
• Recommendations for each element

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• Good design will not create commitment and
  energy, but poor design will surely thwart them.
• (Senge, PM in Leadership in Living
  Organizations)

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The metaphors of organization

• Machines
• Organisms
• Brains
• Economies
• Political arenas

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Machines

• Reduction of ambiguity
• Worker fills a role
• Worker does not think
• Integration of parts into a seamless whole

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Creating a machine

• Division of labor
• Clear authority and responsibility relationships
• Delegation
• Unity of Command
• Line versus staff
• Departmentalization

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Machine, continued

• Coordination mechanisms
• Supervision
• Mutual adjustments
• Standardized output / Technology

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STUDY
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Weber on Bureaucracy

• Formal rules regulations
• Hierarchy
• Clear division of labor
• Impersonal relationships --gt rational decision
  making
• Employment results from competence

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• ...bureaucracy has been and is a power instrument
  of the first order--for the one who controls the
  bureaucratic apparatus

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It Depends Contingency Theories

• Size
• Technology
• Economics

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Size

• More folks, more layers
• Span of control

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Technology

• Technology regulating performance
• Complexity reducing span of control
• Both

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Economics Transaction costs

• Limited to knowledge
• Cost of searching for seller buyer
• Cost of insuring adequate performance

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Williamsons model
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Transaction costs and health care

• Transaction uncertainty
• Specificity of product
• Frequency of purchase
• Duration of transation
• Performance ambiguity
• Can client measure quality

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When ambiguity costs are high

• an organization will need to convince clients
  that it is acting in their interest by developing
  a governance structure that reassures
  them.Specifically, high professional
  qualifications, intensive socialization, and the
  development of medical norms

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Machines as organisms

• Open systems
• Systems--one part affects the other
• Open--environment counts

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Open systems elements

• Importation of energy
• Throughput
• Output
• Cycles of events
• Negative entropy

• Feedback coding
• Dynamic homeostatis
• Differentiation
• Integration coordination
• Equifinality

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Matrix Organization

• Vertical lines within the organization
• Horizontal input from physicians
• Coordination through medical record

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The Kidneys
Strategic apex
Support staff
Technostructure
Middle line
Operating core
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Practical implications

• Creating departments
• Creating jobs

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Creating Departments

• Knowledge skills
• Work process and function
• Time
• Output
• Client
• Place

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Span of control

• Subordinates
• Uncertainty in work
• Standardization of work
• Interaction required
• Integration required

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Creating jobs