Designing Effective Organizations Chapter Fifteen McGraw-Hill/Irwin © 2012 The McGraw-Hill Companies, Inc All rights reserved Copyright © 2012 by The McGraw-Hill Companies, Inc All rights reserved After reading the material in this chapter, you should be able to: LO15.1 Describe the four characteristics common to all organizations LO15.2 Explain the difference between closed and open systems LO15.3 Define seven basic ways organizations are structured 15-2 After reading the material in this chapter, you should be able to: LO15.4 Discuss Burns and Stalker’s findings regarding mechanistic and organic organizations LO15.5 Identify when each of the seven organization structures is the right fit LO15.6 Describe the four generic organizational effectiveness criteria 15-3 What is an Organization? Organization system of consciously coordinated activities or sources of two or more people 15-4 What is an Organization? Four common denominators Coordination of effort Common goal Division of labor Hierarchy of authority 15-5 What is an Organization? Unity of command principle each employee should report to a single manager 15-6 Question? At Creative Calendars, Inc., each employee reports only to one manager This reflects: A.The division of labor B.Coordination of effort C.A narrow span on control D.The unity of command principle 15-7 Organization Charts Organization chart a graphic representation of formal authority and division of labor relationships 15-8 Dimensions of an Organizational Structure 15-9 Sample Organization Chart for a Hospital 15-10 Question? Bankers International (BI) can be described as a rigid bureaucracy with strict rules, narrowly defined tasks and top-down communication BI can also be described as a(n) organization A.Mechanistic B.Organic C.Decentralized D.Wide-span 15-26 Getting the Right Fit A functional structure can save money by grouping together people who need similar materials and equipment Divisional structures increase employees’ focus on customers and products 15-27 Getting the Right Fit A successful matrix structure requires superior managers who communicate extensively, foster commitment and collaboration, manage conflict and negotiate effectively to establish goals and priorities consistent with the organization’s strategy 15-28 Getting the Right Fit Horizontal designs improve coordination and communication Organizations that become hollow, modular, or virtual can generate superior returns by focusing on what they best 15-29 Question? Oneal, CEO of Fredhandbag HobbyTown, wants to improve the communication in his firm He should change to a _ organization A.Functional B.Matrix C.Horizontal D.Modular 15-30 Four Dimensions of Organizational Effectiveness Figure 15-4 15-31 Generic Effectiveness Criteria Goal accomplishment most widely used effectiveness criteria Resource acquisition organization is effective if it acquires necessary factors of production 15-32 Question? Sherman, a new manager at Get Well Industries, is interested in learning about the most likely used effectiveness criterion for organizations Which of these would you recommend to Sherman? A.Goal accomplishment B.Resource acquisition C.Internal processes D.Strategic constituencies satisfaction 15-33 Generic Effectiveness Criteria Internal processes focuses on “what the organization must excel at” to effectively meet its financial objectives and customers’ expectations Strategic constituencies satisfaction Strategic constituency: any group of people with a stake in the organization’s operation or success 15-34 Strategic Constituencies Satisfaction Strategic constituency any group of individuals who have some stake in the organization—for example, resource providers, users of the organization’s products or services, producers of the organization’s output, groups whose cooperation is essential for the organization’s survival, or those whose lives are significantly affected by the organization 15-35 Mixing Effectiveness Criteria: Practical Guidelines Goal accomplishment approach is appropriate when goals are clear, consensual, timebounded, and measurable 15-36 Mixing Effectiveness Criteria: Practical Guidelines Resource acquisition approach is appropriate when inputs have a traceable effect on results or output 15-37 Mixing Effectiveness Criteria: Practical Guidelines Internal processes approach is appropriate when organizational performance is strongly influenced by specific processes 15-38 Mixing Effectiveness Criteria: Practical Guidelines Strategic constituencies approach is appropriate when powerful stakeholders can significantly benefit or harm the organization 15-39 Video: One Smooth Stone The corporate event planning industry is very dynamic What characteristics of One Smooth Stone help it to remain competitive and successful in this industry? Why won’t the premises of organization theory proposed by theorists like Fayol and Weber work for organizations in a dynamic environment? Why won’t they work with knowledge workers? How important is it to ensure that the values of outsourcing partners align with One Smooth Stone’s? Why? 15-40 ... C.Matrix D.Hollow 15-22 The Contingency Approach to Designing Organizations Contingency approach to organization design organizations tend to be more effective when they are structured to fit the... mechanistic and organic organizations LO15.5 Identify when each of the seven organization structures is the right fit LO15.6 Describe the four generic organizational effectiveness criteria 15-3... Mechanistic versus Organic Organizations Mechanistic organizations Rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication Organic organizations Flexible networks