ORGANIZATIONAL STRUCTURE • WORK SPECIALIZATION (Division of Labor) • DEPARTMENTALIZATION
Download ReportTranscript ORGANIZATIONAL STRUCTURE • WORK SPECIALIZATION (Division of Labor) • DEPARTMENTALIZATION
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? WEBER’S 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 WRITTEN, COMPILED & DOCUMENTED “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 VARIETY OF TASKS PROXIMITY QUALITY OF SUBORDINATES ABILITY OF THE MANAGER NARROWS SPAN NARROWS SPAN WIDENS SPAN WIDENS SPAN WIDENS SPAN WORK DESIGN DECISIONS 1. WHAT ARE THE TASKS TO BE PERFORMED? 2. HOW SHOULD THEY BE COMBINED INTO JOBS? 3. HOW SHOULD THE JOBS BE PERFORMED? ANALYSIS & DESIGN OF WORK METHODS STANDARDS OF PERFORMANCE 4. HOW SHOULD PEOPLE RESPOND TO THE JOB? ATTITUDES JOB SATISFACTION MOTIVATION 5. HOW TO STRUCTURE THE JOBS TO BE EFFICIENT & SATISFYING? JOB REDESIGN POSSIBILITIES MAKING THE WORK LESS BORING & MORE INTERESTING JOB DESIGN APPROACH JOB SCOPE (VARIETY) JOB DEPTH (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: PAY WORKING CONDITIONS QUALITY OF SUPERVISION DISSATISFIED WITH: MECHANICAL PACING OF THE LINE REPETITIVE NATURE OF THE WORK LOW SKILL REQMTS & DEMANDS LIMITED SOCIAL INTERACTION NO CONTROL OVER TOOLS, ETC ONLY SEES A SMALL PART OF WORK 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 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. ALTERNATIVES TO SPECIALIZATION - 2 • Job Characteristics Approach (HACKMAN & OLDHAM, 76) – Core Dimensions • Skill variety—the number of tasks a person does in a job. • Task identity—the extent to which the worker does a complete or identifiable portion of the total job. • Task significance—the perceived importance of the task. • Autonomy—the 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. TWO-FACTOR THEORY HERZBERG (59) ASSUMPTIONS TWO DIFFERENT TYPES OF FACTORS INFLUENCE US…HYGIENES & 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) WORKING CONDITIONS COMPANY POLICIES SUPERVISIOR COWORKERS SALARY & BENEFITS STATUS SYMBOLS MOTIVATORS (INTRINSIC) RESPONSIBILITY CHALLENGE OF WORK MEANINGFUL WORK ACHIEVEMENT ACCOMPLISHMENT GROWTH OPPORTUNITIES IMPLICATIONS ABUNDANT HYGIENES DO NOT MOTIVATE WORKERS, THEY ONLY PREVENT DISSATISFACTION ENRICH JOBS TO PROVIDE MOTIVATING, CHALLENGING WORK AND HIGH SATISFACTION WEAKNESSES RESEARCH METHODOLOGY IS FLAWED DOESN’T RECOGNIZE INDIVIDUAL NEED DIFFERENCES…NOT EVERYONE WANTS ENRICHED JOBS OVEREMPHASIZES JOB SATISFACTION JOB DESIGN THEORY HACKMAN & OLDHAM (76) JOB CHARACTERISTICS MODEL FIVE JOB DIMENSIONS PSYCHOLOGICAL STATES SKILL VARIETY TASK IDENTITY TASK SIGNIFICANCE MEANINGFULNESS (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)? HERZBERG’S VERTICAL LOADING FACTORS (ACHIEVEMENT, GROWTH, RECOGNITION, RESPONSIBILITY) ACCOUNTABILITY—Held 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 HACKMAN’S IMPLEMENTING CONCEPTS (Create a sense of MEANINGFULNESS, RESPONSIBILITY, & KNOWLEDGE) COMBINE TASKS FORM NATURAL WORK UNITS ESTABLISH CLIENT RELATIONSHIPS VERTICAL LOADING OPEN FEEDBACK CHANNELS SKILL VARIETY TASK IDENTITY TASK SIGNIFICANCE AUTONOMY FEEDBACK SUCCESS IS MODERATED BY THE INDIVIDUAL’S “GROWTH-NEED” STRENGTH DOES THE INDIVIDUAL WANT AN “ENRICHED JOB?” ARE THEY HIGH “N-ACH?” 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 CAN’T 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 WHEN MIGHT REDESIGN WORK? 1. WHEN NEW UNITS ARE FIRST ESTABLISHED NO PAST HISTORY TO DEAL WITH NEW FACILITIES AND WORKERS 2. 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 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 WORKERS—NO COORDINATION NO SUPERVISION—NOT EASY TO GET HELP WHEN NEEDED HOW PRODUCTIVE ARE YOU WHEN WORKING AT HOME? ISSUE OF LIABILITY WHEN WORK IS DONE AT HOME CENTRALIZED DECISION MAKING DISCRETIONARY AUTHORITY ONLY AT THE TOP ADVANTAGES UNIFORM POLICIES & ACTIONS ARE MAINTAINED TOP MANAGEMENT KNOWS EVERYTHING THAT’S 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 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 management’s 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? WHY DO MANAGERS RESIST DELEGATION? • FEAR THAT SUBORDINATES WILL FAIL – If you want something done right --- do it yourself!! • BELIEF THAT IT’S EASIER TO DO THE TASK YOURSELF – It’s 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 influence…when others must come to me for advice or help • WE LIKE DOING THE TASKS OURSELVES – The work itself is enjoyable…it’s fun for me!! 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-EXIST…FOR EXAMPLE: Accounting is functionally organized, Marketing is by customer within territory, Manufacturing is by process, and Research & Development is by product. SIMPLE STRUCTURES OWNER EMPLOYEES/ WORKERS 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 overloaded…too many things to decide daily Works best if the firm is small --- and stays that way Functional Design for a Small Manufacturing Company FUNCTIONAL ORGANIZATION CEO R&D FINANCE MARKETING HUMAN RESOURCES OPERATIONS 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 there’s no rule to follow, we don’t know what to do! (No discretion) Doesn’t adapt well to change, or unexpected events in the environment DIVISIONALIZED BY GEOGRAPHY OR TERRITORY CEO US DIVISION EASTERN INTERNATIONAL WESTERN FINANCE HUMAN RESOURCES CANADA R&D OPERATIONS EAST ASIA 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? DIVISIONALIZED BY PRODUCT, SERVICE OR CUSTOMER CEO BICYCLES HUM RES R&D MUSICAL INSTRUMENTS PET INSURANCE MARKETING HUM RES PRODUCTION R&D HUM RES R&D MARKETING PRODUCTION MARKETING PRODUCTION 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. A Matrix Organization 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 NETWORK (VIRTUAL) STRUCTURES INNOVATION & DESIGN (R&D) DISTRIBUTOR (Marketing) BROKER ORGANIZATION MANUFACTURER (Operations) FINANCIAL SERVICES NETWORK (VIRTUAL) STRUCTURES CHARACTERISTICS HIGHLY CENTRALIZED LITTLE OR NO DEPARTMENTALIZATION ADVANTAGES Don’t 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 TEAM STRUCTURES HORIZONTAL, CROSS-FUNCTIONAL TEAMS PRESIDENT TEAM 1 TEAM 2 TEAM 3 A-B-C-D A-B-C-D A-B-C-D TEAM STRUCTURES HORIZONTAL, 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 THE NEED FOR COORDINATION • If departments and work groups are interdependent; the greater the need for coordination…especially 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? 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 Committees (Permanent structures) – Permanent organizational units that maintain internal integration and coordination on an ongoing basis. – May have authority and budgetary controls. 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) MECHANISTIC v. ORGANIC STRUCTURES BURNS & STALKER (61) IF ENVIRONMENT IS STABLE DYNAMIC SPECIALIZED FEW HIERARCHICAL MANY, WRITTEN VERTICAL CLEAR NARROW CENTRALIZED HIGH SHARED MANY EXPERTISE FEW HORIZONTAL FREE WIDE DECENTRALIZED LOW PRIMARY OBJECTIVE EFFICIENCY ADAPTABILITY IDEAL STRUCTURE IS: MECHANISTIC ORGANIC MAJOR PROBLEMS CAN’T ADAPT QUICKLY NONPARTICIPATIVE NOT EFFICIENT HARD TO COORDINATE TASKS INTEGRATING ROLES AUTHORITY RULES & PROCEDURES COMMUNICATION CHAIN OF COMMAND SPAN OF CONTROL DECISION MAKING FORMALIZATION ORGANIZATIONAL RATIONALITY THOMPSON (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” DOESN’T 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 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 THE TASK ENVIRONMENT INDUSTRY THE SPECIFIC ENVIRONMENT OF THE FIRM THIS FIRM’S… • • • • • • • • • CUSTOMERS SUPPLIERS CREDITORS COMPETITORS GOVERNMENT AGENCIES UNIONS STOCKHOLDERS COMMUNITIES SPECIAL INTEREST GROUPS ENVIRONMENTAL UNCERTAINTY DUNCAN (72) COMPLEXITY STATIC SIMPLE COMPLEX --------------------------------------------- LOW UNCERTAINTY DYNAMISM MODERATELY LOW UNCERTAINTY --------------------------------------------- (CHANGE) MODERATELY HIGH UNCERTAINTY DYNAMIC HIGH UNCERTAINTY --------------------------------------------- COMPLEXITY = # of Entities the Firm must deal with? DYNAMISM = How Frequently do these entities (or their demands) change? ENVIRONMENTAL UNCERTAINTY SCHWAB (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 HIGH LOW --------------------------------------------- LOW UNCERTAINTY CONTROL MODERATELY LOW UNCERTAINTY --------------------------------------------- MODERATELY HIGH UNCERTAINTY (INFLUENCE) LOW HIGH UNCERTAINTY --------------------------------------------- The Firm only concerns itself with Important segments of it’s task environment. The most difficult environments are those which are Unpredictable and Uncontrollable ENVIRONMENTAL UNCERTAINTY AND STRUCTURE POSSIBLE “FITS” BETWEEN ENVIRONMENT AND STRUCTURE LOW UNCERTAINTY MOD LOW UNCERTAINTY SIMPLE FUNCTIONAL MECHANISTIC FUNCTIONAL MECHANISTIC DIVISIONALIZED MOD HIGH UNCERTAINTY HIGH UNCERTAINTY Mechanistic/Functional DIVISIONALIZED MATRIX ORGANIC DIVISIONALIZED MATRIX ORGANIC TECHNOLOGICAL DETERMINISM CAPITAL INTENSITY WOODWARD (65) UNIT MASS PROCESS HIERARCHICAL LEVELS RATIO OF WORKERS/ADMINISTRATORS NUMBER OF RULES FIRST-LINE SPAN OF CONTROL EXECUTIVE SPAN OF CONTROL LABOR COSTS AS % OF TOTAL CAPITAL INVESTMENT IN EQUIPMENT 3 9/1 Few 23 4 High Low 4 4/1 Many 48 7 Medium Medium 6 1/1 Few 15 10 Low 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 (Phase 3) T X1 Dr, etc TECHNOLOGY PERROW (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 AN ACCEPTABLE SOLUTION CRAFT NON-ROUTINE ---------------------------------------------------------------------------------- ROUTINE ENGINEERING EASY ---------------------------------------------------------------------------------------------- TECHNOLOGICAL DETERMINISM – TECHNOLOGY DETERMINES STRUCTURE INFORMATION PROCESSING GALBRAITH (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 FACTORS THAT AFFECT THE DIFFICULTY OF ACHIEVING INTEGRATION LORSCH (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 STRATEGY DETERMINES STRUCTURE CHANDLER (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. COMBINATION STRUCTURE FORCES THAT SHAPE THE ORGANIZATION GREINER (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 ORGANIZATIONAL “LIFE CYCLE” STAGES TANSIK (80) STAGE STRATEGY STRUCTURE BIRTH CONCENTRATION SIMPLE GROWTH INTEGRATION FUNCTIONAL MATURITY DIVERSIFICATION DIVISIONAL DECLINE RETRENCHMENT CONSOLIDATION DEATH LIQUIDATION DISMEMBERMENT