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COORDINATION AND ORGANIZATIONAL DESIGN

COORDINATION• The process of integrating the objectives and activities

of the separate units (departments or functional areas)of an organization in order to achieve organizational goals efficiently.

• Without coordination, individuals and departments would lose sight of their role within the organization.

• They would begin to pursue their own specialized interests, often at the expense of the larger organizational goals

THE NEED FOR COORDINATION

• Depends on the nature and communication requirements of the tasks performed and the degree of interdependence of the various units performing them.

• Beneficial in non routine and unpredictable work, in which factors in the environment is changing and interdependence is high

• Is significant in organization that sets high performance objectives, productivity and efficiency

JAMES D. THOMPSON 3 VARIETIES OF INTERDEPENDENCE IN ORGANIZATIONAL UNITS

• Pooled interdependence- exists when organizational units do not depend upon one another to carry out their day-to-day work but to depend on the adequate performance of each unit for ultimate survival (least)

• Sequential interdependence- one organizational unit must act before the next can. (greater)

• Reciprocal interdependence- involves give and take relationships between units (greatest)

LAWRENCE AND LORSCH

• Specialization and division of work among units increases the difficulty of achieving effective coordination

• Differentiation- complicates the task of effective coordination of organizational activities

“Misusing talent is a waste at best and dangerous at worst”

LAWRENCE AND LORSCH 4 TYPES OF DIFFERENCES IN ATTITUDE AND WORKING STYLE

• Differences in orientation toward particular goals

• Differences in time orientation

• Differences in interpersonal orientation

• Differences in formality of structure

Integration-is used to designate the degree to which members of various departments worked together in a unified manner

APPROACHES TO ACHIEVING EFFECTIVE COMMUNICATION

1. Basic management techniques

a. Management hierarchyb. Rules and proceduresc. Plans and goals

2. Increase coordination potentiald. Vertical informatione. Lateral relationships

3. Reduce need for coordinationf. Slack resourcesg. Interdependent units

BASIC MANAGEMENT TECHNIQUES

• Managerial hierarchy- the organization’s chain of command specifies relationships among its members and the units they oversee, thereby facilitating the flow of information and work between units

• Rules and procedures- designed to handle routine events before they arise

• Plans and goals- assures that all units direct their efforts toward the same broad targets.

INCREASING COORDINATION POTENTIAL

• Vertical information systems- is the means by which data are transmitted up and down the levels of the organization

• Lateral relationships- Cutting across the chain of command, it permit information to be exchanged and decisions to be made at the level where the needed information actually exists.

Several kinds of lateral relationships

1. Direct contact

2. Boundary-spanning roles

3. Committees and task force

4. Integrating roles

5. Managerial linking

6. Matrix organization

GALBRAITH WAYS OFREDUCING THE NEED FOR COORDINATION

• Creating slack resources- additional resources gives unit leeway in meeting each others requirements

• Creating independent units- units that can perform all the necessary aspects of task internally.

Selecting the appropriate coordination mechanisms

-the key is to match the organization’s capacity for coordination with its needs for coordination

COMPARISON OF COORDINATING MECHANISMS

Mechanims Complexity Cost Information processing capacity

1. Basic managerial techniques

2. Vertical information systems and lateral relationships

Simple

Complex

Inexpensive

Expensive

Low

High

SPAN OF MANAGEMENT

• The number of subordinates who report directly to a given manager

Two major reasons why the choice of appropriate span is important

1. SOM may affect the efficient utilization of managers and the effective performance of subordinates

2. Presence of relationships between SOM throughout the organization and organizational structure

SELECTING THE APPROPRIATE SPAN

Factors affecting the choice of span

1. Similarity of functions supervised

2. Geographic contiguity of functions supervised

3. Complexity of functions supervised

4. Direction and control needed by (capability) subordinates

5. Coordination required of the supervisor

6. Planning required of the supervisor

7. Organizational assistance received by the supervisor

ORGANIZATIONAL DESIGN

• Organizational design/ structure or architecture- defines how activities such as task allocation, coordination and supervision are directed towards the achievement of the organizational aims. It can also be considered the viewing glass or perspective through which individuals see their organization and its environment

EARLY APPROACHES TO ORGANIZATIONAL DESIGN (WEBER,TAYLOR,FAYOL)

• Weberian Bureaucracy theory- fundamentally domination through knowledge as the most efficient and rational way of organizing, it is the key part of the rational-legal authority.

• Weber’s ideal bureaucracy is characterized by hierarchical organization, delineated lines of authority in a fixed area of activity, action taken on the basis of and recorded in written rules, bureaucratic officials needs training, rules are implemented by neutral officials and career advancement depends on technical qualifications judged by organization, not individuals.

FAYOL- FATHER OF THE MODERN OPERATIONAL MANAGEMENT THEORY

• Division of work,

• Delegation of authority,

• Discipline,

• Chain of commands,

• Congenial workplace,

• Interrelation between individual interests and common organizational goals,

• Compensation package,

• Centralization,

• Scalar chains,

• Order,

• Equity,

• Job guarantee,

• Initiatives,

• Team-Spirit or Esprit de corps.

DIFFERENCES BETWEEN FAYOL AND TAYLOR

• Frederick Winslow Taylor developed Scientific Management. Taylor's Scientific Management deals with the efficient organization of production in the context of a competitive enterprise that is concerned with controlling its production costs. Taylor's system of scientific management is the cornerstone of classical theory

• However, Fayol differed from Taylor in his focus. Taylor's main focus was on the task, whereas Fayol was more concerned with management. Fayol appears to have slightly more respect for the worker than Taylor had, as evidenced by Fayol's proclamation that workers may indeed be motivated by more than just money. Fayol also argued for equity in the treatment of workers.

• According to Claude George (1968), a primary difference between Fayol and Taylor was that Taylor viewed management processes from the bottom up, while Fayol viewed it from the top down. In Fayol's book General and Industrial Management, Fayol wrote that; Taylor's approach differs from the one we have outlined in that he examines the firm from the bottom up. He starts with the most elemental units of activity—the workers' actions—then studies the effects of their actions on productivity, devises new methods for making them more efficient, and applies what he learns at lower levels to the hierarchy...

CRITICISMS OF THE CLASSICAL APPROACH

1. It neglects the human aspects of organization members, assuming they are motivated only by economic concerns.

2. It does not suit rapidly changing and uncertain environments

3. It assumes that upper-level managers will be respected and obeyed by subordinates because of their superior knowledge and skills forgetting that as organization increases in size managers lose touch of lower level.

4. As organizational procedures become more formalized and individual become more specialized, means often become confused with ends.

5. Thompson Bureaupathology posits that the structure permits conterproductive personal insecurities to flourish and some managers try to protect their authority and position by aloof ritualistic behavior preventing organization to meet its goals.

• Weber saw the Bureaucracy as the most efficient form of organization but also pointed that it is a threat to

individual freedoms leading to a “Polar Night of Icy Darkness” in which ongoing rationalization

of human life traps individual in aforementioned “Iron Cage” of bureaucratic, rule-based, rational control.

NEOCLASSICAL APPROACH

• Douglas McGregor- Motivational theory of X and Y

Theory x ('authoritarian management' style)

The average person dislikes work and will avoid it he/she can.

Therefore most people must be forced with the threat of punishment to work towards organizational objectives.

The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants security above all else.

NEOCLASSICAL APPROACH

• Chris Argyris- Adult personality

• Argyris believed that managers who treat people positively and as responsible adults will achieve productivity. Mature workers want additional responsibilities, variety of tasks, and the ability to participate in decisions. He also came to the conclusion that problems with employees are the result of mature personalities managed using outdated practices.

NEOCLASSICAL APPROACH

• Rensis Likert

Management systems

• Exploitative authoritative (I)

Exploitative authoritative is rooted in classical theory. In this system, managers tend to use threats, fear, and punishment to motivate their workers. Managers at the top of the hierarchy make all of the decisions and are usually unaware of the problems faced by those in the lower levels of the organization. Decisions are imposed on subordinates, and motivation is characterized by threats.[3] The orders issued from the top make up the goals for the organization. As a result, workers tend to be hostile toward organizational goals and may engage in behavior that is counter to those goal.

NEOCLASSICAL APPROACH• Benevolent authoritative (II)

• Less controlling than the exploitative authoritative system, under this system motivation is based on the potential for punishment and partially on rewards. The decision making area is expanded by allowing lower-level employees to be involved in policy-making but is limited by the framework given to them from upper-level management. Major policy decisions are still left to those at the top, who have some awareness of the problems that occur at lower levels. This creates mainly downward communication from supervisors to employees with little upward communication, causing subordinates to be somewhat suspicious of communication coming from the top. The managers at the top feel more responsibility towards organizational goals than those employees at the bottom, who feel very little responsibility. This contrast in feelings toward responsibility can result in a conflict and negative attitudes with the organization's goals. Subordinates in this system can become hostile towards each other because of the competition that is created between them. Satisfaction among workers is low to moderately-low and productivity is measured at fair to good.

NEOCLASSICAL APPROACH• Consultative system (III)

• This theory is very closely related to the human-relations theory. Motivation of workers is gained through rewards, occasional punishments, and very little involvement in making decisions and goals. Lower-level employees, in this system, have the freedom to make specific decisions that will affect their work. Upper-management still has control over policies and general decisions that affect an organization. Managers will talk to their subordinates about problems and action plans before they set organizational goals. Communication in this system flows both downward and upward, though upward is more limited. This promotes a more positive effect on employee relationships and allows them to be more cooperative. Lower-level employees are seen as consultants to decisions that were made and are more willing to accept them because of their involvement. Satisfaction in this system improves from benevolent authoritative as does productivity.

NEOCLASSICAL APPROACH• Participative system (IV)

• Likert argued that the participative system was the most effective form of management. This system coincides with human-resources theory. This system promotes genuine participation in making decisions and setting goals through free-flowing horizontal communication and tapping into the creativity and skills of workers. Managers are fully aware of the problems that go on in the lower-levels of the organization. All organizational goals are accepted by everyone because they were set through group participation. There is a high level of responsibility and accountability of the organizational goals in all of the employees. Managers motivate employees through a system that produces monetary awards and participation in goal setting. Satisfaction among employees is the highest out of the four systems as is production.

CRITICISMS OF NEOCLASSICAL APPROACH

1. Share the classical assumption that there is one best way of management

2. Theory x and y over simplify human motivation

3. The coordination of decentralized, fragmented groups to achieve organizational goals maybe more difficult than the neoclassicists suggest, particularly when the objectives of the lower level are not consistent with the goals of upper level managers

CONTINGENCY APPROACHES TO ORGANIZATIONAL DESIGN

• A class of behavioral theory that claims that there is no universal/ best way of managing an organization, instead, the optimal course of action is contingent (dependent) upon the internal and external situation.

VARIABLES AFFECTING THE ORGANIZATIONAL STRUCTURE

• Strategy and structure- A company's organizational structure must support its strategy. Employees at all levels of the company must be empowered to effectively complete the tasks necessary to achieve organizational objectives, and company structure can aid or hinder employees in their roles. Structure can also dictate the means by which strategies are formed. Bureaucratic companies tend to generate a majority of strategic ideas at the top levels of management. Companies with flatter structures, on the other hand, often involve a range of employees in strategy sessions.

STRATEGY AND STRUCTURE: IMPACT OF STRATEGY IN ORG STRUCTURE

1. Strategy determines organizational task, which are the ultimate basis for the design of the organization

2. Strategy influences the choice of technology and the people appropriate for the accomplishment of those tasks- and these, in turn, influences structure

3. Strategy determines the specific environment within which the organization will operate

EXTERNAL ENVIRONMENT AND STRUCTURE

• Three types of environment

1. The stable environment

2. The changing environment

3. The turbulent environment

Two types of organizational system

4. Mechanistic- activities are broken down into separate special tasks.(stable)

5. Organic- individuals are more likely to work in group setting than alone. (turbulent)

TASKS AND TECHNOLOGY AND STRUCTURE

• Tasks and technology affects structure because some structure are more appropriate for a given technology and set of tasks than the others. Joan Woodward postulates that technology directly affects the structure of an organization. She found three relationships that states:

1. The more complex the technology- the greater the number of managers and management levels

2. The SOM of first-line managers increases from units to mass production and and decreases from mass to process production

3. The greater the technological complexities of the firm, the larger are the clerical and administrative staffs

PEOPLE AND STRUCTURE

• Attitudes and values of members are related to the structure of the organization. Organizational design is also influenced by employee’s level of education, work involvement and other characteristics

Categories of people in organization

1. Manager and structure- attitudes and values directly influence the structure since the managers have the ultimate responsibility for designing the organization

2. Employee and structure- the greater the demand of employees for greater job satisfaction and participation is also likely to have an effect on structure

ORGANIZATIONAL GROWTH, CHANGE AND DECLINE

• Organizational life cycle models assumes that organizations develop in a predictable sequence of stages. Quinn and Cameron’s integrative life-cycle model suggests that there are four stages:

1. Entrepreneurial stage

2. Collectivity stage

3. Formalization and control stage

4. Structural elaboration and adaptation stage

PROBLEMS OF VERY RAPID GROWTH

• Decisions need to be made faster

• Individuals job demands expands faster

• Large recruiting and training needs have to be met

• Individuals must cope with constant changes

• Financial and human resources are severely strained

SOLUTIONS• Careful screening and selectivity in hiring to obtain well qualified

workers who have the capacity for hard work and growth in responsibility and who will require less training.

• Use of team or matrix structure

• Creation of an organizational philosophy or cultures that emphasizes open communication, a shared vision of the organization’s future, and a sense that it cares

• Projection of future staffing needs and ongoing planning and monitoring to match human resources and organizational needs

• Organizing and staffing

• Sensitivity of the managers to the needs of the members and toughness to deal with unpleasant problems when necessary

PERSPECTIVE OF ORGANIZATIONAL DECLINE

• Decline as stagnation and cutbacks

• Decline and personal stress

• Decline as a cause of conflict

Structural response to decline- adaptation and adjustments

Survival of the fittest