dr. hab. jerzy supernat institute of administrative studies university of wrocław

dr. hab. Jerzy SupernatInstitute of Administrative Studies

University of Wrocław

Organizingand Organization Design

Organizing and Organization Design

dr hab. Jerzy Supernat

Organizing is deciding how to best assemble organiza-tional (structural) elements into an efficient overall struc-ture for the organization.

The six basic organizational (structural) elements that can be used to configure an organization are:

• designing jobs• grouping jobs• establishing reporting relationships• distributing authority• coordinating activities• differentiating between positions

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Designing jobs

Job design is the determination of an individual’s work-related responsibilities. The starting point for designing jobs is determining the level of desired specialization.


Job specialization is the degree to which the overall task of the organization is broken down and divided into smal-ler component parts. Job specialization evolved from the concept of division of labor.

Benefits and limitations of specialization

Alternatives to specialization job rotation job enlargement job enrichment work teams job characteristics approach

• skill variety• task identity• task significance• autonomy• feedback

Adam Smith

http://pl.wikipedia.org/wiki/Grafika:AdamSmith.jpg



Grouping jobs

The process of grouping jobs according to some logical arrangements is called departmentalization.

Rationale for departmentalization

Bases for departmentalization

• function• product • customer• location• other forms

Grouping jobs involving the same or similar activities.

Grouping jobs around products or product groups.

Grouping jobs to respond to and interact with specific customers or customer groups.

Grouping jobs on the basis of defined geographic sites or areas.

Grouping by time or by sequence.



Establishing reporting relationships

Chain of command

• unity of command

• the scalar principle

Span of management / control

• actual span of control• nominal span of control• potential / optimal span of control

Each person within an organization must have a clear reporting relationship to one superior.

A clear and unbroken line of authority must extend from the lowest to the highest posi-tion in the organization.

The number of people who re-port to a particular manager.



Harry S. Truman

The sign "The Buck Stops Here" was on USA President Harry S. Truman's (1884-1972) desk in his White House office. This was meant to indicate that he didn't "pass the buck" to anyone else but accepted personal responsibility for the way the country was governed.

The saying "the buck stops here" derives from the slang expression "pass the buck" which means passing the responsibility on to someone else. The latter expression is said to have originated with the game of poker, in which a marker or counter, frequently in frontier days a knife with a buckhorn handle, was used to indicate the person whose turn it was to deal. If the player did not wish to deal he could pass the responsibility by passing the "buck," as the counter came to be called, to the next player.



Distributing authority

Authority is power that has been legitimized by the organization.

Richard H. Hall, Pamela S. Tolbert: Authority is a type of power that is based on the acceptance by others of a given individual’s legitimate right to issue orders or directives. Thus, orders are followed because it is believed that they ought to be followed; recipients are expected to „suspend judgment” and comply voluntarily.

Two specific issues that managers must address when distributing authority are:

Delegation

Decentralization and centralization



Delegation

Delegation is the downward transfer of authority from su-perior to subordinate (or subordinates). The subordinate is empowered to act for the superior, while the superior remains accountable for the outcome. Delegation of au-thority is a person-to-person relationship requiring trust, commitment, and contracting between the superior and the subordinate.



Good News Bible, Exodus; 18, 13-23:

The next day Moses was settling disputes among the people, and he was kept busy from morning till night. When Jethro saw everything that Moses had to do, he asked, „What is all this that you are doing for the peo-ple? Why are you doing this all alone, with people standing here from morn-ing till night to consult you?”.

Moses answered, „I must do this because the people come to me to learn God’s will. When two people have a dispute, they come to me, and I decide which one of them is right, and I tell them God’s commands and laws”.

Then Jethro said, „You are not doing it the right way. You will wear yourself out and these people as well. This is too much for you to do alone. Now let me give you some good advice […] you should choose some capable men and appoint them as leaders of the people: leaders of thousands, hun-dreds, fifties, and tens. They must be God-fearing men who can be trusted and who cannot be bribed. Let them serve as judges for the people on a permanent basis. They can bring all the difficult cases to you, but they them-selves can decide all the smaller disputes. This will make it easier for you, as they share your burden. If you do this, as God commands, you will not wear yourself out, and all these people can go home with their disputes settled”.



Benefits of delegating:• leaves delegator (superior) free to concentrate on more important strategic issues• increases job satisfaction for delegator and subordinate• helps subordinate to develop new skills• helps subordinate to grow in confidence• provides an opportunity to assess subordinates’ potential• fosters teamwork• helps create a more motivated workforce• enhances morale• improves communication through feedback• creates fresh insights into work issues• helps create a climate for achievement• ultimately speeds up results• reduces costs (subordinate’s time is less expensive than delegator’s time)• increases chances of promotion for delegator• ensures smooth succession when delegator is promoted



Decentralization

Just as authority can be delegated from one individual to another, organizations also develop patterns of authority across a wide variety of positions and departments. De-centralization is the process of systematically delegating power and authority throughout the organization to mid-dle and lower-level managers. Hence, a decentralized or-ganization is one in which decision-making power and authority are delegated as far down the chain of com-mand as possible. Decentralization, of course, is just one end of a continuum anchored at the other end by centrali-zation, the process of systematically retaining power and authority in the hands of higher-level managers.



Coordinating activities

Forms of interdependence• pooled interdependence• sequential interdependence• reciprocal interdependence

Structural coordination techniques

• managerial hierarchy• rules and procedures• liaison roles• task forces• integrating departments

The primary reason for coordi-nation is that departments are interdependent. Reciprocal inter-dependence requires the closest coordination, sequential interde-pendence less, pooled interde-pendence least.



Differentiating between positions

Line positions

Staff positions

Administrative intensity

A line position is a position in the direct chain of command that is responsible for the achievement of an organization’s goals.

A staff position is intended to provide expertise, advice, and support for line positions.Forms of staff authority:• the authority to advise• compulsory advice• functional authority

Administrative intensity is the degree to which managerial positions are concentrated in staff positions.



Organization design

Organization design is the overall configuration of struc-tural elements and the relationships among those ele-ments used to manage the total organization. Thus orga-nization design is a means to implement strategies and plans to achieve organizational goals.

It worth to remember that organizations are not desig-ned and then left intact. Most organizations change al-most continuously as a result of factors such as events and people.

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Universal perspectives on organization design

• mechanistic model / bureaucracy

• organic model / adhocracy



Tom Burns: A mechanistic system is appropriate to stable conditions. It is characterized by:

1. The specialized differentiation of functional tasks into which the problems and tasks facing the concern as a whole are broken down.

2. The abstract nature of each individual task, which is pursued with techniques and purposes more or less distinct from those of the concern as a whole.

3. The reconciliation, for each level in the hierarchy, of these distinct performances by the immediate superiors.

4. The precise definition of rights and obligations and technical methods attached to each functional role.

5. The translation of rights and obligations and methods into the responsibilities of a functional position.

6. Hierarchic structure of control, authority, and communication.

7. A reinforcement of the hierarchic structure by the location of knowledge of actualities exclusively at the top of the hierarchy.

8. A tendency for vertical interaction between members of the concern, i.e. between superior and subordinate.

9. A tendency for operations and working behaviour to be governed by superiors.

10. Insistence on loyalty to the concern and obedience to superiors as a condition of mem-bership.

11. A greater importance and prestige attaching to internal (local) then to general (cosmo-politan) knowledge, experience and skill.



Tom Burns: The organic form is appropriate to changing conditions, which give rise con-stantly to fresh problems and unforeseen requirements for action which cannot be bro-ken down or distributed automatically arising from the functional roles defined within a hierarchic structure. It is characterized by:

1. The contributive nature of special knowledge and experience to the common task of the concern.

2. The realistic nature of the individual task, which is seen as set by the total situation of the concern.

3. The adjustment and continual redefinition of individual tasks through interaction with others.

4. The shedding of responsibilities as a limited field of rights, obligations, and methods.

5. The spread of commitment to the concern beyond any technical definition.

6. A network structure of control, authority, and communication.

7. Omniscience no longer imputed to the head of the concern; knowledge may be located anywhere in the network; this location becoming the centre of authority.

8. A lateral rather than a vertical direction of communication through the organization.

9. A content of communication which consists of information and advice rather than instructions and decisions.

10. Commitment to the concern’s tasks and to the ‘technological ethos’ of material progress and expansion is more highly valued than loyalty.

11. Importance and prestige attach to affiliations and expertise valid in the industrial and technical and commercial milieux external to the firm.



Bureaucracy as seen by Max Weber (1864-1920)

1. Official functions are fulfilled on continuous basis. 2. Jurisdictional areas are clearly specified; activities are

distributed as official duties. 3. Organization follows hierarchical principle.4. Intentional, abstract rules govern decisions and actions.

Rules are stable, exhaustive, and can be learned. 5. Decisions are recorded in permanent files. 6. Means of production or administration belong to office.

Personal property is separated from office property.7. Officials are selected on basis of technical qualifications,

appoin-ted not elected, and compensated by salary.8. Employment by the organization is a career. The official

is a full-time employee and looks forward to a life-long career. After a trial period they get tenure of position and are protected from arbitrary dismissal.



Adhocracy

Adhocracy is the diametric opposite of M. Weber’s bureaucracy. It disregards the accepted, classical principles of management under which each and every one has a carefully defined and permanent role. Adhocracy:

• is flexible and free flowing• is non-hierarchical• is based on participation• is creative and entrepreneurial• is based round networks• is driven by corporate goals – rather than nar-rowly defined functional ones• utilizes information and communication technolo-gy (ICT) as a key resource

Max Weber in 1894

http://de.wikipedia.org/wiki/Bild:Max_Weber_1894.jpg



Situational determinants of organization design

• strategy and organizational functions

• core technology

• environment

• organizational size

• organizational life cycle



Technology

Technology is the conversion process an organization uses to trans-form inputs (various resources) into outputs (products or services). Joan Woodward (1916-1971), one of the first researchers to identify the link between technology and organization design, defined three basic types of technology:

• unit or small-batch technology: products are custom-made or pro-duced in small quantities • large-batch or mass production technology: products are manufa-ctured in assembly-line manner • continuous-process technology: products are transformed from raw materials into finished goods through a series of machine or process transformations that change the composition of the materials

When Joan Woodward classified organizations by technology, the or-ganizations within each set had similar designs. Joan Woodward thus concluded that different forms of technology are likely to necessitate different types of organization design.



Organizational size and life cycle Organizational size refers to how large the organization is, usually in terms of the number of full-time employees. Organizational size can affect organization design.

Researchers at the University of Aston found that large organizations tend to have more job specialization, more standard operating pro-cedures, more rules and regulations, and more decentralization than small organizations. Organizational size is related to its life cycle. Life cycle is the organization's maturity relative to that of other orga-nizations. Organizations tend to follow a fairly predictable pattern of growth. This pattern is one of creation, growth, and stability.



Forms of organization design

• functional (U-form) design

• conglomerate (H-form) design

• divisional (M-form) design

• matrix design

• hybrid designs

• team organization

• virtual organization

• learning organization

Organizations adopt many different kinds of design. Most designs, however, fall into one of four basic categories. Others are hybrids based on two or more of the basic forms.



Functional (U-form) design

The functional design is an arrangement based on the functional approach to departmentalization. The design has been termed the U-form (for unitary) by Oliver E. Williamson. Under the U-form de-sign, the members and units in the organization are grouped into functional departments such as finance, marketing and production. Functionally based designs are most commonly used in small orga-nizations.



Conglomerate (H-form) design

Conglomerate design or H-form (H stands for holding) is used by an organization made up of a set unrelated businesses. In other words, the H-form is used to implement a corporate strategy of unrelated diversification. The conglomerate design is based loosely on the product approach to departmentalization. A general manager opera-tes each business or set of businesses and is responsible for its pro-fits or losses, and each general manager functions independently of the others.



Divisional (M-form) design

The M-form (M stands for multidivisional) design is similar to the H-form design (the product approach to departmentalization is also used), but most or all of its businesses are in the same or related industries (in the case above a firm is specializing in mechanical con-tracting). The M-form organization is used to implement a corpora-te strategy of related diversification.



Matrix design. A matrix organization is created by overlapping product-based departmentalization onto a functional structure. Each member of a matrix organi-zation has a functional 'home' but may be assigned at any given time to one or more groups working on special projects (project teams / product groups / tem-porary departments). Note that a matrix relies on a multiple-command structure.

Project X

Administra-tion

Project Y

Project Z

ProductionMarketingFinance



Advantages of the matrix design

Disadvantages of the matrix design

• flexibility

• employees participation

• opportunity to learn new skills

• opportunity to take full advantage of the organization’s human resources

• enhanced cooperation

• opportunity to delegate and decentralize

• uncertainty about reporting relationships

• conflict of loyalties

• problems associated with the dynamics of group behavior

• a matrix organization may have to devote more time to coordinating task-related activities



Hybrid designs

Some organizations use a design that represents a hybrid (blend) of two or more of the common forms of organi-zation design. For example, an organization may have five related divisions and one unrelated division, making its design a cross between an M-form and an H-form.

Indeed, few organizations use a design in its pure form. Most organizations, in fact, have one basic organization design as a foundation but maintain sufficient flexibility so that they can make temporary or permanent modifications for strategic purposes.



Team organization

An approach to organization design that relies almost ex-clusively on project-type teams, with little or no underly-ing functional hierarchy. Within such an organization peo-ple float from project to project, according to their skills and the demands of those project.



Virtual organization

The virtual organization is closely related to the team or-ganization. A virtual organization has little or no formal structure. Such an organization typically has only a hand-ful of permanent employees and a very small staff and administrative headquarters facility. As the needs of the organization change, its managers bring in temporary workers, lease facilities, and outsource basic support ser-vices to meet the demands. As the situation changes, the temporary workforce also changes, with some people leaving the organization and others entering. Facilities and the services subcontracted to others change as well.



Learning organization

Organizations that adopt this approach work to integrate their own improvement with ongoing employee learning and development. Specifically, a learning organization is one that works to facilitate the lifelong learning and per-sonal development of all its employees while continually transforming itself to respond to changing demands and needs.

Concluding Remark


An empowered organization is one in which individuals have the knowledge, skill, desire, and opportunity to per-sonally succeed in a way that leads to collective organiza-tional success.

Stephen R. Covey

dr. hab. jerzy supernat institute of administrative studies university of wrocław

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