HR Exam 3 - Organizational Design

Organization

System of consciously coordinated activities or forces of two or more persons

Common denominators of all organizations

-coordination of effort
-aligned goals
-division of labor
-hierarchy of authority

Organization Charts

Reveal basic dimensions of organizational structure
-hierarchy of authority
-division of labor
-spans of control
-line and staff positions

Hierarchy of Authority

Formal hierarchy of authority delineats official communication network and speaks volumes about compensation
-difference in pay between successive layers tends to increase over time

Division of labor

at each lower level in organization, jobs become more specialized

Spans of control

Span of control refers to the number of people reporting directly to a given manager. Narrow span of control tends to create "taller" organizations
Wide span of control leads to "flat" organization. Span of 7-10 people considered best

Four factors when determining spans of control

Organizational skill, skill level, organizational culture, managerial responsibilities

Organizational size

larger organizations have narrower spans of control and more organizational layers. Smaller ones have wider span of control. Costs higher in organizations with narrow spans due to more managers' expenses. Communication slower in narrow span because it tra

Skill Level

Complex tasks require more managerial input, suggesting narrow span of control. Routine tasks don't require supervision, leading to wider span of control

Organizational Culture

Hierarchal culture leads to more likely narrow span of control (internal integration and stability and control)
Wider spans of control more likely in companies that desire flexibility and discretion (clan or adhocracy culture)
Wider spans complement cultu

Managerial responsibilities

Most senior executives have narrower spans of control than middle managers because they have broader, complex responsibilities

Organizational Systems

reveal basic dimensions of organizational structure

Closed system

self-sufficient entity - closed to the surrounding environment

Open system

Depends on constant interaction with the environment for survival

Organization of open system

People, information, capital, and goods and services move back and forth across outer boundary of organization.
five organizational subsystems dependent on the others - goals and values, technical, psychosocial, structural, and managerial

Learning organization

Proactively creates, acquires and transfers knowledge.
Changes behavior on the basis of new knowledge and insights

Five Subprocesses of Organizational Learning

Information Acquisition, information distribution, information interpretation, knowledge integration, organizational memory

Improving Organizational Learning

Improve five steps, realize leader behavior and organizational culture drives organizational learning

Organizational Design

Structures of accountability and responsibility used to develop and implement strategies, and HR practices and information and business processes that activate those structures

Categories of Organizational Design

Horizontal, open, traditional

Functional Organizational Structure

groups people according to the business functions they perform, for example, manufacturing, marketing and finance

Divisional Organizational Structure

Employees are segregated into organization groups based on similar products or services, customers or clients, or geographic regions

Matrix Organizational Structure

Combines vertical structure with equally strong horizontal overlay
Generally combines functional and divisional chains of command to form a grid with two command structures

Horizontal Organizational Structure

Teams or workgroups, either temporary or permanent, are created to improve collaboration and work on common projects

Hollow Organizational Structure

-open organization example
-aka network structure
-designed around central core of key functions and outsources other functions to other companies or individuals who can do them cheaper or faster

Modular Organizational Structure

-example of open organization
-uses outsourcing
-assembles product parts, components or modules provided by external contractors

Virtual Organizational Structure

-example of open organization
-members are geographically apart, usually working with email and other forms of information technology
-generally appears to customers as a single, unified organization with a real physical location

Types of Virtual Structures

Internal Virtual Structure and Networked Virtual Structure

Contingency Approach

Organizations tend to be more effective when structured to fit the demands of the situation

Mechanistic organization

rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication

Organic organization

Flexible networks of multitalented individuals who perform a variety of tasks

Centralized Approach

Decision making occurs when key decisions made by top management
used in mechanistic organizations

Decentralized Approach

Decision making occurs when important decisions made by middle and lower-level managers
Used in organic organizations

Practical Research Insights

No one type (mechanistic of organic) is superior to the other - depends on environment
Mechanistic for stable environment
Organic for unstable and uncertain environment

Key issues when making organizational design decisions

Strategy and goals, technology, size, human resources

Generic Effectiveness Criteria

Goal accomplishment
Internal processes
Strategic constituency satisfaction
Resource acquisition

Goal Accomplishment Approach

appropriate when goals are clear, consensual, time-bound and measurable

Internal Process Approach

Appropriate when organizational performance is strongly influenced by specific processes

Strategic constituencies approach

appropriate when powerful stakeholders can significantly benefit or harm the organization

Resource Acquisitions Approach

Appropriate when inputs have traceable effect on results or output

Innovation

Creation of something new that makes money
finds pathway to consumer
more likely to occur when organizations have proper supporting forces

Product vs. Process Innovation

Product: change in the appearance or performance of a product or service or the creation of a new one
Process: change in the way a product or service is conceived, manufactured or distributed

Core vs. Transformational Innovation

Core: targeted at existing customers and rely on optimizing existing products/services for existing customers
Transformational: targeted at creating new markets and customers and rely on developing breakthroughs and inventing things that don't currently e

Seeds of Innovation

-hard work in specific direction
-hard work with direction change
-curiosity and experimentation
-wealth and money
-necessity
-combination of seeds

Learning from failure

occurs when activity fails to deliver expected results
mistakes generally feared and penalized, which creates risk averse environment, reducing innovation
Organizations learn from success AND failure, but learning is stronger and longer last when based on

Supporting Forces for Innovation

Necessary Human Capital?
Right Organizational Culture and Climate?
Devote enough resources to innovation?
Have required structure and processes?

Which of the following is not one of the common denominators of organizations?

Profit Motive

The number of people reporting directly to a given manager is known as:

Span of Control

In a learning organization, the ___ subprocess leads to shared understanding among individuals and groups

Knowledge Integration