ORGANISATIONAL DESIGN

INTRODUCTION.
ASSESSING THE GOALS

Lecturer: Bekzat Musrepova, PhD Candidate

 AGENDA

1. How the course is organised?

2. What is the organisational design?
3. Why is it important?
4. How to implement it?
 EXAMINATIONS

• Literature Seminar – 10 points

• Term paper – 30 points (20 paper, 10 presentation)
• Written exam – 6o points
 LITERATURE SEMINAR

• Individually written memo with name (Times New Roman

12pt, single-line spacing)
• Group written report (group number and names of all
contributing members required)
• Group presentation (PowerPoint).
ASSIGNED TOPICS
 TERM PAPER
• In the individual term paper, you are required to work on what
you consider as ‘the ideal organisation’.
• You can take inspiration from an existing organization or
design a hypothetical organisation that you consider as ideal.
As you write about how to design the ideal organisation, make
use of the course material to defend and argue for why your
design is ideal and what makes it so.
1.WHAT IS THE ORGANISATIONAL
DESIGN?

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 IT BEGINS WITH…
• An organization is a social unit of people with a relatively
identifiable boundary that is structured and managed to meet a
collective goal (Burton and Obel, 1984).
IN A SEARCH FOR ORGANISATIONAL DESIGN

• Organizational design goes beyond drawing a new organizational chart.

• All organizations have a governance structure that determines

relationships between the different activities and the members and their
assigned tasks, responsibilities, and the authority to carry out different
tasks. The activities or tasks must be coordinated to obtain the collective
goal (Burton and Obel, 2004).

• Structure and coordination are thus the fundamental choices in

organizational design (Burton and Obel, 2018).
 DEFINITON

• The design of division of labor and integration of effort (Puranam,

2018).

• Task division, task allocation, reward distribution, and information flows

(Puranamet al., 2014).

• Organizational design is deciding who does what when.

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 KEY ISSUE

Organizational design involves two complementary problems:

(1) how to partition a big task of the whole organization into smaller
tasks of the subunits;

(2) how to coordinate these smaller sub-unit tasks so that they fit
together to efficiently realize the bigger task or organizational
goals (Burton and Obel, 2004).
 FUNDAMENTAL DESIGN QUESITONS

• What are our goals?

• What are the basic tasks?
• Who makes which decisions?
• What is the structure of communication, and what is the
incentive structure?
• Who has access to resources?
 ORGANISATIONAL DESIGN
APPROACH
• Step 1 Goals and scope Diagnosis
• Step 2 Assessing strategy
• Step 3 Analyzing the structure
• Step 4 Assessing process and people
• Step 5 Analyzing coordination, control, and incentives
• Step 6 Designing the architecture Design
• Step 7 Implementing the architecture Implementation
2. WHY IS IT IMPORTANT?

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Greiner's
Growth
Model
 DIAGNOSING ORGANISATIONS -
THE OPEN SYSTEMS MODEL

Inputs Design components Outputs

• General Technology Structure • Organization

environment effectiveness
• Task
Strategy Culture
environment e.g., performance,
• Enacted Human Management productivity,
environment Resource processes stakeholder
Systems satisfaction
MORE THAN 50 PERCENT OF CHANGE
PROCESSES FAIL
 DIAGNOSING ORGANISATIONS

• Alignment – Is the organization’s strategic orientation aligned

with the inputs? Do the design components fit with each other?
• Analysis – What is the company’s general environment?
What’s the company’s industry structure?
• Strategic orientation – What is the company’s strategy? What
are company’s technology, structure, measurement systems,
and human resource systems? What is the company culture?
 APPROXIMATELY 30 PERCENT OF
THE VARIATION IN PERFORMANCE
CAN BE EXPLAINED BY THE
ORGANIZATIONAL DESIGN
 HOW TO DESIGN EFFECTIVE
INTERVENTIONS?

Contingencies related to the change Organizational issues:

situation:
• Strategic issues
• Readiness for change
• Technology and structure issues
• Capability to change
• Human resources issues
• Cultural context
• Human process issues
• Capabilities of the change agent
 WHAT SORT OF CHANGE IS CALLED
FOR?

S O R T
Scope Origin Rollout Timing

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 BALOGUN AND HOPE HAILEY’S
TYPES OF CHANGE

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TYPES OF CHANGE BASED ON SCOPE
AND ORIGIN DESIGN DECISIONS
3. HOW TO IMPLEMENT IT?

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 HOW DOES THE ORGANISATION
CREATE VALUE?

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 https://www.youtube.com/watch?v=Nc-2dhw6ZsI
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 HOW MUCH VALUE DOES THE
ORGANISATION CREATE?

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 VALUE FOR CUSTOMERS.
VALUE FOR EMPLOYEES.
VALUE FOR SUPPLIERS.

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 The most customer
would pay for a
product or service

The least amount of

compensation
employee would accept

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 Product quality
Product complements
Network effects

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 STRATEGY IS SIMPLE.

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 https://www.youtube.com/watch?v=zwSq0nf5TtM
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 AN INTEGRATIVE SET OF CHOICES
THAT POSITIONS YOU ON A PLAYING
FIELD OF YOUR “CHOICE” IN A WAY
THAT YOU WIN.

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85% OF STRATEGIC BREAKDOWNS
RELATE TO INTERNAL FACTORS.
 ORGANISATIONAL DESIGN
APPROACH
• Step 1 Goals and scope Diagnosis
• Step 2 Assessing strategy
• Step 3 Analyzing the structure
• Step 4 Assessing process and people
• Step 5 Analyzing coordination, control, and incentives
• Step 6 Designing the architecture Design
• Step 7 Implementing the architecture Implementation
 AN ORGANIZATIONAL GOAL IS A DESIRED STATE OF
AFFAIRS THAT THE ORGANIZATION ATTEMPTS TO
REACH.

A GOAL REPRESENTS A RESULT OR END POINT TOWARD

WHICH ORGANIZATIONAL EFFORTS ARE DIRECTED. THE
CHOICE OF GOALS AND STRATEGY INFLUENCES HOW
THE ORGANIZATION SHOULD BE DESIGNED

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 MISSION (OFFICIAL GOAL)

• The overall goal for an organization is often called the

mission—the organization’s reason for existence. The mission
describes the organization’s shared values and beliefs and its
reason for being. The mission is sometimes called the official
goals, which refers to the formally stated definition of business
scope and outcomes the organization is trying to achieve.
• One of the primary purposes of a mission statement is to serve
as a communication tool.
 COMPETITIVE ADVANTAGE

• The overall aim of strategic intent is to help the organization achieve a

sustainable competitive advantage.
• What sets the organization apart from others and provides it with a
distinctive edge for meeting customer or client needs in the
marketplace?
• A company’s core competence is something the organization does
especially well in comparison to its competitors. A core competence
may be in the area of superior research and development, expert
technological know-how, process efficiency, or exceptional customer
service.

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 OPERATIVE GOALS
• The organization’s mission and overall goals provide a basis for
developing more specific operative goals. Operative goals designate the
ends sought through the actual operating procedures of the organization
and explain what the organization is actually trying to do
OVERALL PERFORMANCE GOALS
RESOURCE GOALS
MARKET GOALS
EMPLOYEE DEVELOPMENT GOALS
PRODUCTIVITY GOALS
INNOVATION AND CHANGE GOALS
 LET’S DO

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5 MINS DISCUSSION
 EFFECTIVENESS VS. EFFICIENCY

P = R _ C
Profit Revenue Cost

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 THE GOAL SPACE
Cost focus

LEGO Microsoft

Monopoly/ Focus on product and

service goals (volatile
Early start-up environment)

Revenue focus
MISSION VS. OPERATIVE GOAL
NEXT LECTURE GOAL J