16-1

Organizational Design

By:
Dr. Osibanjo, Dr. Adeniji, Dr. Salau, Dr.
Falola, Dr. Mrs. Oyewunmi

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.


Organization Design Models
The Mechanistic Model
• Emphasizes importance
of achieving high levels of
production and efficiency
through:
• Extensive use of rules and
procedures
• Centralized authority
• High specialization of
labor
McGraw-Hill/Irwin
16-2
The Organic Model
• Emphasizes importance
of achieving high levels of
production and efficiency
through:
• Limited use of rules and
procedures
• Decentralized authority
• Relatively low degrees of
specialization
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
 Comparison of Mechanistic and Organic 16-3

Structures (1 of 3) (MccGilpd)

Process Mechanistic Structure Organic Structure

1. Leadership Includes no perceived Includes perceived confidence

confidence and trust between and trust between superiors
superiors and subordinates. and subordinates.

2. Motivation Taps only physical, security, Taps a full range of motives

and economic motives, through participatory methods.
through use of fear and
sanctions.

3. Communication Information flows downward Information flows freely:

and tends to be distorted, upward, downward, and
inaccurate, and viewed with laterally. The information is
suspicion by subordinates. accurate and undistorted.
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
 Comparison of Mechanistic and Organic 16-4

Structures (2 of 3)
Process Mechanistic Structure Organic Structure

4. Interaction Closed and restricted. Open and extensive. Both

Subordinates have little effect superiors and subordinates are
on departmental goals, able to affect departmental
methods, and activities. goals, methods, and activities.

5. Decision Relatively centralized. Relatively decentralized.

Occurs only at the top of the Occurs at all levels through
organization. group processes.

6. Goal setting Located at the top of the Encourages group

organization, discouraging participation in setting high,
group participation. realistic objectives.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 Comparison of Mechanistic and Organic
Structures (3 of 3)
Process Mechanistic Structure
7. Control Centralized. Emphasizes
fixing blame for mistakes.
8. Performance Low and passively sought
goals by managers, who make no
commitment to developing
the organization’s human
resources.
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-5
Organic Structure
Dispersed throughout the
organization. Emphasizes
self-control and problem
solving.
High and actively sought by
superiors, who recognize the
need for full commitment to
developing, through training,
the organization’s human
resources.
 Organization Design Models: 16-6

The Matrix Model

• Matrix organization – attempts to maximize
the strengths and minimize the weaknesses
of both the functional and product bases
• Superimpose a horizontal structure of
authority, influence, and communication on
the vertical structure
• Facilitates the utilization of highly specialized
staff and equipment

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 16-7

Example of the Matrix Organization Model

Functions

Projects, products Manufacturing Marketing Engineering Finance

Project or product A

Project or product B

Project or product C

Project or product D

Project or product E

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 16-8

Advantages of Matrix Organization

• Efficient use of resources

• Flexibility in conditions of change and uncertainty
• Technical excellence
• Freeing top management for long-range planning
• Improving motivation and commitment
• Providing opportunities for personal development

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 16-9

Multinational Structure and Design

• Multinational corporation – consists of a
group of geographically dispersed
organizations with different national
subsidiaries
• Multinational corporations frequently exist in
very divergent environments
• The most prevalent departmental basis is
geographic

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 16-10

Virtual Organizations
• Virtual organization – a collection of
geographically distributed, functionally
and/or culturally diverse aggregations of
individuals that is linked by electronic
forms of communication

• Assembled and disassembled according

to needs

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 Virtual Organizations: 16-11

Factors in Design Considerations

• Personnel distributed geographically

• Electronically connected
• Differences in expertise and function
• Culturally diverse
• Work schedule differences
• Horizontally arranged with little emphasis on
command and control authority

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 Virtual Organizations: 16-12

Design Implications

• Contractual relationships
• Constant change and reconfiguration
• No rigid boundaries
• Flexible
• Little or personal and social contact

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 Virtual Organizations: 16-13

Consequences
• Increase in overall communication and messages
• Relationships are tenuous
• Continual surety of roles, tasks, and assignments
• Caution needed in managing feedback,
discussion, performance review, and reward
systems
• Greater equity of participation

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

 16-14

Boundaryless Organizations
• Organizations in which:
• the hierarchy and chain of command are
minimized
• rigidly structured departments are
eliminated

• Implemented to reduce barriers between

people and constituencies

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.