Chapter 10

Organizing in the 21st

Century

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 Chapter Outline

Contingency Design
 The Burns and Stalker Model
 The Lawrence and Lorsch Model

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 Chapter Outline
(continued)

Basic Structural Formats

 Functional Departments
 Product-Service Departments
 Geographic Location Departments
 Customer Classification Departments
 Work Flow Process Departments in Re-
engineered Organizations

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 Chapter Outline
(continued)

Contingency Design Alternatives

 Span of Control
 Centralization and Decentralization
 Line and Staff Organizations
 Matrix Organizations

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 Chapter Outline
(continued)

Effective Delegation
 The Advantages of Delegation
 Barriers to Delegation

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 Chapter Outline
(continued)

The Changing Shape of Organizations

 Characteristics of the New Organizations
 New Organizational Configurations

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 CONTINGENCY DESIGN

Contingency design: the process of

determining the degree of
environmental uncertainty and adapting
the organization and its subunits to the
situation.

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 CONTINGENCY DESIGN
(continued)

Dimensions of Environmental
Uncertainty
1. Strength of social, political, and economic pressures
on the organization.
2. Frequency of technological breakthroughs in the
industry.
3. Reliability of resources and suppliers.
4. Stability of demand for the organization’s products or
services.

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 CONTINGENCY DESIGN
(continued)

For Discussion: Is the general trend

today toward more or less
environmental uncertainty? Explain
with specific examples.

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 THE BURNS AND STALKER MODEL
(Contingency Organization Design)

Two Ends of a Structural Continuum

 Mechanistic organizations: rigid in

design and have strong bureaucratic
qualities.
 Organic organizations: flexible in
structure and adaptive to change.

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 THE BURNS AND STALKER MODEL
(Contingency Organization Design)
(continued)

Key Research Findings:

1. Successful organizations in relatively stable
and certain environments tended to be
mechanistic.
2. Relatively organic organizations tended to be
the successful ones when the environment
was unstable and uncertain.
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 THE BURNS AND STALKER MODEL
(Contingency Organization Design)
(continued)

Practical Conclusion:

“Mechanistic design is appropriate for

environmental stability, and organic
design is appropriate for high
environmental uncertainty.”

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THE LAWRENCE AND LORSCH MODEL

Opposing Organizational Forces

 Differentiation: tendency among specialists to
think and act in restricted ways. (Tends to
fragment the organization.)
 Integration: in direct opposition to
differentiation, it involves the collaboration among
specialists needed to achieve a common
purpose. (Tends to coordinate the organization.)
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 Figure 10.1 Differentiation and
Integration: Opposing Organizational
Forces

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THE LAWRENCE AND LORSCH MODEL

(continued)

Key Research Findings:

1. Every organization requires an appropriate

dynamic equilibrium between differentiation
and integration.
2. In successful firms, both differentiation and
integration increased as environmental
complexity increased.

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THE LAWRENCE AND LORSCH MODEL

(continued)

Practical Conclusions:
 “These findings suggest that organizational failure in
the face of environmental complexity probably results
from a combination of high differentiation and
inadequate integration.”
 Needed organizational integration (coordination) can
be achieved through formal hierarchy, standard
policies and rules, departmentalization, computer
networks, cross-functional teams, human relations
training, and liaison individuals.
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 BASIC STRUCTURAL FORMATS

Departmentalization: related jobs,

activities, or processes are grouped into
major organizational subunits.

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 BASIC STRUCTURAL FORMATS
(continued)

Five Types of Departmentalization

 Functional Departments (most common)
 Product-service departments (organic alternative to
functional departments)
 Geographic location departments (communication
can be strained)

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 BASIC STRUCTURAL FORMATS
(continued)

Five Types of Departmentalization

 Customer classification departments (needs of
different customers better served
 Work flow process departments (found in
horizontal organizations resulting from reengineering)

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 Figure 10.2 Alternative
Departmentalization Formats (A)

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 Figure 10.2 Alternative
Departmentalization Formats (B)

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 Figure 10.2 Alternative
Departmentalization Formats (C & D)

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 Figure 10.2 Alternative
Departmentalization Formats (E)

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 SPAN OF CONTROL
(Contingency Design Alternatives)

Span of control: the number of people who

report directly to a manager.

Is There an Ideal Span of Control?

“The relevant question is no longer how wide spans of

control should be but instead, ‘How wide can one’s
span of control be?’ Wider spans of control mean
less administrative expense and more self-
management, both popular notions today.”

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 Figure 10.3 Narrow and Wide Spans of
Control

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 Figure 10.4 Situational Determinants
of Span of Control

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 CENTRALIZATION AND
DECENTRALIZATION
(Contingency Design Alternatives)

Two Ends of the Same Continuum

 Centralization: the retention of decision-
making authority by top management.
 Decentralization: management shares
decision-making authority with lower-level
employees.

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 CENTRALIZATION AND
DECENTRALIZATION
(Contingency Design Alternatives)
(continued)
Balance Needed within a Contingency Approach
 “The case against extreme decentralization can be
summed up in three words, lack of control. Balance
helps neutralize this concern.”
 “Centralization, because of its mechanistic nature,
generally works best for organizations in relatively
stable situations.”
 “A more organic, decentralized approach is appropriate
for firms in complex and changing conditions.”

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 Figure 10.5 Factors in Relative
Centralization/Decentralization

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 MATRIX ORGANIZATION

Matrix organization: vertical and

horizontal lines of authority are
combined in checkerboard fashion.

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 Figure 10.7 A Simplified Matrix
Organization Chart

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 MATRIX ORGANIZATION
(continued)

Advantages (increased coordination)

 Efficient use of resources
 Project integration
 Improved information flow
 Flexibility
 Discipline retention
 Improved motivation and commitment

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 MATRIX ORGANIZATION
(continued)

Disadvantages (project manager’s authority

gap)
 Power struggles
 Heightened conflict
 Slow reaction time
 Difficulty in monitoring and controlling
 Excessive overhead
 Experienced stress
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 MATRIX ORGANIZATION
(continued)

For Discussion: On balance, is matrix

design worth the trouble? Why?

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 Figure 10.6 A Line and Staff
Organization

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 DELEGATION

 Delegation: process of assigning

various degrees of decision-making
authority to lower-level employess.

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 Figure 10.8 The Delegation Continuum

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 DELEGATION
(continued)

For Discussion:
1. Does a high degree of delegation make an
organization more mechanistic or more
organic? Explain.

2. What is the relationship between delegation

and decentralization?

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 BARRIERS TO DELEGATION

Why Managers Do Not Delegate as Much as

They Should:
 Belief in the fallacy, “If you want it done right, do it
yourself.”
 Lack of confidence and trust in lower-level
employees.
 Low self-confidence.
 Fear of being called lazy.

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 BARRIERS TO DELEGATION
(continued)

 Vague job definition.

 Fear of competition from those below.
 Reluctance to take the risks involved in depending on
others.
 Lack of controls that provide early warning of
problems with delegated duties.
 Poor example set by bosses who do not delegate.

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 BARRIERS TO DELEGATION
(continued)

For Discussion:
1. Which three of the above reasons for not
delegating do you think are most common?
Why?

2. What should managers delegate: What they

know best, or what they know least well?

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 THE CHANGING SHAPE OF
ORGANIZATIONS
Characteristics of the New
Organizations

 Fewer layers
 More teams
 Smallness within bigness

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 Figure 10.9 Reshaping the Traditional
Pyramid Organization

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 THE CHANGING SHAPE OF
ORGANIZATIONS
(continued)

For Discussion:
1. Which of the new-style organizations will
likely be most common in twenty years?

2. In which of these new organizations would

you most like to be a top manager? A
middle manager? A first-line supervisor? A
nonmanagerial employee?

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