Unit 6C

Organizing in the
Twenty-First Century
 Unit 6C
Organizing in the Twenty-First
Century
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 Chapter Objectives

• Explain the concept of contingency organization

design.
• Distinguish between mechanistic and organic
organizations.
• Discuss the roles that differentiation and
integration play in organization structure.
• Identify and briefly describe the five basic
departmentalization formats.

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 Chapter Objectives (cont’d)

• Describe how a highly centralized organization

differs from a highly decentralized one.
• Define the term delegation and list at least five
common barriers to delegation.
• Explain how the traditional pyramid organization is
being reshaped.

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 Contingency Design

• Organizing
– The structuring of a coordinated system of authority
relationships and task responsibilities
• Contingency Design
– The process of determining the degree of
environmental uncertainty and adapting the
organization and its subunits to the situation
• How much environmental uncertainty is there?
• What combination of structural characteristics is most
appropriate?
– There is no single best organization design.

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 The Burns and Stalker Model

• Mechanistic Organizations
– Are rigid in design, rely on formal communications, and
have strong bureaucratic qualities best suited to
operating in relatively stable and certain environments
• Organic Organizations
– Have flexible structures, have participative
communication patterns, and are successful in adapting
to change in unstable and uncertain environments

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 Joan Woodward’s Study

• When task complexity is either high or low,

organizations with organic structures are more
effective.
• When task complexity is moderate, organizations
with mechanistic structures are more effective.

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 The Lawrence and Lorsch Model

• A dynamic equilibrium exists between two opposing

structural forces and environmental complexity.
– Differentiation: The tendency of specialists to think and act in
restricted ways
– Integration: The collaboration among specialists needed to
achieve a common purpose
• A dynamic equilibrium between differentiation and
integration is necessary for a successful organization.
• Both differentiation and integration increase as
environmental complexity increases.

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 A New Way of Working

• In what ways does

telecommuting affect
the dynamic
equilibrium between
differentiation and
integration in an
organization?

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 Figure 10.1: Differentiation and Integration:
Opposing Organizational Factors

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 Basic Structural Formats

• Departmentalization
– Grouping of related jobs or processes into major
organizational units
• Overcomes some of the effect of fragmentation caused by
differentiation (job specialization)
• Permits coordination (integration) to be handled in the least
costly manner
– Sometimes refers to divisions, groups, or units in large
organizations

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 Basic Structural Formats (cont’d)

• Functional Departments
– Categorizing jobs according to the activity performed
• Product-Service Departments
– Grouping jobs around a specific product or service
• Geographic Location Departments
– Adopting a structural format based on the physical
dispersion of assets, resources, and customers
• Customer Classification Departments
– Creating a structural format centered on various
customer categories

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 Figure 10.2: Alternative
Departmentalization Formats

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 Figure 10.2: Alternative
Departmentalization Formats (cont’d)

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 Figure 10.2: Alternative
Departmentalization Formats (cont’d)

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 Basic Structural Formats (cont’d)

• Work Flow Process Departments in Reengineered

Organizations
– Creating horizontal organizations that emphasize
speedy work flow between two points:
• Identifying customer needs
• Satisfying customer needs

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 Contingency Design Alternatives

• Span of Control (Management)

– Span of control is the number of people who report to a
manager.
– Narrow spans of control foster tall organizations with
many organizational/managerial layers.
– Flat organizations have wider spans of control.
• Is There an Ideal Span of Control?
– The right span of control efficiently balances too little
and too much supervision.

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 Figure 10.3: Narrow and Wide Spans
of Control

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 Contingency Design Alternatives (cont’d)

• The Contingency Approach to Spans of Control

– Both overly narrow and overly wide spans of control are
counterproductive.
– Situational factors dictate the width of spans of control.
• Wide spans of control are appropriate for departments where
many workers work closely together and do the same job.
• Narrow spans of control are best suited for departments where
the work is complex and/or the workers are widely dispersed.

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 Figure 10.4: Situational Determinants
of Span of Control

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 Contingency Design Alternatives (cont’d)

• Centralization
– The retention of decision-making authority by top
management
• Decentralization
– The sharing of decision-making authority by
management with lower-level employees
• The Need for Balance
– The challenge to balance the need for responsiveness
to changing conditions (decentralization) with the need
to create low-cost shared resources (centralization)

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 Figure 10.5: Factors in Relative
Centralization/Decentralization

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 Contingency Design Alternatives (cont’d)

• Decentralization Through Strategic Business

– Strategic business units (SBU) are organizational
subunits that:
• Serve a specific market outside the parent organization
• Face outside competitors
• Are in a position of controlling their own destiny
• Are profit centers, with their effectiveness measured in terms of
profit and loss

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 Contingency Design Alternatives (cont’d)

• Line and Staff Organizations

– Line managers make decisions and staff personnel
provide advice and support.
– Personal staff are assigned to a specific manager in
supporting roles.
– Specialized staff constitute a reservoir of specialized
talent available to the entire organization.
– Functional authority gives staff temporary and limited
authority for specified tasks.

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 Figure 10.6: A Line and Staff
Organization

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 Matrix Organization

• Matrix Organization
– A structure with both vertical and horizontal lines of
authority
– Advantages
• Increases coordination
• Improves quantity of information flow
– Disadvantages
• Violates unity-of-command principle
• Creates an authority gap (lack of line authority) for project
managers
• Decreases quality of information flow

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 Figure 10.7: A Simplified Matrix
Organization Chart

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 Effective Delegation

• Delegation
– Assigning various degrees of decision-making authority
to lower-level employees
• Advantages of Delegation
– Frees up managerial time for other important tasks
– Serves as a training and development tool for lower-
level managers
– Increases subordinates’ commitment by giving them
challenging assignments

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 Effective Delegation (cont’d)

• Barriers to Delegation
– Belief that only you can do the job right
– Lack of confidence and trust in subordinates
– Low self-confidence
– Fear of being called lazy
– Vague job definition
– Fear of competition from subordinates
– Reluctance to take risks that depend on others
– Lack of early warning controls
– Poor example of bosses who do not delegate

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 Figure 10.8: The Delegation Continuum

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 The Changing Shape of Organizations

• Characteristics of New Organizations

– Fewer organizational layers
– More teams
– Smallness within bigness
• New Organizational Configurations
– Hourglass organization: Three-layer structure with
constricted middle (management) layer
– Cluster organization: Collaborative structure in which
teams are the primary unit
– Virtual organizations: Internet-linked networks of value-
adding subcontractors

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 Figure 10.9: Reshaping the Traditional
Pyramid Organization

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 My Office Is My Home

• Which organizational structure and control

problems are likely to increase as more workers
telecommute or work in virtual organizations?

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 Terms to Understand

• Organizing • Strategic business unit

• Contingency design/plan • Line and staff
• Mechanistic organizations organization
• Organic organizations • Functional authority
• Differentiation • Matrix organization
• Integration • Delegation
• Departmentalization • Hourglass organization
• Span of control • Cluster organization
• Centralization • Virtual organization
• Decentralization

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