Organisation Design

Organization Design
Purpose and Overview

Overview
The Meaning of Organizational Design
Levels of Organization Design
Systematic Assessment Before Design
Designs for a Variety of Health Services
Organizations
Influences on Future Organization Designs
Organization in Transition
Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Building blocks of organization are
arranged to improve effectiveness and
adaptive capacity
Authority
Responsibility
Accountability
Information
Rewards

The manner in which a management
achieves the right combination of
differentiation and integration of the
organization's operations, in response to
the level of uncertainty in its external
environment.
Differentiation refers to the subdivision of functional or

departmental units, each concentrating on a particular
aspect of the organization's operations. Integration refers
to the linking of differentiated units to achieve unity of
effort in working toward organization's goals.
In times of high uncertainty, greater organizational
effectiveness is achieved through high differentiation
coupled with high integration. In times of low uncertainty,
low differentiation and low integration are more
effective.
Dimensions of Organization Design
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Determinants of Organization Design
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The Determinant of Organizational Structure
Long-term Organizational Goals

The management chooses an organizational structure very carefully. It
evaluates whether it wants to delegate authority to its employees or
whether it wants to make all the final decisions.
If it decides on keeping authoritative powers with itself, it chooses a
horizontal organizational structure. Here, there are very few levels of
hierarchies and the management always makes ultimate decisions;
whether small or big.
However, when the scale of operations increase, it becomes difficult for
the management to get involved in small matters, and it may decide on
delegating
powers
and
authority.
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Size of Operations
The size and scale of operations is a major determinant of the
organizational structure.
A restaurant business can afford to centralize its authority and decision
making, but a large computers manufacturing firm cannot.
As the business expands, it becomes mandatory to decentralize
authority and departmentalize all important strategic functions.
A large organization has different departments for different functions like
marketing, production, finance and human resources (HR). Each
department takes care of its function, and later all chores are collated to
form organizational tasks.
25
Skills of Employees
The skills and educational qualifications of the employees also
influence the choice of the type of the structure.
A law firm would be constituted of attorneys. These individuals would
have vast professional and educational expertise and experience.
It would get very difficult to maintain authority over them at all times.
They must be given a free hand to make their own decisions. Otherwise,
there are chances of ego clashes between the employees and the
management. It is very easy to maintain authority over low-rung
laborers.
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Technologies Used
The types of technologies used by the organization
also determine the type of organizational structure.
A company that has automated its operations can
choose to decentralize its authority. The systems
would monitor progress of the employee throughout.
Hence, the task of the employee's immediate
superior would be to provide guidance as and when
required.
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The Components of
Organizational Structures
Work Functions
Also referred to as the "division of labor," work functions are
separated and defined in an organizational structure. Work tasks
and responsibilities are divided into different job titles. For example,
in an advertising agency, an account executive might handle
business development and account maintenance, or a media
specialist might concentrate on locating the best venues to place the
client's advertising in, such as print magazines. Job functions and
titles range from highly specialized to general.
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Job Groups
In organizational structures, similar job functions are grouped
together to form separate departments. Officially referred to as
"departmentalization," organizations group jobs according to
function, geographic location, product or market. Functional
departmentalization groups jobs according to a common task, such
as human resources, marketing or accounting. Product
departmentalization groups jobs according to the product that their
activities relate to; this type of departmentalization spans several
disciplines. Market departmentalization groups job functions
according to the client they serve, for example, a third-party contact
center that groups workers according to account.
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Span of Control
Another aspect of organizational structures is deciding the number of
employees that will report to a single manager, or the span of control.
A subaspect of span of control is deciding the number of management
layers that will exist. For example, a sales organization might employ
hundreds of front-line representatives who report to a front-line sales
manager in groups of 10. Each front-line sales manager might report
to a division sales manager who, in turn, might report to a regional
sales vice president.
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Decision-making Authority
In traditional hierarchical structures, the chain of command starts with
the company's top executives and flows downward. This culminates in
front-line staff implementing the strategic decisions that top
management has handed down. Employees might have little
involvement in the policies and procedures they must comply with. An
informal structure involves giving decision-making authority to all levels
of employees. In this type of structure, front-line employees can
participate in the development of the company's policies and make
decisions concerning their daily work routines.
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The Building Blocks of

Organizational Structure
Hierarchy
One of the primary components of any organizational structure is
the hierarchy, or how many layers the organization has. A layer
typically signifies a level of management that an order or idea must
pass through. The executive board is the top layer of the business,
and the bottom layer is made of the entry level works. Sometimes
many levels of managers are found in between the two, especially in
mechanical structures. Sometimes there is only one or two levels of
management, which occurs more often in organic structures.
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Formalization
Formalization refers to how orders, decisions and company
standards are transmitted to all employees throughout the company.
This is tightly tied to leadership and hierarchy. Some businesses
prefer a very bureaucratic system of administering orders by strict
methods and publishing them through dependable channels that are
unquestionable. Conversely, other businesses prefer to collaborate
when making decisions, inviting employee dissent and encouraging
alternative ideas or a reversal of plans even after they are created.
Channels of communication are not as rigid in these types of
organizational structures.
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Divisions
How a company sets up its divisions is also a very important
component of an organization's structure. Small businesses can
often get away with only one division that handles all operations.
Some larger companies, meanwhile, divide the company based on
departments, with accounting, IT, HR and other departments
created as needed. Other organizations create divisions that
produce different products -- for example, one division for vacuum
cleaners and another for washing machines.
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Temporary Constructs
Temporary constructs are those elements of a business
organization that are frequently used to solve problems but do
not last as individual entities themselves. Many businesses
create temporary teams in order to complete specific projects.
Some businesses do not like to use teams but will assign a
special project to a dedicated troubleshooter. How a company
accepts or rejects these more fluid elements becomes an
important part of the organization.
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Organization Culture
The values and behaviors that contribute to the unique
social and psychological environment of an organization.
Organizational culture includes an organization's
expectations, experiences, philosophy, and values that
hold it together, and is expressed in its self-image, inner
workings, interactions with the outside world, and future
expectations.
It is based on shared attitudes, beliefs, customs, and
written and unwritten rules that have been developed
over time and are considered valid.
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Organization Culture
Also called corporate culture, it's shown in
(1) the ways the organization conducts its business, treats its
employees, customers, and the wider community,
(2) the extent to which freedom is allowed in decision making,
developing new ideas, and personal expression,
(3) how power and information flow through its hierarchy, and
(4) how committed employees are towards collective objectives.
Organizational culture is unique for every

organization and one of the hardest things to
change.
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Artifacts symbols
of
s
culture in the physical
and social work environment
Values
Espoused: what members of
an organization say they value
Enacted: reflected in the way
individuals actually behave
Levels
Levelsof
of
Organizational
Organizational
Culture
Culture
Assumptions deeply held

beliefs that guide behavior and tell
members of an organization how
to perceive and think about things
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Types of Artifacts
Ceremonies and Rites
Stories
About the boss

About getting fired
About relocating
About promotions
About crisis situations
Rituals
Symbols
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Functions Of Organization Culture
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Understanding Organizational
Culture
Antecedents
Founders values
Industry &
business
environment
National culture
Senior leaders
vision and
behavior
Organizational
Culture
Observable
artifacts
Espoused values
Basic
assumptions
Organizationa
l Outcomes
Effectiveness
Innovation &
stress
Organizationa
l Structure &
Practices
Group &
Social
Processes
Socialization
Reward
systems
Mentoring
Decision
making
Organizational
design
Collective
Attitudes &
Behavior
Group
dynamics
Communication
Influence &
empowerment
Leadership
Work attitudes
Job
satisfaction
Motivation
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Importance of Culture in Organizations
Unity: A shared organizational culture helps to unite employees of

different demographics. Many employees within an organization come
from different backgrounds, families and traditions and have their own
cultures. Having a shared culture at the workplace gives them a sense
of unity and understanding towards one another, promoting better
communication and less conflict.
Loyalty: Organizational culture helps to keep employees motivated and
loyal to the management of the organization. If employees view
themselves as part of their organizations culture, they are more eager
to want to contribute to the entity's success. They feel a higher sense of
accomplishment for being a part of an organization they care about and
work harder without having to be coerced.
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Competition: Healthy competition among employees is
one of the results of a shared organizational culture.
Employees will strive to perform at their best to earn
recognition and appreciation from their superiors. This in
turn increases the quality of their work, which helps the
organization prosper and flourish.
Direction: Guidelines contribute to organizational culture.
They provide employees with a sense of direction and
expectations that keep employees on task. Each employee
understands what his roles and responsibilities are and how
to accomplish tasks prior to established deadlines.
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Identity: An organizations culture defines its
identity. An entity's way of doing business is
perceived by both the individuals who comprise
the organization as well as its clients and
customers, and it is determined by its culture.
The values and beliefs of an organization
contribute to the brand image by which it
becomes known and respected.
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Types of Organization Culture

Clan oriented cultures are family-like, with a focus on
mentoring, nurturing, and doing things together.
Adhocracy oriented cultures are dynamic and
entrepreneurial, with a focus on risk-taking, innovation,
and doing things first.
Market oriented cultures are results oriented, with a
focus on competition, achievement, and getting the job
done.
Hierarchy oriented cultures are structured and
controlled, with a focus on efficiency, stability and doing
things right.
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Normative Culture: In a normative organization, the organization stresses on
implementing the organizational procedures in the correct manner, and
according to the norms and rules defined. This kind of culture is perceived to
portray a high standard of business ethics.
Pragmatic Culture: In contrast to normative cultures, stress is laid on satisfying
the wish of their clients. In this type of organizational structure, the client is
virtually deified. The prime concern of every employee is to cater to the needs of
the client, attain, and retain the business they may invite through the clients.
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Academy Culture: In this kind of culture, employees
are highly skilled, and the organization provides an
environment for the development, and honing of
employee skills. Examples of this kind of culture are
hospitals, universities, and large corporations.
Employees tend to stay with the organization, and
grow with(in) it.
.
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Collaborate Work Culture: An organization that adopts a

collaborate culture offers a congenial and amiable
environment to work in. The feeling one derives while
working in this type of organization is that of comfort and high
motivation. This organization consists of superiors who
provide more of guidance, and less of governance.
The organization is based on worker-welfare, where you have
the employees' interest in the foreground with his skills
valued, and performances handsomely rewarded. Developing
teamwork is the most vital element of the organization
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Adhocracy Work Culture: It is a type of organization ideas are
encouraged, and out-of-the-box thinking is appreciated. Dynamism
is defined best when the workforce has the freedom to think new &
different; the development of which, may lead to success;
inadvertently, to higher levels of morale, and monetary incentives.
Macho Culture: The most important aspect of this kind of culture
is big rewards, and quick feedback. This kind of culture is mostly
associated with quick financial activities; like, brokerage, and
currency trading. It can also be related to activities, like, a sports
team, a police team, or branding of an athlete.
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Club Culture: Usually, the employees stay with the organization for a
long time, and get promoted to a senior post, or level. These employees
are the one who possess the specific skills required and desired, by the
organization. Examples of this kind of organization are law firms, the
military, etc.
Baseball Team Culture: In this kind of culture, the employees are
'free agents', and are highly prized. These employees find employment
easily in any organization, and are highly in demand. There is,
however, a considerable amount of risk attached to this culture, as it is
very fast-paced. Examples of this kind of culture are advertising, and
investment banking, to name a few.
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Work Hard/Play Hard Culture: This type of organization does not involve
much risk, as the organizations, already, consist of a firm base coupled with a
strong client relationship. This kind of culture is predominantly opted by the
large-scaled organizations that have gained their customers' trust and support. The
organization is qualified with multiple-team meetings.
Bet Your Company Culture: In this kind of culture, the company makes big, and
important decisions over high stake endeavors. It takes time to see the
consequence of these decisions. Companies that postulate experimental projects,
and researches as their core business proposition, adopt this kind of culture; for
instance, a company designing experimental military weapons may implement the
said type of culture.
51

Process Culture: This type of culture does not
include the process of feedback. In this kind of
culture, the organization is extremely cautious about
the adherence to laws, and prefers to abide by them.
This culture bestows consistency upon the
organization, predominantly meant for public
services.
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Organizational Culture
One of the most difficult tasks to undertake in an organization, is to change

its work culture. A change in the organizational culture requires an
organization to make amendments to its policies, workplace ethics, and
management system. It needs to start right from its base functions;
including, support functions, operations, and the production floor, which
finally affects the overall output of the organization. It requires a complete
overhaul of the entire system, and not many organizations prefer it as the
process is a long, and tedious one, which requires patience, and endurance.
However, when an organization succeeds in making a change on such a
massive level, the results are almost always positive, and fruitful. The
different types of organizational cultures aforementioned, surely, must have
helped you to understand them. You can also adopt one of them for your
own organization; however, persistence, and patience, ultimately, is the
essence.
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Constructive Culture
Normative
Beliefs
Organizational
Characteristics
Achievement
Goal and achievement

oriented
Selfactualizing
Value self-development
and creativity
Humanisticencouraging
Affiliative
Participative, employee
centered, and
supportive
High priority on constructive
interpersonal relationships, and focus
on work group satisfaction
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Passive Defensive Culture

Normative
Beliefs
Organizational
Characteristics
Approval
Avoid conflict, strive to

be liked by others, and
approval oriented
Conventional
Conservative,
bureaucratic, and
people follow the rules
Nonparticipative, centralized decision
making, and employees do what they
are told
Negative reward system and Defensive
avoid accountability
Dependent
Avoidance
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Aggressive-Defensive
Culture
Organizational
Characteristics
Normative
Beliefs
Oppositional
Confrontation and
negativism rewarded
Power
Nonparticipative, take
charge of Defensive
subordinates, and
responsive to superiors
Winning is values and a
win-lose approach is
used
Perfectionistic, persistent, and hard
working
Competitive
Perfectionistic
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Research Suggests:
1) Organizational culture correlated with
employee attitudes and behavior
2) Congruence between an individuals values
and the organizations values associated
with organizational commitment, job
satisfaction, intentions to quit, and
turnover
3) Organizational culture did not predict a
companys financial performance
4) Mergers frequently failed due to
incompatible cultures
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Theories on the relationship

between organizational culture and
performance
Strong Culture Perspective

Fit Perspective
Adaptive Perspective
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Strong Culture
an organizational culture with a
consensus on the values that drive
the company and with an intensity that
is recognizable even to outsiders
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Strong Cultures Facilitate

Performance
BECAUSE
They are characterized by goal

alignment
They create a high level of motivation
because of shared values by the
members
They provide control without the
oppressive effects of bureaucracy
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Fit Perspective
A culture is good only if it fits the
industry or the firms strategy
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Fit Perspective
Three particular industry
characteristics affect culture:
1.Competitive environment
2.Customer requirements
3.Societal expectations
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Adaptive Culture
An organizational culture that encourages
confidence and risk taking among employees,
has leadership that produces change, and
focuses on the changing needs of customers
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Adaptive vs. Nonadaptive Cultures
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Most Important Elements

in Managing Culture
What leaders pay attention to
How leaders react to crises
How leaders behave
How leaders allocate rewards
How leaders hire and fire individuals
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Organizational Socialization
Phase 1: Anticipatory
Phase 2: Encounter
Phase 3: Change and acquisition
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Organizational Socialization Process
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Perceptual and
Social Processes
Phases
1) Anticipatory
socialization
learning that
occurs prior to
joining the
organization
Anticipating realities
about the organization
and the new job
Anticipating
organizations needs for
ones skills and abilities
Anticipating
organizations sensitivity
to ones needs and
values
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Perceptual and
Social Processes
Phases
2) Encounter values,
skills, and
attitudes start to
shift as new
recruit discovers
what the
organization is
truly like
Managing lifestyleversus-work conflicts
Managing intergroup role

conflicts
Seeking role definition

and clarity
Becoming familiar with

task and group dynamics
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Perceptual and
Social Processes
Phases
3) Change and
acquisition recruit
masters skills and
roles and adjusts
to work groups
values and norms
Competing role demands

are resolved
Critical tasks are

mastered
Group norms and values

are internalized
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Outcomes of Socialization
Newcomers who are successfully
socialized should exhibit:
Good performance
High job satisfaction
Intention to stay with organization
Low levels of distress symptoms
High level of organizational commitment
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How cultures are embedded in

organizations
Formal/public statements
Physical Layout
Slogans, co. lingo
Mentoring, modeling
Explicit rewards, promotion criteria
Stories, legends, myths
Processes and outcomes, measurement
Workflow and systems
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Mentoring
Outcomes for Mentees

Outcomes for Mentors
Outcomes for Organizations
Maintaining the Culture
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Functions of Mentoring
Career Functions
Sponsorship
Exposure-and-Visibility
Coaching
Protection
Challenging Assignments
Psychological Functions
Role Modeling
Acceptance-andConfirmation
Counseling
Friendship
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Organizational Culture Inventory

Focuses on behaviors that help employees fit
into the organization and meet coworker
expectations
Uses Maslows hierarchy of
needs to measure twelve
cultural styles
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Kilmann-Saxton Culture-Gap Survey

Focuses on what actually happens in the
organization and the expectations of others
Two underlying dimensions

technical/human and
time.
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Interventions for Changing

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Questions on Culture
Can the organizational culture change?
How?
Where does the culture come from?

1.
2.
3.
Does the culture look the same from the

top and from the bottom?
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Organization Design

Purpose and Overview

The Meaning of Organizational Design

The Meaning of Organizational Design

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Differentiation refers to the subdivision of functional or

Dimensions of Organization Design

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Determinants of Organization Design

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Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

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The Determinant of Organizational Structure

Long-term Organizational Goals

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Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

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The Building Blocks of

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Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Organizational culture is unique for every

Assumptions deeply held

About the boss

Functions Of Organization Culture

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Importance of Culture in Organizations

Unity: A shared organizational culture helps to unite employees of

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Importance of Culture in Organizations

Importance of Culture in Organizations

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Types of Organization Culture

Types of Organization Culture

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Types of Organization Culture

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Collaborate Work Culture: An organization that adopts a

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Types of Organization Culture

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.

Types of Organization Culture

Copyright 2006 by Thomson Delmar Learning. ALL RIGHTS RESERVED.