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MANAGING: A COMPETENCY BASED APPROACH 11 th Edition Chapter 11—Designing Organizations Don Hellriegel Susan E. Jackson John W. Slocum, Jr. Prepared by Argie Butler Texas A&M University
MANAGING: A COMPETENCY BASED APPROACH
11th Edition
Chapter 11—Designing Organizations
Don Hellriegel
Susan E. Jackson
John W. Slocum, Jr.
Prepared by
Argie ButlerTexas A&M University
Chapter 11: PowerPoint 11.1
Learning GoalsLearning Goals
1. Explain the two fundamental principles of designing organizations
2. State the major concepts of vertical organizational design
3. Describe four types of horizontal organizational design
4. Describe the major options for achieving organizational integration
Chapter 11: PowerPoint 11.2
The organization chart conveys four kinds of information?
Organization chart: a diagram that illustrates the reporting lines between units and people within the organization
Boxes represent different units Titles in each box show the work performed
by that person Reporting relationships are shown by the lines
connecting superiors and subordinates Levels of the organization are indicated by the
number of vertical layers in the chart
Boxes represent different units Titles in each box show the work performed
by that person Reporting relationships are shown by the lines
connecting superiors and subordinates Levels of the organization are indicated by the
number of vertical layers in the chart
Chapter 11: PowerPoint 11.3 (Adapted from Figure 11.1)
SVP,South EastDivision
SVP,South EastDivision
SVP,South CentralDivision
SVP,South CentralDivision
Executive VicePresident, StoreOperations
Executive VicePresident, StoreOperations
Region1
Region1
Region3
Region3
SVP,WesternDivision
SVP,WesternDivision
DistrictManager
DistrictManager
Region2
Region2
DistrictManager
DistrictManager
DistrictManager
DistrictManager
Chairman, President and CEO
Executive VicePresident, Logistics& Distribution
Executive VicePresident, Logistics& Distribution
Sr. Vice President,Human Resources
Sr. Vice President,Human Resources
Chapter 11: PowerPoint 11.4
David Packard, Cofounder, Hewlett-Packard
“I’ve often thought that after you get organized, you ought to throw away the organization chart. It really doesn’t show who has the
power and how things really work.”
Chapter 11: PowerPoint 11.5
Organization is composed of units that work on specialized tasks using different work methods and requiring employees with unique competencies
Division of labor: work of the organization is divided into smaller tasks
Specialization: process of identifying particular tasks and assigning them to departments, teams, or divisions
Chapter 11: PowerPoint 11.6
Various units coordinate their work to achieve common goals
Snapshot
Mike Lazaridis, President, Research in Motion,Waterloo, Ontario, Canada
“Coordination is like professional sports: It looks easy, but when you’re on the field, you see how difficult it is. The more people need to work with each other to reach the organization’s goal, the more coordination is needed. However, there is a cost (meeting time, travel, uniform policies) to achieving integration.”
Chapter 11: PowerPoint 11.7
Vertical Design
Hierarchy: a pyramid showing relationships among levels
Span of control: the number of employees directly reporting to a person1. Competence of both the manager and the employee
2. Similarity or dissimilarity of tasks being supervised
3. Incidence of new problems in the manager’s department
4. Extent of clear operating standards and rules
(continued)
Chapter 11: PowerPoint 11.8
Authority: right to make a decision
Responsibility: an employee’s duty to perform the assigned task
Vertical Design
Accountability: manager’s expectation that the employee will accept credit or blame for his or her work
Chapter 11: PowerPoint 11.9
Jim Schwieger, former Enron Employee
“Ken Lay, you have completely failed at the job you were hired to perform. If this lack of accountability would have
occurred farther down the organization, no one would hesitate to
fire the person.”
Chapter 11: PowerPoint 11.10
Vertical Design
Delegation: process of giving authority to a person (or group or team) to make decisions and act in certain situations
Barriers to delegation
Failure to define authority and responsibility clearly
Managers fear to delegate to others Cultural values
Failure to define authority and responsibility clearly
Managers fear to delegate to others Cultural values
Chapter 11: PowerPoint 11.11
Vertical Design: Building Blocksfor Effective Delegation
Establish goalsand standards
Ensure clarity
Involvement Expect completedwork
Provide training Timely feedback
Chapter 11: PowerPoint 11.12
Centralization: concentration of authority at the top of an organization or department
Decentralization: delegation of authority to lower level employees or departments
No absolutes for centralization versus decentralization
Chapter 11: PowerPoint 11.13
Cost ofdecisions
Desire for uniformityof policy
Environmental influences that
require uniformity
Competency levels of
managers and employees
Need forformal controlmechanisms
Chapter 11: PowerPoint 11.14
Majortypes
Functionaldesign
Productdesign
Networkdesign
Geographicaldesign
Chapter 11: PowerPoint 11.15
Grouping managers and employees according to their areas of expertise and the resources they use to perform their jobs
Chapter 11: PowerPoint 11.16 (Adapted from Figure 11.2)
CEOCEO
GeneralCounsel
GeneralCounsel
ChiefFinancialOfficer
ChiefFinancialOfficer
ChiefOperating
Officer
ChiefOperating
OfficerTreasurerTreasurer
FinancialServices
FinancialServices
StrategicPlanning
StrategicPlanning
StylingOfficer
StylingOfficer
HumanResources
HumanResources
Chapter 11: PowerPoint 11.17
Potential Benefits Supports skill specialization Reduces duplication of
resources & increases coordination with the function
Enhances career development & training within functional area
Allows superiors and subordinates to share common expertise
Promotes high-quality technical decision making
Potential Pitfalls Inadequate communication
across functional areas Conflicts over product
priorities Focus on departmental
rather than organizational issues and goals
Develops managers who are experts only in a narrow field
Chapter 11: PowerPoint 11.18
All functions that contribute to a product are organized under one manager
Divides the organization into self-contained units
Chapter 11: PowerPoint 11.19 (Adapted from Figure 11.3)
AviationServices
AviationServices
InformationSystems &Technology
InformationSystems &Technology
MarineSystems
MarineSystems AerospaceAerospace
LandSystems
LandSystems
ArmamentSystems
ArmamentSystems
Ordinance& Tactical
Systems
Ordinance& Tactical
Systems
BathIron
Works
BathIron
Works
ElectricBoat
ElectricBoat
Chairman & ChiefExecutive Officer
Chairman & ChiefExecutive Officer
CombatSystems
CombatSystems
Chapter 11: PowerPoint 11.20
Potential Benefits Permits fast changes in a
product line Allows greater product line
visibility Fosters a concern for
customer demand Clearly defines
responsibilities for each product line
Develops managers who can think across functional lines
Potential Pitfalls Inefficient utilization of
skills and resources Not fostering coordination
of activities across product lines
Encourages politics and conflicts in resource allocation across product lines
Limits career mobility for personnel outside their own product lines
Chapter 11: PowerPoint 11.21
Organizes activities around location
Helps to develop competitive advantage in each region according to that area’s customers, competitors, and other factors
Chapter 11: PowerPoint 11.22
Potential Benefits Facilities and the equipment
used for production and/or distribution all in one place, saving time and costs
Able to develop expertise in solving problems unique to one location
Understanding of customers’ problems and desires in the location
Getting production closer to raw materials and suppliers
Potential Pitfalls Duplication of functions, to
varying degrees, at each regional or individual unit location
Conflict between each location’s goals and the organization’s goals
Adds levels of management and extensive use of rules and regulations to coordinate and ensure uniformity of quality among locations
Chapter 11: PowerPoint 11.23
Network Design
Subcontracts some or many of its operations to other firms and coordinates them to accomplish specific goals
Sometimes called virtual organizations
Connects people regardless of their locations
Chapter 11: PowerPoint 11.24
Potential Benefits Ability to gain special
knowledge and skills of others without having to hire employees
Allows managers the flexibility to work with a wide variety of different suppliers, customers, and other organizations
Potential Pitfalls Other organizations may fail
to live up to established deadlines
Managers must constantly monitor the quality of work provided by other organizations
Employees in the outsourced organization may not hold the same values and sense of time urgency to which employees in the organization are committed
Chapter 11: PowerPoint 11.25 (Adapted from Figure 11.4)
ComputerHardwareSoftware
ComputerHardwareSoftware
MarketingMarketing
TechniciansTechnicians
TalentScouts
TalentScouts
AgentsAgents
Senior Managers ofDreamWorks, SKG
Senior Managers ofDreamWorks, SKG
CostumeDesigners
CostumeDesigners
MakeupArtists
MakeupArtists
ActorsActors MediaRelations
MediaRelations
LegalLegal
FutureGames
FutureGames
Chapter 11: PowerPoint 11.26 (Adapted from Table 11.1) (continued)
Organic Tasks tend to be ill
defined
Tasks are continually adjusted and redefined through communication as situations change
Network structure of control, authority, and communication
Mechanistic Tasks are highly
specialized
Tasks tend to remain rigidly defined unless changed by top management
Specific roles are prescribed for each employee
Chapter 11: PowerPoint 11.27 (Adapted from Table 11.1)
Organic Communication and
decision making are both vertical and horizontal, depending on where information and expertise reside
Communication emphasizes the form of mutual influence and advice among all levels
Mechanistic Hierarchical structure of
control, authority, and communication
Communication and decision making are primarily vertical, top-down
Communication emphasizes directions and decisions issued by superiors
Chapter 11: PowerPoint 11.28
Interdependence: the degree of coordination required between individuals and units to transform information and raw materials into goods and services
Pooled interdependence: little sharing of information or resources among individuals within a unit or among units in the performance of tasks (e.g., golf teams)
Interdependence: the degree of coordination required between individuals and units to transform information and raw materials into goods and services
Pooled interdependence: little sharing of information or resources among individuals within a unit or among units in the performance of tasks (e.g., golf teams)
Output
Input Input Input
Chapter 11: PowerPoint 11.29
Organizational Integration: Typesof Interdependence (cont’d)
Sequential interdependence: the orderly step-by-step flow of information, tasks, and resources from one individual or team to another within the same unit or from one unit to another (e.g., football teams)
OutputInput
Chapter 11: PowerPoint 11.30
Organizational Integration: Typesof Interdependence (cont’d)
Reciprocal interdependence: the need for every individual and unit to work with every other individual and unit; information and resources flow back and forth freely until the goal is achieved (e.g., volleyball teams)
OutputInput OutputInput
OutputInput
