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Organizational Design
Fundamentals
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Contemplative Questions
• In what type of company would
I like to work?
• How do organizations process
information?
• Are all organizations the same?
• How are they different?
• What career paths can I pursue?
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Management Functions
Planning Organizing Leading Controlling
Defining
goals, estab-
lishing
strategy, and
developingsubplans to
coordinate
activities
Determining
what needs
to be done,
how it will
be done,and who is
to do it
Directing
and moti-
vating all
involved
parties andresolving
conflicts
Monitoring
activities
to ensure
that they are
accomplishedas planned
Achieving the
organization’s
stated
purpose
Lead to
Designing organizational structures is part of
organizing, one of the four basic management functions.
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Org chart example
Chief ExecutiveOfficer
President
Vice-
President
Region3
District
D
Executive
Vice-President
Region1
Region2
Region4
Region5
District
A
District
B
District
E
District
F
District
G
District
C
Vice-
President
Vice-
President
Vice-
President
Vice-
President
Executive
Vice-President
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Alternate Org. Form:
A Matrix OrganizationDesign
Engineering
Manu-
facturing
Contract
Admin.Purchasing Accounting
Human
Resources
Alpha
Project
Beta
Project
GammaProject
Omega
Project
Design
Group 1
Design
Group 2
DesignGroup 3
Design
Group 4
Mftg.
Group 1
Mftg.
Group 2
Mftg.Group 3
Mftg.
Group 4
Contract
Group 1
Contract
Group 2
ContractGroup 3
Contract
Group 4
Purch.
Group 1
Purch.
Group 2
Purch.Group 3
Purch.
Group 4
Acctg.
Group 1
Acctg.
Group 2
Acctg.Group 3
Acctg.
Group 4
HR
Group 1
HR
Group 2
HRGroup 3
HR
Group 4
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An IS Department Org Chart
Fig. 1-3.
IS professionals frequently work in project-based teams.
Only 1 team works on a project, usually.
People work on many projects, however (e.g. a matrix organization).
Teams are comprised of diverse group of members from several areas, and
may include users, managers, analysts, programmers, etc.
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Whether you are a programmer, analyst, useror manager, it will help your career if youcan understand how organizations work. Analysts, especially, need to understand how
organizations process information. There are literally millions of organizations in
the world. When is a group of people considered an
organization? An organization is a ________ with some form of
___________ who collectively possess some___________ .
Organizations
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In what type of organization would you like to work? All organizations vary in terms of their strategy,
their structure, their processes, their culture. Organizational structure is almost always
predetermined. It is there on your first day on thejob.
What works at one company may not work inanother, therefore it would be helpful to classify
organizations into certain types. Then we can make general statements about the types.
Organizations
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In what type of organization would you like to work? Think of organizations in terms of 3 dimensions:
Degree of complexity Formalization Centralization
These dimensions will help you assess prospectiveemployers They generate great questions for job interviews.
They also help to determine how information is processedwithin the organization.
Organizations
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Degree of Complexity
Two dimensions of organizational design
Vertical (the number of layers of management) Span of control = avg. # employees / manager
Horizontal (how jobs are differentiated)
Unity of Command says everyone should report to one and
only one superior (this is often not the case in IS).
IS positions commonly require team work
You may have a superior who advises you and teamleaders or project managers who give you specificdirection
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Assuming Span of 4
Vertical complexity
Contrasting Spans of Control
(Highest)
Assuming Span of 81
2
3
4
5
6
7
1
4
16
64
256
1,024
4,096
1
8
64
512
4,096
Organizati o
nLe
vel
(Lowest)Span of 4:
4,096 Operatives. 1,365 ManagersSpan of 8:
4,096 Operatives. Only 585 Managers!
Which organization looks more appealing to you?
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Horizontal complexity
Functional Departmentalization
Plant Manager
Manager,
Engineering
Manager,
Accounting
Manager,
Manufacturing
Manager,
Human
Resources
Manager,
Purchasing
Press
Dept. Mgr.
Tube
Dept. Mgr.
Finishing
Dept. Mgr.
Inspection
Dept. Mgr.
Castings
Dept. Mgr.
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Horizontal complexity
Product Departmentalization
Bombardier, Inc.
Recreational
Products
Division
Logistic
Equipment
Division
Industrial
Equipment
Division
Bombardier-
Rotax
(Gunskirchen)
Mass Transit
Sector
Rail Products
Sector
Recreational and Utility
Vehicles Sector
Mass Transit
Division
Bombardier-Rotax
(Vienna)
Rail and Diesel Products
Division
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Horizontal complexity
Customer Departmentalization
Director Director of Sales
Manager Manager,
Retail AccountsManager Manager,
Wholesale AccountsManager Manager,
Government Accounts
Figure 10-7
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Horizontal complexity
Geographic Departmentalization
Vice PresidentVice Presidentfor Sales
Sales Director,Sales Director,
Western RegionSales Director Sales Director
Southern RegionSales Director,Sales Director,
Midwest RegionSales Director Sales Director
Eastern Region
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Centralization and Decentralization
DEGREE OF CENTRALIZATION
DEGREE OF DECENTRALIZATION
Judging by the size of the desk, where do decisions get made?
Which organization looks more appealing to you?
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Two Extremes for Organizational Types
Rigid hierarchicalrelationships
Fixed duties
High formalization
Formalizedcommunication
channels
Centralizeddecision authority
Vertical and horizontalcollaboration
Adaptable duties
Low formalization
Informal
communication
Decentralizeddecision authority
Mechanistic Organic
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Types of Organizations
Rigid hierarchicalrelationships
Fixed dutiesHigh formalization
Formalizedcommunicationchannels
Centralizeddecision authority
Vertical and horizontalcollaboration
Adaptable duties
Low formalization
Informalcommunication
Decentralizeddecision authority
Mechanistic Organic
In which type of organization would you like to work?
Do you like to take orders?
Are you risk-averse, i.e. do you avoid risk?
Do you prefer to be aware of the ‘big picture’?
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Woodward’s Findings on Technology,
Structure, and Effectiveness
Unit
Production
Mass
Production
Process
Production
Structural
characteristics
Low vertical
differentiation
Moderate vertical
differentiation
High vertical
differentiationLow horizontal
differentiation
High horizontal
differentiation
Low horizontal
differentiation
Low
formalization
High
formalization
Low
formalization
Most effective
structure
Organic Mechanistic Organic