ORGANIZATIONAL DESIGN

RAKESH SETH
 Environment

 Strategy

 Organizational Architecture

 Organizational Culture

 Organizational Change
 Essentially all businesses were effected by the COVID
19 event.
 New Environment is blended: f2f and online. Both are
acceptable.
 Reset of the entire business eco system.
 Those that demonstrated innovation increased
business model resilience and adapted to the new
business environment.
 Invest your lessons learned back into the enterprise
to reset strategy and build resilience
INDIVIDUAL TEAMWORK ORGANISAT OPERATION FINANCIAL
ION S

INDUSTRY MARKETS COMPETITI SALES REVENUE

ON CUSTOMER
S

STRATEGY TECHNOLO PROCESSES EXECUTION REWARDS

GY
 The totality of the firm’s organization,
including formal structure, control systems,
incentives, processes, people and culture
 Organization Design is about translating
vision and strategy into reality.
 OD involves how to organize work:

 Grouping
 Linking
 Aligning
 StrategicDesign: How can people configure
organizations to achieve goals?

 Political:
How do different stakeholders use
power to achieve their goals

 Cultural:
How do we do things around here?
How do attitudes, beliefs and symbols shape
the meanings people assign to situations.
 External Environment
Opportunities Organization
Threats Design
Uncertainty Structural Form – Effectiven
Resource Availability Strategic learning vs. Outcom
Management efficiency Resou
Define Select
CEO, Top Information and Efficie
Management mission, operatio
control systems Goal
Team official nal
Production attainm
goals goals,
technology t
collabor
Human resource Stakeh
Internal Environment
Strengths ative
policies, ers
Weaknesses strategi
incentives Compe
Distinctive competence es
Organizational g value
Leadership Style ©2000 culture
South-Western College Publishing
Past Performance Cincinnati, Ohio
Surce: Adapted from Arie Y. Lewin and Carroll U. Stephens,
“Individual Properties of the CEO as Determinants of Organization Interorganizational
Daft,
Design,” unpublished Organization
manuscript, Theory
Duke University, and
1990; and ArieDesign
Y. Lewin 7/e
and Carroll U. Stephens, “CEO Attributes as Determinants of Organization Design:
An integrated Model,” Organization Studies 15, no. 2 (1994): 183-212
linkages
2-24
 Innovation
 Organic: A loose structure. Low specialization.
Low formalization decentralized.
 Cost Minimization
 Mechanistic: Tight control, extensive work
specialization, high formalization, high
centralization
 Imitation:
 Mechanistic and organic: Mix of loose with tight
properties, tight control over current activities
and loose controls for new undertakings
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Cincinnati, Ohio
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Cincinnati, Ohio
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Cincinnati, Ohio
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Cincinnati, Ohio
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Cincinnati, Ohio
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Cincinnati, Ohio
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Cincinnati, Ohio
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 CEO

Vice President Vice President Director

Fianance Manufacturing Human Resources

Chief Budget Plant Maintenance Training Benefits

Accountant Analyst Superintendent Superintendent Specialist Administrator

©2000
South-Western College Publishing 3-33
Daft, Organization Theory and DesignOhio
Cincinnati, 7/e
 Functional
Grouping CEO

Engineering Marketing Manufacturing

Divisional
Grouping C E O

P ro d u c t P ro d u c t P ro d u c t
D iv is io n 1 D iv is io n 2 D iv is io n 3
Source: Adapted from David Nadler and Michael Tushman,
Strategic Organization Design (Glenview, Ill.: Scott Foresman, 1988), 68.
©2000
South-Western College Publishing 3-34
Daft, Organization Theory and DesignOhio
Cincinnati, 7/e
 STRENGTHS:  WEAKNESSES:
 Allows economies of  Slow response time to
scale within functional environmental changes
departments  May cause decisions to
 Enables in-depth pile on top, hierarchy
knowledge and skill overload
development  Leads to poor
 Enables organization to horizontal coordination
accomplish functional among departments
goals  Results in less
 Is best with only one or innovation
few products  Involves restricted view
©2000
of organizational goals
Source: Adapted from South-Western College
Robert Duncan, “What Publishing
Is the Right
Cincinnati,
Organization Structure? Decision Tree Analysis Ohio
Provides the Answer,”
Daft,
Organizational Organization
Dynamics Theory
(Winter 1979): 429.and Design 7/e
3-35
 STRENGTHS:  WEAKNESSES:
 Suited to fast change in  Eliminates
unstable environment economies of scale
 Leads to client satisfaction in functional
because product departments
responsibility and contact
points are clear  Leads to poor
 Involves high coordination coordination across
across functions product lines
 Allows units to adapt to  Eliminates in-depth
differences in products, competence and
regions, clients technical
 Best in large organizations specialization
with several products  Makes integration
 Decentralizes decision- and standardization
making across product lines
©2000
difficult
South-Western College Publishing
Cincinnati, Ohio
Source: Adapted
Daft, from Robert Duncan,
Organization “What
Theory andIs the
Design 7/e
Right Organization Structure? Decision Tree Analysis 3-36
Provides the Answer,” Organizational Dynamics
(Winter 1979): 431.
Functional Info-Tech
President
Structure

R&D Manufacturing Accounting Marketing

Divisional Info-Tech
Structure President

Electronic Office Virtual

Publishing Automation Reality

R&D Mfg Acctg Mktg R&D Mfg Acctg Mktg R&D Mfg Acctg Mktg

©2000
South-Western College Publishing 3-37
Daft, Organization Theory and DesignOhio
Cincinnati, 7/e
 Multi-focused
Grouping
CEO

Marketing Manufacturing

Product
Division 1

Product
Division 2
©2000
Source: AdaptedSouth-Western
from David NadlerCollege Publishing
and Michael
Cincinnati,
Tushman, Strategic Organization Design Ohio
(Glenview, Ill.:
Scott Foresman, 1988), 68. Theory and Design 7/e
Daft, Organization
3-38
 CEO
Steve Jobs

Apple Apple Apple Apple

Products Americas Europe Pacific

Canada France Australia

Latin
America/ Japan
Caribbean

Sales Far East

Service and
Marketing
©2000
to Regions
South-Western College Publishing
Cincinnati, Ohio
Daft, Organization Theory and Design 7/e
Source: www.apple.com 3-39
 STRENGTHS:  WEAKNESSES:
 Achieves coordination  Causes participants to experience dual
necessary to meet dual authority, which can be frustrating and
demands from customers confusing
 Flexible sharing of human  Means participants need good
resources across products interpersonal skills and extensive
 Suited to complex decisions training
and frequent changes in  Is time consuming; involves frequent
unstable environment meetings and conflict resolution
 Provides opportunity for both sessions
functional and product skill  Will not work unless participants
development understand it and adopt collegial
 Best in medium-sized rather than vertical-type relationships
organizations with multiple  Requires great effort to maintain
products power balance
©2000
South-Western College Publishing
Cincinnati, Ohio
Source: Adapted from Robert Duncan, “What Is the Right
Daft, Organization Theory and Design 7/e
Organization Structure? Decision Tree Analysis Provides the 3-40
Answer,”Organizational Dynamics (Winter 1979): 429.
 President
Vertical Functions
Mfg. Industrial
Mfg. Marketing Finance Metallurgy Field Sales
Services Relations
Vice Vice Vice Vice Vice
Vice Vice
President President President President President
President President
Horizontal Functions

Open Die
Business Mgr.

Ring Products
Business Mgr.

Wheels & Axles

Business Mgr.

Steelmaking
©2000
Business Mgr.
South-Western College Publishing
Cincinnati, Ohio
Daft, Organization Theory and Design 7/e
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 President

Functional Chief
Human Technology Financial
Resources Vice Services
Structure Counsel
Director President Vice Pres.

Product Fuels Lubricants Chemicals

Vice Vice Vice
Structure President President President

©2000
South-Western College Publishing
Cincinnati,
Sources: Based on Linda S. Ackerman, “Transition Ohio
Management:
An In-DepthDaft,
Look at Managing Complex Change,”
Organization Theory and Design 7/e
Organizational Dynamics (Summer 1982): 46-66; 3-42
and Frank Ostroff, The Horizontal Organization,
(New York: Oxford University Press, 1999), Fig. 2.1, 34.
 Vice President and
General Manager

Functional Strategy and Human

Structure Finance Communication Resources

Director and
Process Owner Teams
Horizontal Structure

Parts Supply / Logistics Group

Director and
Process Owner Teams

Vehicle Service and Programs Group

Director and
Process Owner Teams
©2000
South-Western College Publishing Technical Support Group
Cincinnati, Ohio
Sources: Based
Daft,on Organization
Linda S. Ackerman,Theory
“Transition
andManagement:
Design 7/e
An In-Depth Look at Managing Complex Change,” Organizational Dynamics 3-43
(Summer 1982): 46-66; and Frank Ostroff, The Horizontal Organization,
(New York: Oxford University Press, 1999), Fig. 2.1, 34.
 Decision making is delayed or lacking in
quality
 The organization does not respond
innovatively to a changing environment
 Too much conflict from departments being at
cross purposes is evident

©2000
South-Western College Publishing
Cincinnati, Ohio
Daft, Organization Theory and Design 7/e
3-44
ü Managers must design organizations for complex
international coordination
ü Organizations international strategy and structure
evolve
ü There a diverse options for specific international
strategies
ü There are a variety of challenges for global
organizations
ü Diverse national and cultural values influence an
organization’s approach
ü Companies operating globally require broad
coordination
 Video link is pasted below