Organizing in The Twenty-First Century: (Lecture Outline and Line Art Presentation)

Chapter 10
(Lecture Outline and

Line Art Presentation)
Organizing in the
Twenty-First
Century
Chapter Objectives
1. Explain the concept of contingency organization

design.
2. Distinguish between mechanistic and organic
organizations.
3. Discuss the roles that differentiation and integration
play in organization structure.
4. Identify and briefly describe the five basic
departmentalization formats.
5. Describe how a highly centralized organization differs
from a highly decentralized one.
Copyright © Houghton Mifflin Company. All rights reserved. Lecture Outline and Line Art Presentation, 10–2
Chapter Objectives (cont’d)
6. Define the term delegation and list at least five

common barriers to delegation.
7. Explain how the traditional pyramid organization is
being reshaped.
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 sub units to the situation.
• How much environmental uncertainty is there?
• What combination of structural characteristics is
most appropriate?
• There is no single best organization design.
Contingency Design (cont’d)
• 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,
participative communication patterns and are
successful in adapting to change in unstable and
uncertain environments.
• 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.
• The Lawrence and Lorsch Model
• The relationship of 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.
Figure 10.1
Differentiation and Integration: Opposing Organizational Factors
Basic Structural Formats
• Departmentalization
• The 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 division, group, or unit in large
organizations.
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.
Figure 10.2
Alternative Departmentalization
Figure 10.2
Alternative Departmentalization (cont’d)
Figure 10.2
Alternative Departmentalization (cont’d)
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
Contingency Design
Alternatives
• Span of Control (Management)
• 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.
Figure 10.3
Narrow and Wide Spans of Control
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 close
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.
Figure 10.4
Situational Determinants of Span of Control
Contingency Design
• 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 is to balance the need for
responsiveness to changing conditions
(decentralization) with the need to create low-cost
shared resources (centralization).
Figure 10.5
Factors in Relative Centralization/Decentralization
Contingency Design
• 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.
Contingency Design
• Line and Staff Organizations
• Organizations in which 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.
Figure 10.6
A Line and Staff Organization
Matrix Organization
• Matrix Organization
• A structure with both vertical and horizontal lines of
authority.
• Advantages
• Increased coordination
• Improved quantity of information flow.
• Disadvantages
• Violates unity-of-command principle.
• Authority gap (lack of line authority) for project
managers.
• Decreases quality of information flow.
Figure 10.7
A Simplified Matrix Organization Chart
Effective Delegation
• Delegation
• Assigning various degrees of decision-making
authority to lower-level employees.
• The 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.
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.
Figure 10.8
The Delegation Continuum
The Changing Shape of
Organizations
• Characteristics of New Organizations
• Fewer organizational layers
• More teams
• Smallness within bigness
• New Organizational Configurations
• Hourglass organization: a 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.
Figure 10.9
Reshaping the Traditional Pyramid Organization

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Chapter 10

(Lecture Outline and

1. Explain the concept of contingency organization

6. Define the term delegation and list at least five

• The Burns and Stalker Model

• Joan Woodward’s Study

• Work Flow Process Departments in

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