UGBA105: Organizational BehaviorOrganization design: Session objectivesSlide 3Slide 4What should structure do?What shouldn’t structure do?THE VERTICAL (MECHANISTIC) MODEL: SCIENTIFIC MANAGEMENT : “Systems so perfect that no one will need to be good”THE VERTICAL (MECHANISTIC) MODEL: CLASSICAL ADMINISTRATIVE THEORYSlide 9Strategic grouping: Dividing people, activities, and resources so as to maximize efficiency, flexibility, and successSlide 11Slide 12Slide 13Slide 14Slide 15MatrixThe discipline – degree program matrix at HaasHybrid formsSlide 19Vertical structuring: The linking (coordination) problemWhat’s good about hierarchy?The 180◦ alternative: mutual adjustmentA formal org alternative: rules & standardsSlide 24Slide 25Slide 26Steps in cross-functional coordination: An evolutionary sequenceSlide 28Slide 29Slide 30Slide 31Slide 32Slide 33Slide 34Functional organization goods and badsProduct organization goods and badsMatrix organization goods and badsMatrix as culture, not structureSlide 39Process organization: Grouping by interdependence, not similarity Hammer and Champy: Reengineering the Corporation, 1993Keep functional skills but dispense with functional groupsSlide 42Network organizationSlide 44Managing process & network organizationsSlide 46IT and the manager’s jobAllentown Materials CaseUGBA105: UGBA105: Organizational BehaviorOrganizational BehaviorProfessor Jim LincolnProfessor Jim LincolnWeek 2: LectureWeek 2: LectureOrganization design: Organization design: From vertical (mechanistic) to horizontal (organic)From vertical (mechanistic) to horizontal (organic)2Organization design: Session objectives•Introduce organization design as “manager as engineer” perspective•Understand the legacy of classical design theory•Discuss strategic grouping and linking•View structure from the congruence perspective •Contrast hierarchy with other coordination modes•Consider process and network organization as horizontal “organic” forms3StrategyInput EnvironmentResourcesHistoryOutputSystemsUnitIndividualInformalOrganizationTasksPeopleFormalOrganizationThe Congruence Model4Source: S. Adams, Dogbert’s Big Book of Business, DILBERT reprinted by permission of United Features Syndicate, Inc.Why do managers like to change structure?Why do managers like to change structure?5What should structure do?6What shouldn’t structure do?7THE VERTICAL (MECHANISTIC) MODEL: SCIENTIFIC MANAGEMENT :“Systems so perfect that no one will need to be good”Frederick W. Taylor: The Principles of Scientific Management, 1911. Frank B. Gilbreth: Motion Study, a Method for Increasing the Efficiency of the Workman. New York, D. Van Nostrand Company, 1911.Which always brings to mind….8THE VERTICAL (MECHANISTIC) MODEL: CLASSICAL ADMINISTRATIVE THEORY•Horizontal structuring (grouping)–Specialization (divide tasks)–Unity of direction (group similar tasks in departments)•Vertical structuring (linking)–Unity of command–Scalar chain–Span of control•Authority –Fit to responsibility •Decision-making–Delegate routine decisions; manage exceptionsHenry Fayol: General and Industrial Management, 1949L. Gulick and L. Urwick: Papers on the Science of Administration, 1937J. Mooney: The Principles of Organization, 19479Horizontal and Vertical Structuring10 Strategic grouping: Dividing people, activities, and resources so as to maximize efficiency, flexibility, and success11 Dimensions to group on •Inputs–Function, tasks, disciplines, or skills: •Outputs–Product, customer, market, region12R&DEngineer-ingManu-facturingGeneral ManagerHuman resourcesSales ProductA ProductBProduct CFunctional grouping13CEOCarsPrefabHousesElectronicsHR Mfg Mkt HR Mfg Mkt HR Mfg MktProduct grouping14CEONorth AmericaEuropeAsia PacificHR Mfg Mkt HR Mfg Mkt HR Mfg MktRegional grouping15 Finance ProfessorsLyons, Odean, Stanton Undergrad Program MBA Program PhD ProgramUndergradMBA PhDProfessorLyonsProfessorOdeanProfessorStantonAre Haas professors organized by function or product?16 Matrix Marketing R&DEngineeringManu-facturingSalesCarsPrefab housesElectronics17The discipline – degree program matrix at Haas Accounting Finance Marketing OBIR EAPUnder- gradMBAPhD18Hybrid forms•Most large firms are functional/product hybrids•Trend in U. S. in recent years is to centralize functions & consolidate divisions•Trend in Japan is to decentralize19Hybrid form at Levi StraussHaas CEOProduct Group AProduct Group AProduct Group BProduct Group BProduct Group CProduct Group CLegalLegalFinanceFinanceR&DR&DAcctg.Acctg.MktDistributionSalesManufact.MktDistributionSalesManufact.MktDistributionSalesManufact.20Vertical structuring: The linking (coordination) problemThe hierarchical chain of command–Must organizations be hierarchical?•“The iron law of oligarchy” ( (Robert Michels, 1915)•And alternatives to it21Market-ingMarket-ingEngineeringEngineeringManu-facturingManu-facturingHuman ResourcesHuman ResourcesManage-mentManage-mentWhat’s good about hierarchy? Account-ingAccount-ing22The 180◦ alternative: mutual adjustment Market-ingMarket-ingHuman resourcesHuman resourcesEngin-eeringEngin-eeringAccount-ingAccount-ingManu-facturingManu-facturing23A formal org alternative: rules & standardsMarket-ingMarket-ingManu-facturingManu-facturingAccount-ingAccount-ingEngin-eeringEngin-eeringHuman resourcesHuman resources24The choice depends on the level of The choice depends on the level of task interdependencetask interdependenceRegional HQAircraft Scheduling1. Pooled Interdependence2. Sequential InterdependenceProductDevelopmentManufacturing SalesHotel A Hotel B Hotel COperations MaintenanceCoordinationNeed? Coordination Method?3. Reciprocal InterdependenceInterdependenceInterdependence25CEO“A”Principles of hierarchy: Unity of command, Scalar chain, Span of control CEO“A”Case 1Case 2Herbert Simon: “The proverbs of administration.” Public Administration Review 6 (1946):53-67.26Product ZmanagerEngineer-ingManufac-turingMarketingGeneral ManagerZ EngZ MfgZ MktWhat principle of vertical structuring does matrix violate?27Steps in cross-functional coordination:An evolutionary sequencePure functional organizationFunctional org with product-centered cultureLiaison roles / employee transfersCross-functional task forces & teamsIntegrating rolesMatrix“Heavyweight” product manager formFully self-contained product