UGBA105: Organizational BehaviorOrganization design: Session objectivesThe Two Faces of ManagementSlide 4What is the formal organization?Slide 6What 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 11Strategic grouping: Dividing people, activities, and resources so as to maximize efficiency, flexibility, and successSlide 13Slide 14Slide 15Slide 16Slide 17MatrixThe discipline – degree program matrix at HaasHybrid formsSlide 21Vertical structuring: The linking (coordination) problemWhat’s good about hierarchy?The 180◦ alternative: mutual adjustmentA formal org alternative: rules & standardsSlide 26Slide 27Slide 28Steps in cross-functional coordination: An evolutionary sequenceSlide 30Slide 31Slide 32Slide 33Slide 34Slide 35Slide 36Functional organization goods and badsSlide 38Product organization goods and badsSlide 40Matrix organization goods and badsSlide 42Matrix as culture, not structureSlide 44Process organization: Grouping by interdependence, not similarity Hammer and Champy: Reengineering the Corporation, 1993Keep functional skills but dispense with functional groupsSlide 47Network organizationSlide 49Managing process & network organizationsSlide 51IT 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” forms3The Two Faces of Management The Two Faces of Management Manager as engineer: Manager as engineer: Trained technician who Trained technician who uses a professional body uses a professional body of knowledge to create of knowledge to create formal systems that plot formal systems that plot strategy, make decisions, strategy, make decisions, incent people, and incent people, and coordinate units in coordinate units in maximally efficient ways.maximally efficient ways.Manager as leaderManager as leader: : Individual who leverages Individual who leverages highly personal resources highly personal resources (energy, stamina, charisma, (energy, stamina, charisma, vision, warmth, charm, vision, warmth, charm, gregariousness, toughness, gregariousness, toughness, daring, know-how) to inspire, daring, know-how) to inspire, empower, and channel the empower, and channel the actions of others.actions of others.4StrategyInput EnvironmentResourcesHistoryOutputSystemsUnitIndividualInformalOrganizationTasksPeopleFormalOrganizationThe Congruence Model5What is the formal organization?•Formal structure –Grouping (or division of labor or differentiation)•Divide work and group people doing similar tasks into distinct jobs and work units–Linking (or coordination or integration)•Devise mechanisms of control and coordination to direct activity and create an integrated whole•Formal control & information systems (rules, procedures, measurement)–Accounting & finance–Inventory and process control–Human resource6Source: 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?7What should structure do?•Increase efficiency •Allow for flexibility•Channel individual behavior in desired directions •Empower people to accomplish tasks•Enable teamwork• Fit the informal org, strategy, environment8What shouldn’t structure do?•Create unmanageable coordination problems•Balkanize the organization into warring fiefdoms•Disempower and demotivate people•Be a weapon in organizational politics•Become sacred and ceremonial•Breed “bureaucratic personalities”•Cause inertia •Mire the organization in “red tape”•Divert or smother other ways of doing things•Provide a safe haven for the incompetent or unmotivated9THE 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….10THE 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, 194711Horizontal and Vertical Structuring12 Strategic grouping: Dividing people, activities, and resources so as to maximize efficiency, flexibility, and success13 Dimensions to group on •Inputs–Function, tasks, disciplines, or skills: •Outputs–Product, customer, market, region14R&DEngineer-ingManu-facturingGeneral ManagerHuman resourcesSales ProductA ProductBProduct CFunctional grouping15CEOCarsPrefabHousesElectronicsHR Mfg Mkt HR Mfg Mkt HR Mfg MktProduct grouping16CEONorth AmericaEuropeAsia PacificHR Mfg Mkt HR Mfg Mkt HR Mfg MktRegional grouping17 Finance ProfessorsLyons, Odean, Stanton Undergrad Program MBA Program PhD ProgramUndergradMBA PhDProfessorLyonsProfessorOdeanProfessorStantonAre Haas professors organized by function or product?18 Matrix Marketing R&DEngineeringManu-facturingSalesCarsPrefab housesElectronics19The discipline – degree program matrix at Haas Accounting Finance Marketing OBIR EAPUnder- gradMBAPhD20Hybrid forms•Most large firms are functional/product hybrids•Trend in U. S. in recent years is to centralize functions & consolidate