UGBA105: Organizational BehaviorOrganization design: Session objectivesWhat exactly should structure do?What shouldn’t structure do?Slide 5Two models of structureTHE MECHANISTIC or VERTICAL MODEL: I. SCIENTIFIC MANAGEMENT : “Systems so perfect that no one will need to be good”THE VERTICAL (MECHANISTIC) MODEL: II. CLASSICAL ADMINISTRATIVE THEORYSlide 9Slide 10What’s good about hierarchy as a coordination mode?As opposed to..The horizontal (organic) model“One best way” vs. congruence (or contingency)Let’s return to the basics: Strategic grouping and linking Dividing and coordinating people, activities, and resources so as to maximize efficiency, flexibility, and successSlide 16Slide 17Slide 18Slide 19Slide 20Slide 21What’s this?The function - product matrix at the Haas SchoolSlide 24Slide 25Slide 26Slide 27Slide 28Process organization: Grouping by interdependence Hammer and Champy: Reengineering the Corporation, 1993Keep functional expertise but dispense with functional groupsSlide 31Network organizationSlide 33TakeawaysUGBA105: UGBA105: Organizational BehaviorOrganizational BehaviorProfessor Jim LincolnProfessor Jim LincolnWeek 3: Lecture on Week 3: Lecture on Organizational DesignOrganizational DesignWalter A. Haas School of BusinessUniversity of California, Berkeley2Organization design: Organization design: Session objectivesSession objectives•Discuss organization design as case of “manager as engineer” perspective•Contrast vertical (mechanistic) and horizontal (organic) models of design•Examine grouping & linking as strategic design decisions3What exactly What exactly should should structure do?structure do?•Increase efficiency •Allow for flexibility•Channel individual behavior in desired directions •Empower people to accomplish tasks•Enable cooperation•Fit the informal org, strategy, environment4What shouldn’t structure do?What shouldn’t structure do?•Create unmanageable coordination problems•Balkanize the organization into warring fiefdoms•Disempower and demotivate people•Become a weapon in organizational politics•Become sacred and ceremonial•Breed “bureaucratic personalities”•Cause inertia •Mire the organization in “red tape”•Divert or smother informal ways of accomplishing tasks•Provide a safe haven for the incompetent or unmotivated5Source: S. Adams, Dogbert’s Big Book of Business, DILBERT reprinted by permission of United Features Syndicate, Inc.It’s easy to rationalize restructuringsIt’s easy to rationalize restructurings6Two models of structureTwo models of structure•Mechanistic or vertical•Organic or horizontal7THE MECHANISTIC or VERTICAL MODEL:THE MECHANISTIC or VERTICAL MODEL: I. SCIENTIFIC MANAGEMENT :I. SCIENTIFIC MANAGEMENT :“Systems so perfect that no one will need to be good”“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:THE VERTICAL (MECHANISTIC) MODEL: II. CLASSICAL ADMINISTRATIVE THEORYII. CLASSICAL ADMINISTRATIVE THEORY•Horizontal structuring (grouping)–Narrow division of labor –Employees grouped by task similarity•Vertical structuring (linking)–Coordinate by hierarchy of authority•Unity of command•Scalar chain•Span of control•Decision-making–Routinize decisions with rules & SOP’s–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, 1947Max Weber: Essays in Sociology. 1948.9Principles of Vertical Structuring10CEO“A”Principles of vertical organization: Unity of command, scalar chain, span of control CEO“A”Case 1Case 211Market-ingMarket-ingEngineeringEngineeringManu-facturingManu-facturingHuman ResourcesHuman ResourcesManage-mentManage-mentWhat’s good about hierarchy as a What’s good about hierarchy as a coordination mode?coordination mode?Account-ingAccount-ing12As opposed to.. As opposed to.. Market-ingMarket-ingHuman resourcesHuman resourcesEngin-eeringEngin-eeringAccount-ingAccount-ingManu-facturingManu-facturing13The horizontal (organic) modelThe horizontal (organic) model•Broad division of labor–Teams as unit of work •Flat hierarchy –Communicate laterally–Coordinate with networks, leadership, and culture •Few formal rules & SOP’s–Employees make discretionary decisions at point of action •Focus on outputs & processes–Less on inputs •Horizontal (zig-zag) career paths14““One best way” vs. congruence One best way” vs. congruence (or contingency)(or contingency)•The vertical model theory was presented as the “one best way”•The horizontal model was first presented as a “contingent” design–But lately it is presented as the “one best way”•When should managers use one or the other?15 Let’s return to the basics:Let’s return to the basics:Strategic grouping and linking Strategic grouping and linking Dividing and coordinating people, Dividing and coordinating people, activities, and resources so as to maximize activities, and resources so as to maximize efficiency, flexibility, and successefficiency, flexibility, and success16 Dimensions to group on Dimensions to group on •Inputs–Function, tasks, disciplines, or skills: •Outputs–Product, customer, market, region17R&DEngineer-ingManu-facturingGeneral ManagerHuman resourcesSales ProductA ProductBProduct CFunctional groupingFunctional grouping18CEOCarsPrefabHousesElectronicsHR Mfg Mkt HR Mfg Mkt HR Mfg MktProduct groupingProduct grouping19CEONorth AmericaEuropeAsia PacificHR Mfg Mkt HR Mfg Mkt HR Mfg MktRegional groupingRegional grouping20CEOProduct Group AProduct Group AProduct Group BProduct Group BProduct Group CProduct Group CLegalLegalFinanceFinanceR&DR&DAcctg.Acctg.MktDistributionSalesManufact.MktDistributionSalesManufact.MktDistributionSalesManufact.A hybrid formA hybrid form21 Finance ProfessorsLyons, Odean, Stanton Undergrad Program MBA Program PhD ProgramUndergradMBA PhDProfessorLyonsProfessorOdeanProfessorStantonAre Haas professors organized by function or product?Are Haas professors organized by function or product?22 What’s this? What’s this? Marketing