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BA105-1: Organizational BehaviorOrganization design I: Session objectivesSlide 3What is formal organization?What should structure do?What shouldn’t structure do?Slide 7SCIENTIFIC MANAGEMENT : “Systems so perfect that no one will need to be good”The Scientific Management Program: The Origin of Industrial EngineeringSlide 10Slide 11CLASSICAL ADMINISTRATIVE THEORYSlide 13Slide 14Slide 15Slide 16Do organizations have to be hierarchical?Coordination by hierarchy economizes on communication and centralizes controlCoordination by mutual adjustment maximizes communication and diffuses controlCoordination by rules & standards economizes on hierarchy and communicationSlide 21Strategic grouping: Functional and Divisional OrganizationSlide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Functional OrganizationSlide 31Next time: Allentown Materials CaseBA105-1: BA105-1: Organizational BehaviorOrganizational BehaviorProfessor Jim LincolnProfessor Jim LincolnWeek 2: LectureWeek 2: Lecture2Organization design I:Session objectives•Introduce organization design as the clearest case of the “manager as engineer” perspective •Understand the legacy of classical (“one best way”) design theory•Understand principles of grouping and linking•Get a feel for strategic organization design from the congruence or “fit” perspective –There is no “one best way”–Every design must be aligned with the organization’s environment, strategy, & internal architecture.3Strategy (diversification; innovation) Input Environment(Competition, change)Resources(munificence)History (age, conditions at founding) OutputSystemsUnitIndividualInformalOrganization(culture, leadership, networks, politics)Tasks (technologies, work flows)People(ability, skills, motivation, biases)FormalOrganization (job titles, departments, reporting hierarchy, IT & HR systems Organizational Design4What is formal organization?Bureaucracy! Meaning what exactly…?•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 rules & measurement systems –Accounting & finance–Inventory and process control–Human resource5What should structure do?•Provide efficiency in the accomplishment of tasks•Coordinate and integrate activities across the organization•Allow for flexibility–adjust quickly and smoothly to new conditions–Support creativity & innovation•Channel individual behavior in cooperative & productive ways •Economize on information processing•Empower people to undertake and accomplish challenging tasks•Fit the organization’s strategy and environment•Align with & support the organization’s culture, networks, incentive systems, etc.6What shouldn’t structure do?•Cause overspecialization leading to 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”•Be a residue or holdover from the past •Mire the organization in “red tape”•Divert or smother alternative means of channeling & coordinating action•Provide a safe haven for the incompetent or unmotivated7•This week:–Classical and mainstream design perspectives•Next week:–Modern “new economy” design perspectives8SCIENTIFIC 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….9The Scientific Management Program:The Origin of Industrial Engineering•Time and motion study•Reduce physical tasks to elemental units (“therbligs”). Recombine in maximally efficient way •Fixed rules & standards for physical task performance•Pay geared to performance (piece rates) •Production scheduling, equipment design, shop layout •Scientific method (measure, experiment)•Functional foremanship10Oper-ationsForeman Worker A Worker B Worker CMain-tenanceForeman Quality Assurance ForemanTaylor’s Functional Foremanship11Line Foreman Worker A Worker B Worker CMain-tenanceQuality Assurance The Line and Staff Alternative12CLASSICAL ADMINISTRATIVE THEORY•Principles of horizontal structuring –Specialization (divide tasks)–Unity of direction (group tasks into departments)•Principles of vertical structuring–Unity of command–Scalar chain•“Go through channels”–Span of control•Principles of authority and decision-making–Centralization:•Fit authority to responsibility •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, 194713Specialization(Division of Labor)14Unity of Direction(Grouping)15Principles of Hierarchy:Unity of Command, Scalar Chain, Span of Control16CEO“A”Logical flaws in CM: The trade-off between hierarchy & span of controlCEO“A”Case 1Case 2Herbert Simon: “The proverbs of administration.” Public Administration Review 6 (1946):53-67.17Do organizations have to be hierarchical?18Market-ingMarket-ingEngineeringEngineeringManu-facturingManu-facturingHuman ResourcesHuman ResourcesManage-mentManage-mentCoordination by hierarchy economizes on communication and centralizes controlAccountingAccounting19Coordination by mutual adjustment maximizes communication and diffuses control MarketingMarketingEngineer-ingEngineer-ingManu-facturingManu-facturingHuman ResourcesHuman ResourcesAccountingAccounting20Market-ingMarket-ingEngineeringEngineeringManu-facturingManu-facturingHuman ResourcesHuman ResourcesCoordination by rules & standards economizes on hierarchy and communicationAccountingAccounting21Choose the coordination solution that fits the degree of interdependenceRegional HQAircraft Scheduling1. Pooled Interdependence2. Sequential InterdependenceProductDevelopmentManufacturing SalesHotel A Hotel B Hotel COperations MaintenanceNeed for IntegrationLowMediumHighCoordinating MechanismRules/standardsHierarchyMutual Adjustment3. Reciprocal


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