dr. hab. Jerzy Supernat Institute of Administrative Studies

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Organizingand Organization Design
dr. hab. Jerzy SupernatInstitute of
Administrative Studies University of Wroclaw
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Organizing and Organization Design
I

• Organizing is deciding how to best assemble
  organiza-tional (structural) elements into an
  efficient overall struc-ture for the
  organization.
• The six basic organizational (structural)
  elements that can be used to configure an
  organization are
• designing jobs
• grouping jobs
• establishing reporting relationships
• distributing authority
• coordinating activities
• differentiating between positions

dr hab. Jerzy Supernat
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Organizing and Organization Design
Designing jobs Job design is the determination of
an individuals work-related responsibilities.
The starting point for designing jobs is
determining the level of desired specialization.
dr hab. Jerzy Supernat
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Organizing and Organization Design

• Job specialization is the degree to which the
  overall task of the organization is broken down
  and divided into smal-ler component parts. Job
  specialization evolved from the concept of
  division of labor.
• Benefits and limitations of specialization
• Alternatives to specialization
• job rotation
• job enlargement
• job enrichment
• work teams
• job characteristics approach
• skill variety
• task identity
• task significance
• autonomy
• feedback

Adam Smith
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Organizing and Organization Design

• Grouping jobs
• The process of grouping jobs according to some
  logical arrangements is called departmentalization
  .
• Rationale for departmentalization
• Bases for departmentalization
• function
• product
• customer
• location
• other forms

Grouping jobs involving the same or similar
activities.
Grouping jobs around products or product groups.
Grouping jobs to respond to and interact with
specific customers or customer groups.
Grouping jobs on the basis of defined geographic
sites or areas.
Grouping by time or by sequence.
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Organizing and Organization Design

• Establishing reporting relationships
• Chain of command
• unity of command
• the scalar principle
• Span of management / control
• actual span of control
• nominal span of control
• potential / optimal span of control

Each person within an organization must have a
clear reporting relationship to one superior.
A clear and unbroken line of authority must
extend from the lowest to the highest posi-tion
in the organization.
The number of people who re-port to a particular
manager.
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Organizing and Organization Design
Harry S. Truman
The sign "The Buck Stops Here" was on USA
President Harry S. Truman's (1884-1972) desk in
his White House office. This was meant to
indicate that he didn't "pass the buck" to anyone
else but accepted personal responsibility for the
way the country was governed. The saying "the
buck stops here" derives from the slang
expression "pass the buck" which means passing
the responsibility on to someone else. The latter
expression is said to have originated with the
game of poker, in which a marker or counter,
frequently in frontier days a knife with a
buckhorn handle, was used to indicate the person
whose turn it was to deal. If the player did not
wish to deal he could pass the responsibility by
passing the "buck," as the counter came to be
called, to the next player.
dr hab. Jerzy Supernat
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Organizing and Organization Design

• Distributing authority
• Authority is power that has been legitimized by
  the organization.
• Richard H. Hall, Pamela S. Tolbert Authority is
  a type of power that is based on the acceptance
  by others of a given individuals legitimate
  right to issue orders or directives. Thus, orders
  are followed because it is believed that they
  ought to be followed recipients are expected to
  suspend judgment and comply voluntarily.
• Two specific issues that managers must address
  when distributing authority are
• Delegation
• Decentralization and centralization

dr hab. Jerzy Supernat
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Organizing and Organization Design
Delegation Delegation is the downward transfer of
authority from su-perior to subordinate (or
subordinates). The subordinate is empowered to
act for the superior, while the superior remains
accountable for the outcome. Delegation of
au-thority is a person-to-person relationship
requiring trust, commitment, and contracting
between the superior and the subordinate.
dr hab. Jerzy Supernat
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Organizing and Organization Design
Good News Bible, Exodus 18, 13-23 The next day
Moses was settling disputes among the people, and
he was kept busy from morning till night. When
Jethro saw everything that Moses had to do, he
asked, What is all this that you are doing for
the peo-ple? Why are you doing this all alone,
with people standing here from morn-ing till
night to consult you?. Moses answered, I must
do this because the people come to me to learn
Gods will. When two people have a dispute, they
come to me, and I decide which one of them is
right, and I tell them Gods commands and
laws. Then Jethro said, You are not doing it
the right way. You will wear yourself out and
these people as well. This is too much for you to
do alone. Now let me give you some good advice
you should choose some capable men and
appoint them as leaders of the people leaders of
thousands, hun-dreds, fifties, and tens. They
must be God-fearing men who can be trusted and
who cannot be bribed. Let them serve as judges
for the people on a permanent basis. They can
bring all the difficult cases to you, but they
them-selves can decide all the smaller disputes.
This will make it easier for you, as they share
your burden. If you do this, as God commands, you
will not wear yourself out, and all these people
can go home with their disputes settled.
dr hab. Jerzy Supernat
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Organizing and Organization Design

• Benefits of delegating
• leaves delegator (superior) free to concentrate
  on more important strategic issues
• increases job satisfaction for delegator and
  subordinate
• helps subordinate to develop new skills
• helps subordinate to grow in confidence
• provides an opportunity to assess subordinates
  potential
• fosters teamwork
• helps create a more motivated workforce
• enhances morale
• improves communication through feedback
• creates fresh insights into work issues
• helps create a climate for achievement
• ultimately speeds up results
• reduces costs (subordinates time is less
  expensive than delegators time)
• increases chances of promotion for delegator
• ensures smooth succession when delegator is
  promoted

dr hab. Jerzy Supernat
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Organizing and Organization Design
Decentralization Just as authority can be
delegated from one individual to another,
organizations also develop patterns of authority
across a wide variety of positions and
departments. De-centralization is the process of
systematically delegating power and authority
throughout the organization to mid-dle and
lower-level managers. Hence, a decentralized
or-ganization is one in which decision-making
power and authority are delegated as far down the
chain of com-mand as possible. Decentralization,
of course, is just one end of a continuum
anchored at the other end by centrali-zation, the
process of systematically retaining power and
authority in the hands of higher-level managers.
dr hab. Jerzy Supernat
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Organizing and Organization Design

• Coordinating activities
• Forms of interdependence
• pooled interdependence
• sequential interdependence
• reciprocal interdependence
• Structural coordination techniques
• managerial hierarchy
• rules and procedures
• liaison roles
• task forces
• integrating departments

The primary reason for coordi-nation is that
departments are interdependent. Reciprocal
inter-dependence requires the closest
coordination, sequential interde-pendence less,
pooled interde-pendence least.
dr hab. Jerzy Supernat
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Organizing and Organization Design

• Differentiating between positions
• Line positions
• Staff positions
• Administrative intensity

A line position is a position in the direct chain
of command that is responsible for the
achievement of an organizations goals.

• A staff position is intended to provide
  expertise, advice, and support for line
  positions.
• Forms of staff authority
• the authority to advise
• compulsory advice
• functional authority

Administrative intensity is the degree to which
managerial positions are concentrated in staff
positions.
dr hab. Jerzy Supernat
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Organizing and Organization Design
II
Organization design Organization design is the
overall configuration of struc-tural elements and
the relationships among those ele-ments used to
manage the total organization. Thus orga-nization
design is a means to implement strategies and
plans to achieve organizational goals.
It worth to remember that organizations are not
desig-ned and then left intact. Most
organizations change al-most continuously as a
result of factors such as events and people.
dr hab. Jerzy Supernat
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Organizing and Organization Design

• Universal perspectives on organization design
• mechanistic model / bureaucracy
• organic model / adhocracy

dr hab. Jerzy Supernat
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Organizing and Organization Design

• Tom Burns A mechanistic system is appropriate to
  stable conditions. It is characterized by
• The specialized differentiation of functional
  tasks into which the problems and tasks facing
  the concern as a whole are broken down.
• The abstract nature of each individual task,
  which is pursued with techniques and purposes
  more or less distinct from those of the concern
  as a whole.
• The reconciliation, for each level in the
  hierarchy, of these distinct performances by the
  immediate superiors.
• The precise definition of rights and obligations
  and technical methods attached to each functional
  role.
• The translation of rights and obligations and
  methods into the responsibilities of a functional
  position.
• Hierarchic structure of control, authority, and
  communication.
• A reinforcement of the hierarchic structure by
  the location of knowledge of actualities
  exclusively at the top of the hierarchy.
• A tendency for vertical interaction between
  members of the concern, i.e. between superior and
  subordinate.
• A tendency for operations and working behaviour
  to be governed by superiors.
• Insistence on loyalty to the concern and
  obedience to superiors as a condition of
  mem-bership.
• A greater importance and prestige attaching to
  internal (local) then to general (cosmo-politan)
  knowledge, experience and skill.

dr hab. Jerzy Supernat
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Organizing and Organization Design

• Tom Burns The organic form is appropriate to
  changing conditions, which give rise con-stantly
  to fresh problems and unforeseen requirements for
  action which cannot be bro-ken down or
  distributed automatically arising from the
  functional roles defined within a hierarchic
  structure. It is characterized by
• The contributive nature of special knowledge and
  experience to the common task of the concern.
• The realistic nature of the individual task,
  which is seen as set by the total situation of
  the concern.
• The adjustment and continual redefinition of
  individual tasks through interaction with others.
• The shedding of responsibilities as a limited
  field of rights, obligations, and methods.
• The spread of commitment to the concern beyond
  any technical definition.
• A network structure of control, authority, and
  communication.
• Omniscience no longer imputed to the head of the
  concern knowledge may be located anywhere in the
  network this location becoming the centre of
  authority.
• A lateral rather than a vertical direction of
  communication through the organization.
• A content of communication which consists of
  information and advice rather than instructions
  and decisions.
• Commitment to the concerns tasks and to the
  technological ethos of material progress and
  expansion is more highly valued than loyalty.
• Importance and prestige attach to affiliations
  and expertise valid in the industrial and
  technical and commercial milieux external to the
  firm.

dr hab. Jerzy Supernat
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Organizing and Organization Design

• Bureaucracy as seen by Max Weber (1864-1920)
• Official functions are fulfilled on continuous
  basis.
• Jurisdictional areas are clearly specified
  activities are distributed as official duties.
• Organization follows hierarchical principle.
• Intentional, abstract rules govern decisions and
  actions. Rules are stable, exhaustive, and can be
  learned.
• Decisions are recorded in permanent files.
• Means of production or administration belong to
  office. Personal property is separated from
  office property.
• Officials are selected on basis of technical
  qualifications, appoin-ted not elected, and
  compensated by salary.
• Employment by the organization is a career. The
  official is a full-time employee and looks
  forward to a life-long career. After a trial
  period they get tenure of position and are
  protected from arbitrary dismissal.

dr hab. Jerzy Supernat
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Organizing and Organization Design

• Adhocracy
• Adhocracy is the diametric opposite of M. Webers
  bureaucracy. It disregards the accepted,
  classical principles of management under which
  each and every one has a carefully defined and
  permanent role. Adhocracy
• is flexible and free flowing
• is non-hierarchical
• is based on participation
• is creative and entrepreneurial
• is based round networks
• is driven by corporate goals rather than
  nar-rowly defined functional ones
• utilizes information and communication
  technolo-gy (ICT) as a key resource

Max Weber in 1894
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Organizing and Organization Design

• Situational determinants of organization design
• strategy and organizational functions
• core technology
• environment
• organizational size
• organizational life cycle

dr hab. Jerzy Supernat
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Organizing and Organization Design

• Technology
• Technology is the conversion process an
  organization uses to trans-form inputs (various
  resources) into outputs (products or services).
  Joan Woodward (1916-1971), one of the first
  researchers to identify the link between
  technology and organization design, defined three
  basic types of technology
• unit or small-batch technology products are
  custom-made or pro-duced in small quantities
• large-batch or mass production technology
  products are manufa-ctured in assembly-line
  manner
• continuous-process technology products are
  transformed from raw materials into finished
  goods through a series of machine or process
  transformations that change the composition of
  the materials
• When Joan Woodward classified organizations by
  technology, the or-ganizations within each set
  had similar designs. Joan Woodward thus concluded
  that different forms of technology are likely to
  necessitate different types of organization
  design.

dr hab. Jerzy Supernat
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Organizing and Organization Design
Organizational size and life cycle
Organizational size refers to how large the
organization is, usually in terms of the number
of full-time employees. Organizational size can
affect organization design. Researchers at the
University of Aston found that large
organizations tend to have more job
specialization, more standard operating
pro-cedures, more rules and regulations, and more
decentralization than small organizations.
Organizational size is related to its life
cycle. Life cycle is the organization's
maturity relative to that of other
orga-nizations. Organizations tend to follow a
fairly predictable pattern of growth. This
pattern is one of creation, growth, and
stability.
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Organizing and Organization Design

• Forms of organization design
• functional (U-form) design
• conglomerate (H-form) design
• divisional (M-form) design
• matrix design
• hybrid designs
• team organization
• virtual organization
• learning organization

Organizations adopt many different kinds of
design. Most designs, however, fall into one of
four basic categories. Others are hybrids based
on two or more of the basic forms.
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Organizing and Organization Design
Functional (U-form) design
The functional design is an arrangement based on
the functional approach to departmentalization.
The design has been termed the U-form (for
unitary) by Oliver E. Williamson. Under the
U-form de-sign, the members and units in the
organization are grouped into functional
departments such as finance, marketing and
production. Functionally based designs are most
commonly used in small orga-nizations.
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Organizing and Organization Design
Conglomerate (H-form) design
Conglomerate design or H-form (H stands for
holding) is used by an organization made up of a
set unrelated businesses. In other words, the
H-form is used to implement a corporate strategy
of unrelated diversification. The conglomerate
design is based loosely on the product approach
to departmentalization. A general manager
opera-tes each business or set of businesses and
is responsible for its pro-fits or losses, and
each general manager functions independently of
the others.
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Organizing and Organization Design
Divisional (M-form) design
The M-form (M stands for multidivisional) design
is similar to the H-form design (the product
approach to departmentalization is also used),
but most or all of its businesses are in the same
or related industries (in the case above a firm
is specializing in mechanical con-tracting). The
M-form organization is used to implement a
corpora-te strategy of related diversification.
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Organizing and Organization Design
Matrix design. A matrix organization is created
by overlapping product-based departmentalization
onto a functional structure. Each member of a
matrix organi-zation has a functional 'home' but
may be assigned at any given time to one or more
groups working on special projects (project teams
/ product groups / tem-porary departments). Note
that a matrix relies on a multiple-command
structure.
Administra-tion
Production
Marketing
Finance
Project X
Project Y
Project Z
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Organizing and Organization Design
Advantages of the matrix design Disadvantages of the matrix design
flexibility employees participation opportunity to learn new skills opportunity to take full advantage of the organizations human resources enhanced cooperation opportunity to delegate and decentralize uncertainty about reporting relationships conflict of loyalties problems associated with the dynamics of group behavior a matrix organization may have to devote more time to coordinating task-related activities
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Organizing and Organization Design
Hybrid designs Some organizations use a design
that represents a hybrid (blend) of two or more
of the common forms of organi-zation design. For
example, an organization may have five related
divisions and one unrelated division, making its
design a cross between an M-form and an
H-form. Indeed, few organizations use a design in
its pure form. Most organizations, in fact, have
one basic organization design as a foundation but
maintain sufficient flexibility so that they can
make temporary or permanent modifications for
strategic purposes.
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Organizing and Organization Design
Team organization An approach to organization
design that relies almost ex-clusively on
project-type teams, with little or no underly-ing
functional hierarchy. Within such an organization
peo-ple float from project to project, according
to their skills and the demands of those project.
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Organizing and Organization Design
Virtual organization The virtual organization is
closely related to the team or-ganization. A
virtual organization has little or no formal
structure. Such an organization typically has
only a hand-ful of permanent employees and a very
small staff and administrative headquarters
facility. As the needs of the organization
change, its managers bring in temporary workers,
lease facilities, and outsource basic support
ser-vices to meet the demands. As the situation
changes, the temporary workforce also changes,
with some people leaving the organization and
others entering. Facilities and the services
subcontracted to others change as well.
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Organizing and Organization Design
Learning organization Organizations that adopt
this approach work to integrate their own
improvement with ongoing employee learning and
development. Specifically, a learning
organization is one that works to facilitate the
lifelong learning and per-sonal development of
all its employees while continually transforming
itself to respond to changing demands and needs.
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Concluding Remark
An empowered organization is one in which
individuals have the knowledge, skill, desire,
and opportunity to per-sonally succeed in a way
that leads to collective organiza-tional success.
Stephen R. Covey
dr hab. Jerzy Supernat