Organization Design
The design of the organization is composed of
the structure, rewards and management
practices intended to direct members’
behaviours toward the organization’s goals, as
well as the criteria used to select person’s for
the organization.
The Goals of Organizational Design
To create an organization design that provides a
permanent setting in which managers can influence
individuals to their particular jobs.
To achieve the pattern of collaborative effort among
individual employees, which is necessary for
successful operations.
To create an organization that is cost effective. That
is, one which not only achieves the first two goals,
but does so with a minimum of duplication of effort
or payroll costs, and so on.
Differentiation
Horizontal differentiation
Degree of differentiation between organizational subunits.
Vertical differentiation
The difference in authority and responsibility
in the organizational hierarchy
Spatial differentiation
Geographic dispersion of an organization’s offices,
plants and personnel
Beyond the Book:
Differntiation at Cisco
• At Cisco, the existence of multiple teams, councils, boards,
and working groups within Cisco creates a web of internal
integrating structures that lead to fast decisions by the right
people to ensure that the company is agile.
• Cisco has a complex organizational structure because it
allows the firm to enter into new markets quickly.
• An emphasis on horizontal integration and cross-function
teaming allows Cisco to be much more agile than before. A
key benefit is speed in decision making.
Managing Complexity Through Integration
Interdependence is the degree to which work
groups are interrelated.
Three primary levels of work group integration:
- Pooled interdependence
- Sequential interdependence
- Reciprocal interdependence
Pooled Interdependence
Occurs when organizational units have a
common resource but no interrelationship with
one another.
Sales Teams A
F B
Head-
quarters
E C
D
Sequential Interdependence
Occurs when organizational units must coordinate
the flow of information, resources, and tasks from
one unit to another. For example: Manufacturing
Teams
A B C
Reciprocal Interdependence
Occurs when information,
A B
resources, and tasks must be
passed back and forth between
work groups. Integration
between marketing, research
C D
development & manufacturing
personnel in developing new
products E F
For example-Design Teams
Integrating Mechanisms
Methods for managing the flow of
information, resources, and tasks within the
organization.
Three major categories of integrating
mechanisms are:
- General management systems.
- Methods of increasing coordination potential.
- Methods of reducing the need for
coordination.
Integration
Vertical integration
•Hierarchical referral
•Rules and procedures
•Plans and schedules
•Positions added to the organization
structure
•Management information systems
Horizontal differentiation
•Liaison roles
•Task forces
•Integrator positions
•Teams
Organizational Design in Functional Units
1.Employee Motivation
2.Division of Work :
- Job design and the division of work
- Creating a cost effective organization
3. Achieving Integration:
-
Organizing the single business
Differentiation of Functions: Issue of equity and
fairness,
Too much emphasis on standardization to ease
administrative tasks
Goals each unit should focus on
Time period for each unit to obtain some definitive
feedback about the results of its members efforts
Appropriate leadership behaviour for each unit
Alignment between the pattern of structure,
measurement and rewards with the members personal
expectations
Integration of Functions
Review of factors affecting the difficulty of
achieving integration:
No of units requiring integration
Patterns of integration
Frequency of integration required
Importance of integration to organizational
results
Complexity and uncertainty of information
Degree of differentiation
