Organization theory and design 03 2013

organization @TC 2013

3 หลักการการออกแบบองค์กรที่มีประสิทธิภาพ


หัวข้อบรรยาย/กรณีศึกษา 1 แนวคิดทฤษฎีองค์การ 2 โครงสร้างและการออกแบบองค์การ Focus on task performance and structure Focus on motivation Focus on adjustments to the external environment 3 หลักการการออกแบบองค์กรที่มีประสิทธิภาพ 4 Fundamentals of Organization Designพื้นฐานแนวคิดการออกแบบโครงสร้างองค์การ C 1 : Harvard Business Case / NYPD New 5 Designing Around the Customer C 2 : Harvard Business Case /Transformation at Ernst & Young United Kingdom


What was it all about?

Get organized… & make it work:

To get the job done! STRUCTURE

PROCESSES


Why does Structure Matter?

•  Influences what employees pay attention to •  Affects ease of coordination •  Impacts the speed, cost, and quality of business activities •  Drives relationships and interaction


Key Success Factors

1.  Understanding business context is imperative.


Method Means Knowing the Context

•  What is the business and the organizational mission? •  Its stage in the lifecycle? •  Its value proposition? •  Its core competencies? •  Its desired goals and strategies? •  Process strengths and weaknesses?

… and only then applying design principles!


How Good is the Fit?


Alignment Examples

Task Technical System

Culture

Management System

People

Process

Technology

Formal Informal

Open/Flexible

Closed

Open/Flexible


The Star Model

•  Different Strategies = Different Organizations

•  Organization is More than Structure

•  Alignment = Effectiveness

Strategy

Structure

Processes Rewards

People

Behavior

Culture Performance

© Jay R. Galbraith


Key Success Factors

1.  Understanding business context is imperative. 2.  Always formulate goals for the design or redesign. 3.  Designs can be prescriptive or contingent 4.  Alignment is critical.


Organization Structure


Organization Structure

•  5 basic forms or configurations •  3 parts to management structure

– Hierarchy (no. of levels) – Spans of control – Centralization vs. decentralization

•  Best arrangements for coordination and control


Mintzberg’s 5 Organizational Forms

1.  Simple Structure 2.  Machine Bureaucracy 3.  Professional Bureaucracy 4.  Divisionalized Form 5.  Adhocracy


What are Pros and Cons?

• Functional • Product/Service • Geographies and/or customers • Business Process Teams • Matrix


Parts of Management Structure

1.  Hierarchy (No. of levels)



1.  Hierarchy (No. of levels) 2.  Spans of control



1.  Hierarchy (No. of levels) 2.  Spans of control 3.  Centralization vs.

Decentralization •  Cost •  Control •  Responsiveness •  Independence •  Technology

Corporate

Regional

Field Locations


Considerations

Scalability Small economy of scale

Large economy of scale

Cost-Structure Charge-Back Overhead

Financial Decentralize Centralize

Proximity to End User

High level of knowledge

Low level of knowledge

Competitive Advantage

Source near The market

Source is internal

Mission Very market- driven Slightly market- driven

External Decentralize Centralize


Considerations

Oversight & Control

Low Importance

High Importance

Internal Networks

Low level of coordination

High Level of Coordination

Operational Decentralize Centralize

Speed of Business

Fast Moving

Slow Paced


Considerations

Competencies

Arise from Business units

Maintained at the top

Leadership Style

Bottom-Up Top-Down

Strategic Decentralize Centralize

Culture & Values

Diverse

Shared

Entrepreneur-ship and Innovation

Highly Important

Low Importance


Coordination


Coordination & Control

•  Supervision •  Standardization of

– Work - Skills - Outputs •  Formal & Ad Hoc Teams •  Commitment and Employee Involvement


THE NEED FOR COORDINATION

•  If departments and work groups are interdependent; the greater the need for coordination…especially if the departments are decentralized.

•  Pooled interdependence –  When units operate with little interaction; their output is simply pooled at the organizational

level.

•  Sequential interdependence –  When the output of one unit becomes the input of another unit in sequential fashion.

•  Reciprocal interdependence –  When activities flow both ways between units.

ARE STRUCTURAL COORDINATING MECHANISMS NEEDED? Can we rely on the hierarchy, rules and procedures, and an occasional committee meeting to coordinate across these boundaries?

organization @TC 2013 24

Coordinating Mechanisms: six basic mechanisms : Mutual Adjustment – informal communication. It is a very simple form. Direct Supervision – one person coordinates by giving orders to others. Standardization of Work Processes – procedures and programming. Standardization of Outputs – not what is to be done, but of its results. Standardization of Skills and Knowledge – the worker is standardized, such as with professionalization

in a school (e.g., physicians) Standardization of Norms – workers share common beliefs and can achieve coordination based on it.

Mutual Adjustment Direct Supervision Standardization

Organizational Work Complication


STRUCTURAL COORDINATING MECHANISMS

•  The Managerial Hierarchy –  Going up the hierarchy (chain of command) to find a manager with the authority to make the

decisions that affect the interdependent units. •  Rules and Procedures

–  Coordinating routine activities via rules and procedures that set priorities and guidelines for actions.

•  Liaison Roles –  Designating a specific manager who will facilitate the flow of information to the

interdependent units by acting as a common point of contact. •  Task Forces (Temporary problem-solving groups)

–  Used with multiple units when coordination is complex requiring more than one individual and the need for coordination is acute.

–  Committees disbanded when the need for coordination has been met. •  Integrating Departments (Permanent structures)

–  Permanent organizational units that maintain internal integration and coordination on an ongoing basis.

–  May have authority and budgetary controls.


FACTORS THAT AFFECT THE DIFFICULTY OF ACHIEVING INTEGRATION LORSCH (77)

•  THE DEGREE OF DIFFERENTIATION

•  THE NUMBER OF UNITS REQUIRING INTEGRATION

•  PATTERNS OF INTERDEPENDENCE BETWEEN THE UNITS –  SEQUENTIAL –  POOLED –  RECIPROCAL

•  THE FREQUENCY OF INTERACTION REQUIRED AMONG THE UNITS

•  THE COMPLEXITY AND IMPORTANCE OF THE INFORMATION SHARED


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What is it all about? to the process organization


Organizational Design & Processes

•  An organization’s structure is not an end in itself. But it sets the context for managerial action.

•  Structure is just one tool that managers can employ to achieve the objectives

that have been set.

Source: Nohria, N. “Note on Organization Structure” Harvard Business School


… to the process organization

Moving away with the functional silos

To create new organizational structures «process-complete unit» each able to perform all the cross-functional steps or tasks required to meet

customers' needs.

Source: Majchrzak, A. & Wang, Q. «Breaking the Functional Mind-set in Process Organizations» HBR


… to new forms of organization The “disaggregated”… “virtual”… “networked”… : •  Creating smaller sub-units with significant decisions rights; •  Decreasing the layers of management and the extent of central staff; •  Joint-venture and strategic-alliance and outsourcing: the line of what is inside

and what is outside has blurred.

Source: The Economist “The new organisation: a survey of the company”


… to new forms of organization

The “disaggregated”… “virtual”… “networked”… : •  Linked closely where opportunities to create values and loosely where values

lie in differentiation

•  And where IT becomes an electronic glue … •  Redrawing the boundaries …



New Organization Model: New Management Roles •  Building from small front-line operating units; •  Cross-unit integrative process; •  Commitment to empowerment;

Source: BARTLETT, C.A.; GHOSHAL S. “The Myth of the Generic Manager”


New Organization Model: New Management Roles

… in building and managing a company that stimulates people to take

initiatives, to collaborate, to renew themselves and the organization…

Source: GOSHAL, S., BARTLETT, C.A. “ Building Organizational Capabilities”



•  The Entrepreneurial Process: –  Looking for innovation & opportunities

•  The Integration Process: –  Linking resources and competencies

•  The Renewal process: – Challenging its own beliefs and practices

Source: GOSHAL, S., BARTLETT, C.A. “ Building Organizational Capabilities”



ENTREPRENEURS COACHES LEADERS

Source: BARTLETT, C.A.; GHOSHAL S. “The Myth of the Generic Manager”


New Organization Model: What does it take?

•  LEADERSHIP – … more responsibilities handed down to the workforce at large, many

more people than before are having to exercise authority. •  TALENT

– … hold on knowledge workers…essentials to its operations… and who are not motivated only by money.

•  CULTURE – … the compass that steers employees in the way the organisation wants

them to go, is its culture.



LEADERSHIP & ORGANIZATION

CULTURE & VALUE

PEOPLE & SKILLS

PROCESSES & TOOLS INNOVATION

EFFECTIVENESS

EVERYTHING IS LINK TOGETHER…

Source: Loewe, P. & Dominiquini, J «Overcoming the barriers to effective innovation» Strategy & Leadership


New Organization Model:

Configuring:

ü Structure ü Processes

ü Reward systems ü People practices & policies

TO SUPPORT A NEW STRATEGY How can we get organized to deliver on the strategy?

Source: Galbraith, J & al: « Designing Dynamic Organization » Chapter 1 ‘Getting started’


New Organization Model:

To the reconfigurable organization:

ü Active leadership: The organization as a source of competitive advantage

ü Knowledge management: Collect and share knowledge across boundaries… IT connected

ü Learning: People who have «learning aptitude» and can move around

ü Flexibility: And more changes to come… tolerance for ambiguity and unpredictability

TO RESPOND TO

AN EVER-CHANGING ENVIRONMENT Source: Galbraith, J & al: « Designing Dynamic Organization » Chapter 1 ‘Getting started’