Unit 1.6 - Organizational Design and Development Flashcards
Describe the difference between efficiency and effectiveness
Efficient - simply a ratio of inputs to outputs
Effective - obtain inputs, transforming them into useful products, selling them, and obtaining more inputs
Efficiency is all about reducing costs and resources required to execute on tactics. Effectiveness is about achieving strategic goals that align with the vision of the organization and drive more revenue.
Ex. Efficiency is busy and effectiveness is productive
What are the two basic issues an org must figure out regarding organizational structure?
- Differentiation - how to divide the work into specialized jobs
- Integration - how to coordinate what has been divided
What design decisions are involved in creating an organizational structure?
AKA 5 methods of achieving coordination
- Departmentalization
- The delegation of authority (centralized vs. decentralized spectrum)
- Coordinating mechanisms
- Division of labor
- Span of control
All are situation-dependent
What is a matrix structure of departmentalization?
Departmentalization is one of the 5 design decisions
Its matrix structure is a combination of:
- Function - focuses on one function; more efficient; may cause suboptimizing (failure of coordinating with other departments)
- Product - duplicates jobs in each product; more effective; may cause duplication of roles (often seen in large retailers)
Ex. Think HMS, all teams could be divided by product, regardless of job (Eva, PYT, etc.) OR, by function ex. all sales people on one team regardless of if they’re selling for Eva or PYT
What are the two forms of departmentalization in a matrix structure?
Function and Product
Describe the delegation of authority in org design/development
One of the 5 design decisions
Centralized vs. decentralized decision making
Describes how broadly the delegation of authority is distributed through the organizational hierarchy
Increased decentralization = many times - increased effectiveness, productivity, employee satisfaction, profits
Cons of decentralization - makes it more difficult for shared functions to be executed, can create conflict over priorities, requires greater competence and expertise on part of the decision makers, lower level managers may be less skilled at making good decisions
Successful decentralization requires a strong company culture
The best level of centralization to choose for an org is situation dependent (its a spectrum); think of ConsenSys as all the way to the right (completely decentralized)
What are the 5 integrating mechanisms to achieve coordination along a continuum of discretion allowed to the employee?
AKA formal vs informal rules
Coordination of control mechanisms is one of the 5 design decisions
Its 5 integrating mechanisms are (ordered from left to right on a continuum from least to most personal discretion)
- Direct supervision - work is coordinated by supervisors who tell their workers what to do (most centralized)
- Standardization of work processes - highly routine jobs can be coordinated by standard operating procedures of the technology itself
- Standardization of of outputs - technical specifications may serve as a basis, workers are allowed some discretion as long as output is adequate
- Standardization of skills - highly skilled and trained employees coordinate their own activities in line with their training (ex. doctors)
- Mutual adjustment - constant adjustment/give and take, informal communication; individuals coordinate their work through informal processes; adjusting to each others’ needs (most decentralized)
Describe the division of labor in org design/development
One of the 5 design decisions
It’s the extent to which jobs should be specialized.
Continuum; high specialization to low specialization (centralized to decentralized)
Specialization is more productive and but more boring, could cause a lack of coordination or not enough work to keep everyone busy
Benefits-
* More proficiency because its the same activity over and over again
Less training
* Less time is lost from switching activities
* Special tools can be developed for automation
* Better quality control of output
Describe the span of control in org design/development
One of the 5 design decisions
It’s the number of individuals in a group under one supervisor (higher span of control is more employees under one supervisor and more flat).
Considerations:
* Contact required - jobs that require frequent contact should use a narrower span of control
* Level of subordinate education and/or training - highly skilled employees need less supervision
* Ability to communicate - if instructions can be communicated easily, a higher span of control works better
* Nature of the task - jobs that are repetitive and stable can have wider span of control
What is the matrix structure in org design?
In departmentalization, one of the 5 decisions
Each department reports to both a product and functional manager
Most orgs have found it to be best reporting structure bc of its organization of both product and function
Particularly useful in an uncertain environment
Cons (matrix tax) - role ambiguity, stress, unproductive conflicts
Describe line vs. staff activities
Line - production related activities (ex. engineering, shipping for a company)
Staff - Supportive activities that provide service and advice to line personnel
Describe mechanistic vs. organic organizations
Mechanistic Structure
* Bureaucratic
* Homogenous departments
* Centralized decision making
* Formal rules
* Specialized jobs
* Exist in stable environments
Organic Structure
* Flexible
* Heterogeneous departments
* Decentralized decision making
* No strict lines of authority
* Autonomy amongst employees
* Able to adapt to change quickly
* Can deal with uncertainty
