PART 3: ORGANIZING
CHAPTER 5 - BASIC ORGANIZATION DESIGNS
After reading this chapter, students should be able to:
1. Identify and define the six elements of organization structure. 2. Describe the advantages and disadvantages of work specialization. 3. Contrast authority and power.
4. Identify the five different ways by which management can departmentalize. 5. Contrast mechanistic and organic organizations.
6. Summarize the effect on organization structures of strategy, size, technology, and environment. 7. Contrast the divisional and functional structures.
8. Explain the strengths of the matrix structure.
9. Describe the boundaryless organization and what elements have contributed to its development. 10. Describe what is meant by the term organization culture.
Not more than a decade or two ago, managers sought to pattern their organizational structures after such companies as General Motors and IBM, seeking to create hierarchical organizations with mass production capabilities and efficiencies, standardized rules and regulations, and centralized control. Example, the accounting profession in a firm such as Lipschultz, Levin and Gray (LLG),
For decades, LLG was the prototypical accounting firm. As the firm grew, more and more management layers were added. But it wasn't until Harold Lipschultz left the firm and turned the managing responsibilities over to Steve Siegel that things changed.
Siegel cut the staff nearly in half, eliminated private offices, etc., tearing down walls. He gave every employee a rolling tote cart, a phone, a laptop computer, and some hanging file folders. He thought this change could create a team of workers who could be crossed-trained and who could offer better client service. Siegel changed the dress code--from business dress to business casual. Radical structural changes in any organization--but changes that have proved quite beneficial to LLG.
Since he took over as managing partner and made his draconian changes, the Bean Counters have witnessed considerable growth. Their referrals have more than doubled, and income has more than tripled in the past 10 years. The firm is located in an office space that is 60 percent smaller. LLG has had remarkable success in recruiting new accountants. Employee longevity with the firm has also more than doubled, going from 4.75 years to over 10.
1. Discuss this case with students asking them:
➢ Why did new management have to come in to make these changes? ➢ How do they think employees reacted initially?
➢ Would they want to work for a company while it was going through such change? After the change? Why? ➢ Which changes do they think really had something to do with improvement of performance and which were simply Siegel's personal preferences? Why? ➢ Why did organizational design changes impact performance? 2. Discuss, "What would happen if such radical changes were made at your institution?" ➢ What things would change? Stay the same?
1 The Steve Siegel Example
1. Demonstrates the importance of having the right structure and work environment. 2. Once decisions regarding corporate strategies are made, an effective structure must be implemented to facilitate the attainment of those goals. a) When managers develop or change the organization's structure, they are engaging in organization design. 3. Organization design decisions are typically made by senior managers. 4. Organization design applies to any type of organization.
I. THE ELEMENTS OF STRUCTURE
2 The Basic Concepts of Organization Design
1. Formulated by management writers in the early years of this century. 2. These principles still provide valuable insights into designing effective and efficient organizations. 3. We will discuss the six elements of structure
3 What Is Work Specialization?
4. In the 1700s, Adam...
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