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TOPIC 12

Organizational Design

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Characteristics Common to All Organizations

Hierarchy ofauthority

Division oflabor

Commongoal

Coordinationof effort

Organization: System of consciously coordinatedactivities of two or more people.

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Organization Charts

Example of Hospital's Organization Chart

Director of

Human

Resources

Director of

Admissions

Director of

Accounting

Director of

Nutrition

and Food

Services

Executive

Administrative

Director

Director of

X-Ray and

Laboratory

Services

Director of

Surgery

Director of

Pharmacy

Chief

Physician

Executive

Medical

Director

President

Chief Executive

Officer

Board of Directors

Type title here

Strategic PlanningOfficer

Legal Counsel

Cost-ContainmentStaff

Director ofPatient and

PublicRelations

Director ofOutpatient

Services

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Organizational Structure Terms

Span of control

The number of people reporting directly to agiven manager

Staff Personnel denoted by dotted lines

Provide research, advice, andrecommendations to line managers

Line managers denoted by solid linesHave authority to make organizational

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Test Your Knowledge

True (A) or False (B)

1. The ideal span of control is 10.

2. Wider spans of control complementemployee empowerment trends.

3. Narrower spans of control save costs and areadministratively efficient.

4. With wider spans of control, inadequatesupervision and less coordination may result

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Closed Vs. Open Systems

Closed System arelatively self-sufficiententity

Open System organismthat must constantlyinteract with itsenvironment to survive

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The Organization as an Open System

Goals and ValuesSubsystem

TechnicalSubsystem

Psychological

Subsystem

StructuralSubsystem

ManagerialSubsystem

Feedback

Inputs

Material

Money

Human effort

Information

Outputs

Products

Services

Human

satisfaction

Organiz-

ational

survival and

growth Social

benefit

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Learning Organization

LearningOrganization

is the oneis the one proactively

creates, acquires, andtransfers knowledgethroughout theorganization

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A Supportive Culture for OrganizationalL

earningSensitive topics are freely discussedUpper-level managers are approachable

Interpersonal interactions are frequent and meaningful

A collective responsibility for solving problems

Full recognition of expertise and appreciation ofexisting knowledge

Knowledge is freely shared rather than hoarded (kept)Teaching is highly valued

Everyone is committed to learning from mistakes

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Organizational Structures

Organized according to business function (marketing, finance,etc.)

Functional

Organized by activities related to outputs (e.g., product orservice type or location of customer)

Divisional Structure

Horizontal cooperation necessary as is functional knowledge

Typically organized by function vertically and product/servicehorizontally

Matrix Structure

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Horizontal Design for Collaboration

Provide required expertise from outside the team as

required.

Let supplier and customer contact drive performance.

Appoint process team leaders to manage internal teamprocesses.

Flatten hierarchy and use teams to manage everything

Organize around complete workflow processes ratherthan tasks

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Designs that Open Boundaries

Between Organizations

Outsourcing non-core processes to those more able

Hollow

Outsources parts of a product rather than processes

Modular

Temporary company created to respond to anexceptional market opportunity

Virtual

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Test Your Knowledge

Regardless of the specific type, tobe effective tomorrows

organizations will require:a. Rigidity

b. Short-term thinking

c. Internal focus

d. Flexibility and adaptability17-13

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Characteristics of Mechanistic andOrganic Organizations

4) Specification oftechniques,obligations, and

rights

3) Task flexibility

2) Linkage betweenindividualscontribution andorganizationspurpose

1) Task definitionand knowledge

required

OrganicOrganizations

MechanisticOrganizations

Characteristic

Broad; generalNarrow; technical

Clear or directVague or indirect

Flexible; variedRigid; routine

GeneralSpecific

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Characteristics of Mechanistic andOrganic Organizations

8) Emphasis onobedience andloyalty

7) Primary decision-

making style

6) Primarycommunicationpattern

5) Degree ofhierarchal control

OrganicOrganizations

MechanisticOrganizations

Characteristic

LowHigh

Lateral(between peers)

Top-down

Democratic;

participative

Authoritarian

LowHigh

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