Basic Challenges of Organisational Design

Question 1

Differentiation

Answer 1

The process by which an organisation allocates people and resources to organisational tasks and establishes the task and authority relationships that allow the organisation to achieve its goals.

Question 2

Division of labor

Answer 2

The process of establishing and controlling the degree of specialisation in the organisation.

Question 3

In a simple organisation, differentiation is low because…

Answer 3

the division of labor is low

Question 4

In a complex organisation, both what and what are high?

Answer 4

the division of labor and differentiation are high

Question 5

Design Challenge 1

Answer 5

People in this organisation take on new tasks as the need arises, and it’s very unclear who is responsible for what, and who is supposed to report to whom

Question 6

Organisational role

Answer 6

The set of task-related behaviours required of a person by his or her position in an organisation.

Question 7

Authority

Answer 7

The power to hold people accountable for their actions and to make decisions concerning the use of organisational resources.

Question 8

Control

Answer 8

The ability to coordinate and motivate people to work in the organisation’s interests.

Question 9

Function

Answer 9

A subunit composed of a group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs.

Question 10

Division

Answer 10

A subunit that consists of a collection of functions or departments that share responsibility for producing a particular good or service.

Question 11

Support functions

Answer 11

Functions that facilitate an organisation’s control of its relations with its environment and its stakeholders.

Question 12

Production functions

Answer 12

Functions that manage and improve the efficiency of an organisation’s conversion processes so more value is created.

Question 13

Maintenance functions

Answer 13

Functions that enable an organisation to keep its departments in operation

Question 14

Hierarchy

Answer 14

A classification of people according to authority and rank

Question 15

Vertical differentiation

Answer 15

The way an organisation designs its hierarchy of authority and creates reporting relationships to link organisational roles and subunits

Question 16

Horizontal differentiation

Answer 16

The way an organisation groups organisational tasks into roles and roles into subunits (functions and divisions).

Question 17

What are the 3 other design challenges?

Answer 17

How to link and coordinate organisational activities.

To determine who will make decisions.

To decide which types of mechanisms are best suited to controlling specific employee tasks and roles

Question 18

Subunit orientation

Answer 18

A tendency to view one’s role in the organisation strictly from the perspective of the time frame, goals, and interpersonal orientations of one’s subunit.

Question 19

Reasons for problems in communication and coordination among subunits

Answer 19

The development of subunit orientations that makes communication difficult and complex.

Another reason for lack of coordination and communication is that managers often fail to use the appropriate mechanisms and techniques to integrate organisational subunits

Question 20

Integration

Answer 20

The process of coordinating various tasks, functions, and divisions so that they work together and not at cross purposes.

Question 21

Hierarchy of authority

Answer 21

A ranking of employees integrates by specifying who reports to whom.

Question 22

Direct contact

Answer 22

Managers meet face to face to coordinate activities.

Question 23

Liaison role

Answer 23

A specific manager is given responsibility
for coordinating with managers from other
subunits on behalf of his or her subunit

Question 24

Task force

Answer 24

Managers meet in temporary committees to coordinate cross-functional activities

Question 25

Team

Answer 25

Managers meet regularly in permanent committees to coordinate activities.

Question 26

The types of integrating mechanisms

Answer 26

Hierarchy of authority

Direct contact

Liaison role

Task force

Team

Integrating role

Integrating department

Question 27

Integrating role

Answer 27

A new role is established to coordinate the activities of two or more functions or divisions.

Question 28

Integrating department

Answer 28

A new department is created to coordinate the activities of functions or divisions.

Question 29

Managers facing the challenge of deciding how and how much to differentiate and integrate must do two things:

Answer 29

(1) carefully guide the process of differentiation so an organisation builds the core competences that give it a competitive advantage

(2) carefully integrate the organisation by choosing appropriate coordinating mechanisms that allow subunits to cooperate and work together to strengthen its core competences

Question 30

Decentralised

Answer 30

An organisational setup in which the authority to make important decisions about organisational resources and to initiate new projects is delegated to managers at all levels in the hierarchy.

Question 31

Centralised

Answer 31

Organisational setup in which the authority to make important decisions is retained by managers at the top of the hierarchy.

Question 32

Advantage of centralisation

Answer 32

It lets top managers coordinate organisational activities and keep the organisation focused on its goals.

Question 33

Issue with centralisation

Answer 33

Centralisation becomes a problem, however, when top managers become overloaded and immersed in operational decision making about day to-day resource issues (such as hiring people and obtaining inputs).

When this happens they have little time to spend on long-term strategic decision making, and planning crucial future organisational activities, such as deciding on the best strategy to compete globally, is neglected.

Question 34

Advantage of decentralisation

Answer 34

It promotes flexibility and responsiveness by allowing lower-level managers to make on-the-spot decisions. Also, when authority is decentralised managers can make important decisions that allow them to demonstrate their personal skills and competences and may be more motivated to perform well for the organisation

Question 35

Issue with decentralisation

Answer 35

Is that if so much authority is delegated that managers at all levels can make their own decisions, planning and coordination become very difficult

Question 36

Standardisation

Answer 36

Conformity to specific models or examples—defined by sets of rules and norms—that are considered proper in a given situation.

Question 37

Mutual adjustment

Answer 37

The compromise that emerges when decision making and coordination are evolutionary processes and people use their judgment rather than standardised rules to address a problem.

Question 38

Formalisation

Answer 38

The use of written rules and procedures to standardise operations.

Question 39

Rules

Answer 39

Formal written statements that specify the appropriate means for reaching desired goals

Question 40

Norms

Answer 40

Standards or styles of behaviour that are considered acceptable or typical for a group of people.

Question 41

A high level of formalisation typically implies

Answer 41

Centralisation of authority

Question 42

A low level of formalisation implies

Answer 42

That coordination is the product of mutual adjustment among people across organisational functions and that decision making is a dynamic process in which employees apply their skills and abilities to respond to change and solve problems.

Question 43

Mutual adjustment typically implies

Answer 43

Decentralisation of authority because employees must have the authority to commit the organisation to certain actions when they make decisions

Question 44

Norms

Answer 44

Standards or styles of behaviour that are considered acceptable or typical for a group of people

Question 45

Socialisation

Answer 45

The process by which organisational members learn the norms of an organisation and internalise these unwritten rules of conduct.

Question 46

Individual Specialisation

Answer 46

Employees work separately and specialise in one clearly defined task.

Question 47

Simple Integrating Mechanisms

Answer 47

Hierarchy of authority is clearly defined and is the
major integrating mechanism.

Question 48

Mechanistic structures result when an organisation makes these choices.

Answer 48

Individual Specialisation

Simple Integrating Mechanisms

Centralisation

Standardisation

Question 49

Centralisation

Answer 49

Authority to control tasks is kept at the top of the
organisation.

Most communication is vertical.

Question 50

Standardisation

Answer 50

Extensive use is made of rules and SOPs to coordinate
tasks, and work process is predictable.

Question 51

Organic structures result when an organisation makes these choices.

Answer 51

Joint Specialisation

Complex Integrating Mechanisms

Decentralisation

Mutual Adjustment

Question 52

Joint Specialisation

Answer 52

Employees work together and coordinate their actions to find the best way of performing a task.

Question 53

Complex Integrating Mechanisms

Answer 53

Task forces and teams are the major integrating mechanisms.

Question 54

Decentralisation

Answer 54

Authority to control tasks is delegated to people at
all levels in the organisation. Most communication
is lateral.

Question 55

Mutual Adjustment

Answer 55

Extensive use is made of face-to-face contact to
coordinate tasks, and work process is relatively
unpredictable.

Question 56

Mechanistic structures

Answer 56

Structures that are designed to induce people to behave in
predictable, accountable ways.

Question 57

Organic structures

Answer 57

Structures that promote
flexibility, so people initiate
change and can adapt quickly
to changing conditions

Question 58

Contingency approach

Answer 58

A management approach in
which the design of an
organisation’s structure is tailored to the sources of
uncertainty facing an
organisation.

Question 59

According to contingency theory, in order to manage its environment effectively, an organisation
should…

Answer 59

Design its structure to fit with the environment in which the organisation operates

In other words, an organisation must design its internal structure to control the external environment

Question 60

What did Paul Lawrence and Jay Lorsch find?

Answer 60

They found that when the environment was perceived by each of the three departments
as very complex and unstable, the attitudes and orientation of each department
diverged significantly. Each department developed a different set of values, perspectives, and way of doing things that suited the part of the specific environment it was
dealing with. Thus the extent of differentiation between departments was greater in
companies that faced an uncertain environment than in companies that were in stable
environments.

Question 61

What did Lawrence and Lorsch also find?

Answer 61

when the environment is perceived as unstable
and uncertain, organisations are more effective if they are less formalised, more decentralised,
and more reliant on mutual adjustment.When the environment is perceived as relatively
stable and certain, organizations are more effective if they have a more centralized,
formalized, and standardized structure. Moreover, they found that effective companies in
different industries had levels of integration that matched their levels of differentiation
The message of Lawrence and Lorsch’s study was that organizations must adapt their
structures to match the environment in which they operate if they are to be effective.

Question 62

Stalker’s conclusion

Answer 62

Organizations should design their structure to match the dynamism
and uncertainty of their environment.