Organizational Theory and Design Dersi 3. Ünite Sorularla Öğrenelim

What is organizational design?

Organizational design is the whole specification of strategy, processes, and structure of the organization. Processes include coordination, control, and incentives.

What are the coordination mechanisms for organizations?

1. Face-to-face interpersonal interaction

2. Rules and procedures for coordinating routine, recurring activities

3. Standardized plans, skills, and values

4. Direct supervision

5. Staff assistants as specialized administrative personnel created to facilitate interaction between personnel of the same unit

6. Liaisons as specialized positions or units designed to facilitate interchange between interdependent units

7. Teams having members from different units

8. Coordination-supporting software packages

9. Independent integrators, who are independent of the departments they coordinate and report to the manager who oversees those departments.

What does "control" mean in organizational design process?

Control refers to a process through which management is able to initiate and regulate activities such that their results fit in with the goals and expectations held by management. 

What are the important strategies of control in organizations?

1. Personal centralized control including direct supervision of people’s activities and centralized decision-making.

2. Bureaucratic control, whose most characteristic feature is formalization in the sense of written and standardized definitions of responsibilities and procedures.

3. Output control, which depends on having the ability to identify tasks that are complete in themselves, in the sense of having a measurable output or criterion of overall achievement.

4. Control through electronic surveillance, in which the speed and quality of work is recorded and appraised remotely through the use of information and communication technology, including video.

5. HRM control including recruitment and selection, performance appraisal, training and development, and rewards.

6. Cultural control, which aims to ensure that the members of an organization willingly comply with managerial requirements on the basis both of accepting the legitimacy of management’s authority and of identifying with its goals.

What are the basic incentive systems to improve performance and meet unit goals in organizations?

1. Personal pay, which is based on the individual compliance with rules or directives. Usually, personal pay-based systems take the form of a contract through which employee behavior is measured regarding people coming on at a particular time and then working for some hours.

2. Skill-based pay, which is based on merit, and is usually measured regarding formal education and seniority. It is the basis for payment in most organizations, whether private companies or public organizations.

3. Bonus-based incentives, which are based on individual performance, are rooted in a management-by-objectives philosophy. Goals, which are derived from the organizational goals, are set for employees, and rewards are distributed based on performance which is compared to preset targets or goals.

4. Profit sharing is based on giving both a fixed bonus and a share in the profits to the group (team, a division, department, or another subunit; it could also be the whole organization). People are rewarded by productive collaboration with others to yield high performance on the part of the group.

What is departmentalization? 

A fundamental characteristic of organization structure is departmentalization, which is the basis for grouping positions into departments and departments into the entire organization.

What are the significant forms of departmentalization?

There are four significant forms of departmentalization: simple, functional (unitary), multidivisional, and matrix.

Describe the functional (unitary) form of departmentalization in organizations.

A function is a group of people, working together, who have similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs. A functional form (U-from) consists of all the departments that an organization requires to produce its goods or services.

What are the advantages of A multidivisional form (M-form) of departmentalization?

The M-form has several advantages. The first of these is size. Multidivisional organizations consistently grow more extensive than their functional counterparts.  Large organizations can typically hire the best executives because most are attracted to the power and influence large organizations command, not to mention the salaries they offer. Furthermore, the resources that are under the control of large organizations give them more opportunities to broaden their competitive activities both domestically and abroad. Secondly, the M-form also provides better training for future executives than does the functional form and headquarters staff acquire broad-based experience that is unlikely to be gained within the functional form. Thirdly, the M-form offers enhanced responsiveness to the needs of customers because of the specialization allows greater focus on the businesses each division operates. Finally, the M-form provides for accountability based on divisional profits. The profitability of each independent division can be used to compare it with both internal and external competitors

What is the primary disadvantage of the M-form of departmentalization?

The primary disadvantage of the M-form is duplication. Usually, each department has the same functional units such as production, marketing, and accounting. Overlap like this often results in higher costs.

What are the advantages of the matrix form of departmentalization?

The matrix form has significant advantages. One is tremendous flexibility to tackle new projects. Within both U-form and M-form designs, starting a new project generally requires either adding responsibility to every function or creating a new division, whereas starting a new project is a common event within matrix organizations that only requires naming a project manager and recruiting a team. Therefore, a matrix retains the flexibility of the M-form to provide customer service and respond to opportunities in the environment. Another advantage of matrix forms derives from their unique ability to maximize the value of expensive specialists. The specialists can be pooled for a wide variety of projects, some of which may be otherwise unrelated and thus likely to remain structurally unconnected in the M-form. Although the individual specialist will have to deal with issues like working on two or more unrelated projects for project managers who have little concern for the specialists’ competing responsibilities, from the perspective of the organization, the sharing out of specialized capabilities creates the significant efficiency the U-form offers relative to the M-form. This is because where the M-form would hire potentially redundant specialists for each of its divisions, the matrix can more efficiently use its specialists to their full capacity. 

What is a business group?

When companies enter different industries, which have either few or no similarities with each other, the Multidivisional form becomes inadequate. That is why; these companies create a business group, which is a collaboratively coordinated set of legally independent companies. The base for the reason for collaboration between the companies can be joint ownership, products, and financial or family bonds.

What is the main advantage of business group form of organizations?

The main advantage of the form of business group is achieving financial synergy, which refers to increases in competitiveness for each unit financially controlled by the corporate headquarters beyond what can be achieved by each unit competing independently as a standalone company. The mechanism to obtain financial synergy is identifying and funding profitable investment opportunities.

What is the network form of organization?

The network form combines legally separate companies along a value chain (the input-out system containing activities such as design, procurement of raw materials and/or components, production, marketing, and after-sale services) into a loosely integrated whole.

What are the types of the network form of organizations?

There are three types of a network form: The dynamic network includes independent companies along the value chain form temporary alliances from among a large pool of potential partners. The stable network consists of a large core company creates market- based linkages to a limited set of partners. The internal network is composed of commonly owned companies allocate resources along the value chain using prices established in the open market.

What is virtual form of organizations?

A highly developed version of the network form is the virtual form, which exists within a space that is not bound by the legal and physical structures that define a conventional organization. Certain phrases are commonly used to identify the virtual organization, lack of physical structure, reliance on ICT, fluidity and mobility, the transcending of conventional boundaries, networks, and flexibility.

What are the advantages of network form of organizations?

There are two main advantages of network forms. First, networks are capable of extremely rapid information exchange because they can process information in multiple directions at the same time. Rapid information exchange enables network partners to exploit opportunities before non-networked competitors even become aware that they exist. Second, the relative independence of decision making allows experimentation and learning, and new knowledge can be rapidly diffused throughout the network. By enhancing the spread of information and bringing together different logics and novel combinations of information, networks provide the conditions for innovation.

According to the contingency theory, What are the types of organizational design?

According to the contingency theory, there are two types of organizational design: the mechanistic and organic (“organismic”) organizational designs.

The mechanistic organization has a high degree of formalization, centralization, and specialization; tall hierarchy; bureaucratic control; and personal and/ or skill-based pay as the incentive system.

The organic organization includes a low degree of formalization and specialization, decentralization; flat hierarchy; HRM and/or cultural control; and bonus-based incentives and/or profit sharing as the incentive system.

What are the types of technology in mechanical complexity typology of technology as a contingency factor?

Unit technologies produce one item or unit at a time or a few items all at once.

Mass production technologies deliver high numbers of identical products using highly routinized and often mechanized procedures.

The continuous processing is a series of non-discrete transformations occurring in a sequence.

What is machine bureaucracy? 

The machine bureaucracy is enormous, typically mature, and is often oriented to mass production. The middle management area reflects the tall hierarchy for control. This form demonstrates extensive formalization and specialization, with a primary goal of efficiency. This form is suited to a simple, stable environment.