Summary

Chapter 7: Designing Effective Organizations

  1. Whatever their purpose, all organizations have four characteristics: (1) coordination of effort, (2) common goal or purpose, (3) division of labor, and (4) hierarchy of authority. If even one of these characteristics is absent, an organization does not exist. Because there is no one criterion for organizational effectiveness, for-profit as well as nonprofit organizations need to satisfy different effectiveness criteria in the near, intermediate, and distant future. Effective organizations are effective, efficient, and satisfying in the near term. They are adaptive and developing in the intermediate term. Ultimately, in the long term, effective organizations survive.
  2. The idea behind contingency design is to structure the organization to fit situational demands. Consequently, contingency advocates contend that there is no one best organizational setup for all situations. Diagnosing the degree of environmental uncertainty is an important first step in contingency design. Burns and Stalker discovered that mechanistic (rigid and bureaucratic) organizations are effective when the environment is relatively stable and that organic (flexible and adaptable) organizations are best when unstable conditions prevail.
  3. There are five basic departmentalization formats, each with its own combination of advantages and disadvantages. Functional departmentalization is the most common approach. The others are product-service, geographic location, customer classification, and work-flow process departmentalization. In actual practice, these pure types of departmentalization are usually combined in various ways.
  4. Delegation of authority, although generally resisted for a variety of reasons, is crucial to decentralization. Effective delegation permits managers to tackle higher-priority duties while helping to train and develop lower-level managers. Although delegation varies in degree, it never means abdicating primary responsibility. Successful delegation requires plenty of initiative from lower-level managers. Barriers to delegation include doing everything yourself, lack of confidence and trust in employees, low self-confidence, fear of being called lazy, vague job definition, fear of competition from those below, not wanting to risk depending on others, lack of early-warning signs of problems with delegated duties, and poor role models who do not delegate.
  5. Many factors, with global competition leading the way, are forcing management to reshape the traditional pyramid bureaucracy. These new organizations are characterized by fewer layers, extensive use of teams, and manageably small subunits. Three emerging organizational configurations are the hourglass organization, the cluster organization, and virtual organizations. Each has its own potentials and pitfalls.
  6. Organizational culture is the “social glue” that binds people together through shared symbols, language, stories, and practices. Organizational cultures can commonly be characterized as collective, emotionally charged, historically based, inherently symbolic, dynamic, and inherently fuzzy (or ambiguous). Diverse outsiders are transformed into accepted insiders through the process of organizational socialization. Orientations and stories are powerful and lasting socialization techniques. Stories have been called social roadmaps that guide employees in certain directions.