Reframing Organizations, 3rd ed.

1. Reframing Organizations, 3rd ed.

2. Chapter 4 Structure and Restructuring

3. Structure and Restructuring Chapter 4 Overview Structural dilemmas Structural configurations Generic issues in restructuring Why restructure? Making restructuring work Three case examples

4. I. Structural Dilemmas Differentiation vs. integration (allocation of work & coordination) Gaps vs. overlaps (whose responsibility/job?) Underuse vs. overload (Navy brick theory) Lack of clarity vs. lack of creativity (unclear job responsibilities)

5. I. Structural Dilemmas cont� Excessive autonomy vs. excessive interdependence (group work) Too loose vs. too tight (gov�t bureaucracy) Goalless vs. goalbound (organizational goals) Irresponsible vs. unresponsive (rules)

6. II. Structural Configuration Mintzberg�s five-sector logo Operating core People who perform basic work (line workers) Administrative Component Managers/supervisors (line supervisor) Strategic Apex Focus on outside environment (executives) Techno structure Specialist/analysts (engineers) Support staff Perform tasks that facilitate work (secretaries)

7. II. Structural Configuration cont� Simple structure Two Levels: Strategic apex Operating level Start-up companies Virtues Structure is very flexible & adaptable One person directs the entire operation Vices Lack of strategic planning (boss too close to operations) Authority can block change

8. II. Structural Configuration cont� Machine bureaucracy Important decisions are made at the strategic apex Day-to-day operations are controlled by managers & SOPs Example: McDonalds Challenges: How to motivate employees and satisfy workers in the operating core Constant tension between headquarter and local managers Overcome challenges by: Permitting experimentation (Egg McMuffin breakfast sandwich)

9. II. Structural Configuration cont� Professional Bureaucracy Characteristics: Operating core is larger than other structural parts Few managerial levels exist between the strategic apex and professors (flat organizational structure) Examples: Universities (EIU or U of Illinois) Challenges: Quality control and coordination Dealing with incompetence and irresponsibility Respond slow to change

10. II. Structural Configuration cont� Divisionalized Form Work accomplished through quasi-autonomous units (multispecialty hospital) serving defined markets Division heads (presidents) are accountable to the corporate office As long as the division performs, they have free reign Benefits: Offer economies of scale Ample resources Responsive Challenges: Headquarters may lose touch with operations

11. II. Structural Configuration cont� Adhocracy Loose, flexible, and organic structure Characteristics Don�t believe in hierarchy, rule books, dress codes, etc� Ambiguous authority structure Unclear objectives Contradictory assignments

12. Helgesen�s Web of Inclusion Helgesen�s Web of Inclusion Organizational structure form more circular than a defined hierarchical pyramid(spider web) Emphasis on lateral relationships rather than hierarchy Leadership at the center rather than at the top Web builds from the center out through a network of interconnections

13. III. Generic Issues in Restructuring Restructuring must take into account structural configurations Restructuring triggers a multidirectional tug-of-war Each component exerts distinct pressures. Strategic apex pushes for more alignment, centralization. Middle managers try to protect autonomy and room to run their own units. Technostructure pushes for standardization, believes in measurement and monitoring. Support staff prefers less hierarchy, more collaboration.

14. IV. Why Restructure? The environment shifts (regulation/compliance) Example: Health Insurance Portability and Accountability Act (HIPPA) Technology changes Example: Boeing�s shift from piston to jet engines Example: Automotive mfg shift to hybrid cars Organizations grow Leadership changes Often the first initiative when new leadership arrives

15. V. Three Case Examples Citibank�s �back room� Backroom was originally structured as a machine bureaucracy (ex. McDonalds) Issues: Productivity, errors, expenses rising 20%/per year The Idea was to transform backroom into high-volume production facility through divisional form bureaucracy Phases: Phase 1 � Implemented new computer system for control and forecasting Phase 2 � Studied how the back room�s processes worked Phase 3 � Broke pipeline into smaller lines (different product) with managers for each line Challenges: Technical core strongly resisted the restructuring (almost led to rebellion)

16. V. Three Case Examples cont� Kodak�s black-and-white division Issues Competition, costs, customer satisfaction, low employee morale Plan: Organize into three flow with the black & white division Graphics Health Sciences Financial services, HR, & engineering would support the flows Managers/supervisors became coaches Cross functional teams were formed to solve problems Result Two years after restructuring the division performance standards were surpassed

17. V. Three Case Examples cont� Beth Israel Hospital Issues: Responsibilities of nurses were highly specialized (no one really knew what was going on with the patient) Idea Transform structure from a pyramid into an inclusionary web (called primary nursing) Each nurse assumes responsibility for the care of a specific patient Nurse manager sets goals, deals with budget and administrative matters, and ensures nurses have resources Results Nurse became a professional partner

18. V. Three Case Examples cont� Why were these restructuring efforts successful? Developed a new conception of the organizational goals and strategies Carefully studied the existing structure and processes (had the complete picture) Designed new structure in light of goals, technology, and environment Experimented while retaining things that worked

19. Conclusion An organization�s structure represents its efforts to align its internal processes with its external environment while balancing structural dilemmas. Mintzberg: structural configurations align with different tasks and environments. Changes in the environment pressure the organization to realign it structure.