Organization Design Simulation Activity
Part I: Strategy
In this four-part simulation activity, you will have the opportunity to design a fictional organization using the principles from the chapters. In essence, you’ll be creating your own case study. You will face real-life constraints on your design work, which have already started with your dice rolls (see the instructions at the end of Chapter 3 if you did not start there). You can be as inventive as you want, as long as your choices remain consistent within your constraints.
The scenario: You are the right-hand chief of staff to the top leader of the organization. The leader considers you to be the consultant to the top management team about all matters related to organization design. Your task will be to design an organization using the STAR model that fits the profile you have been given, according to concepts and ideas that we have learned about thus far in the book.
What kind of organization are you? To find out, refer to Figure A.1 and the dice rolls that you conducted. Your organizational profile will be based on the numbers you rolled.
For example, if you roll a 6 for your third roll (cash), it means that your organization has a very high amount of cash on hand and a good financial situation. If you roll a 3 for people, your organization has between 1,001 and 5,000 employees. If you have a 2 for global reach, your organization is regionally based (e.g., southwest United States or Eastern Europe). “Capability” means your organization’s current skill and performance level at product development, operations, or sales and marketing (definitions noted in Figure A.1 on the next page).
On the surface, some of these characteristics may look inconsistent. For example, it might seem counterintuitive to have low operations capability but a major global presence. In this case, it’s likely that your organization does not manufacture its own products for global customers, but uses outsourced manufacturing. (Maybe it doesn’t manufacture anything?) If you have a low number of employees but a lot of cash, perhaps you’re a small investment firm. Be creative! Consider nonprofits, educational institutions, governments and their agencies, health care organizations, consortiums and alliances, and for-profit companies. You can invent flying cars or sell missions to Mars. You can choose whatever you want, but the key is consistency and good design practice.
Your Mission: Create an Organization and Explain Its Strategy
Using your organization’s profile numbers, create a fictional organization and design it according to this organizational profile, focusing on the strategy of your organization as we learned about in Chapter 3. Give your organization a name and tell us everything you can about it.
Answer the following questions about your organization:
What does your organization do? Write the five design criteria for your organization (refer to Chapter 2 for guidance).
What does it produce, if anything, and in what market(s) does the organization participate? Who are your “customers”?
Where is the organization located?
Who are your organization’s competitors, and what is your strategy—your source of competitive advantage? Research the strategy of at least one real organization that competes with your organization and note how your organization is different. Apply concepts that we discussed in Chapter 3, such as the generic strategy models, Porter’s Five Forces, or blue ocean strategy.
Part II: Structure and Processes and Lateral Capability
Now that you have created your fictional organization and described its strategy, you can begin to work on the next two elements of the organization design: structure, and processes and lateral capability.
Using the concepts we learned about in Chapter 4, create an organizational structure to fit this strategy. How does the structure follow from the strategy? What are the major divisions of your organization and what are they responsible for? How many employees work in each division, and how are divisions structured? To answer these questions, it may be helpful to create an organizational chart for your organization.
In addition to describing how you have organized your departments, consider these other important elements of organization structure:
Centralization and decentralization: What functions should be centralized? Where should decision making be decentralized? Why?
Span of control: Will your organization have a wide or narrow span of control? Why? How many management and leadership roles do you anticipate for your organization?
Division of labor: What jobs require deep specialization? Which require low specialization?
What are the advantages and disadvantages of this structure? Knowing what we have learned about various structure types and their advantages and disadvantages, what potential problems can you anticipate from this structure?
Processes and Lateral Capability
Given your chosen structure and the flaws you identified in it, what lateral capabilities are required for your organization? Describe where you would implement less formal mechanisms (i.e., low lateral capability) or where you would choose more formal mechanisms (i.e., high lateral capability).
Consider, for example, the types of lateral capability we studied in Chapter 5:
What informal networks would you foster and how would you do that?
What are the organization’s major cross-functional processes, opportunities for shared goals, or what technology coordination mechanisms you would implement?
Where might teams be required, if at all?
Would you have any integrative roles? Why, and what would those roles accomplish?
Would a matrix organization be appropriate? Why or why not? What dimensions of the matrix would you select?
Finally, why did you select these lateral coordinating mechanisms? What disadvantages of the structure are solved here? How are these consistent with the rest of the star?
Part III: People and Rewards
In Part III, you will complete the remaining two points of the star for your organization design.
Explain the unique people practices of your organization that set you apart from your competitors and give you a strategic advantage. What special capabilities are required in your organization, and how have you defined your people practices to take those into consideration? How are these consistent with the rest of the star? (As we read in Chapter 6, it is insufficient to state that “our people are our biggest asset” and leave it at generalities such as that. State specifically why your people strategy is unique to your organization and why it supports other components of your organization design). How are your people practices unique to supporting the strategic agenda of your organization, and why will they give you a competitive advantage?
Consider these important people-related considerations that we discussed in Chapter 6:
Where does your organization require talent that is better than your competitors? What are your organization’s pivot roles or strategic “A” positions?
How will you identify and treat high-potential employees?
What career development programs exist in your organization?
How will you conduct performance appraisals? How will you ensure that you realize the benefits and not the negative consequences of performance management?
What learning and development programs will be critical to your success?
As we have learned, rewards practices can have negative unintended consequences. Here you will explain what rewards programs will drive motivation for your employees to achieve goals that are aligned with the strategy. Consider these topics covered in Chapter 7:
What goals, scorecards, and metrics will you create? Specifically what metrics will the organization use to know that it is achieving the strategy?
What values and behaviors are important in your organization?
How will organization members be rewarded? What types of rewards will you give? How will you match compensation and rewards practices to fit the needs of your design? How are these consistent with the rest of the star?
Part IV: Reorganizing
With the star complete, your organization is humming along. However, as we know from our readings, organization design cannot remain static. Strategies change, structures change, and the rest of the star must change along with it. What kinds of changes are occurring in your organization? That’s what this activity is all about: reorganizing and redesigning to change.
The executive management staff recently took a 5-day retreat. After an extensive review of the past year’s operations and a strategic planning session to plan the future direction of the organization, the team made some important decisions. They now need your help revisiting the design because some major changes are about to take place.
To find out what’s happened in your organization, refer to Figure A.2 and your dice roll.
How does the executive team’s decision fit with your current strategy and design? Such strategic choices often look inconsistent on the surface but are in response to competitive or market trends. Consider what larger trends might have prompted these decisions, and how they might have implications on your organization design.
It is now time to examine what effect these changes have on the strategy, structure, processes and lateral capability, people, and rewards choices that you have made. Describe what changes to the organization design you need to make, and what new advantages and disadvantages the changes now hold for you. Consider the following:
Strategy: What are the implications to your organization’s strategy based on these changes? Do you have a different competitive position than you had before? What might have changed in the organization’s strategy?
Structure: Do you have a different structure type now? Which one? What does it look like? What are its advantages and disadvantages? Do you have more/fewer employees? Plans to hire or downsize? Where and why?
Processes and Lateral Capability: What new lateral capabilities are required, if any? Why? How will you implement these?
People: What implications are there for your people and talent strategy? Consider changes you may need to make to career development, learning and development, and performance management practices.
Rewards: What implications are there to the organization’s rewards practices? What goals and metrics will now be important, and how have these changed? What new values and behaviors will you seek to encourage through your rewards practices? How will compensation and other nonmonetary recognition be affected?
Reorganizing and managing transitions: What will be some of the major challenges in transitioning to this new design? Who might resist the change to the new structure? What departments will likely face the biggest transition? How will you choose to implement the new design? Will you proceed with a rapid transition or at a more cautious pace? Will you pilot changes or sequence them before a larger implementation? How will you communicate the changes?
For the final report – organization design simulation activity (worth 20%): Respond to the activity presented in the appendix of the textbook. You may use slides in place of pages, if you would prefer to prepare your report in that medium. If you use slides, the requirement for double spacing and size 12 Arial font will not apply. This paper will be graded based on the following weighted areas:
• Application of theory and the quality of your response to the assignment – 60%
• Formatting of the assignment – 5%
• Spelling/grammar/punctuation – 10%
• Style/clarity – 10%
• Alignment of the ideas presented – 10%
• Timely submission – 5%
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