Organizational Design

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From the course by University of Pennsylvania

Managing Social and Human Capital

714 ratings

University of Pennsylvania

Managing Social and Human Capital

714 ratings

Course 3 of 6 in the Specialization Business Foundations

People are the most valuable asset of any business, but they are also the most unpredictable, and the most difficult asset to manage. And although managing people well is critical to the health of any organization, most managers don't get the training they need to make good management decisions. Now, award-winning authors and renowned management Professors Mike Useem and Peter Cappelli of the Wharton School have designed this course to introduce you to the key elements of managing people. Based on their popular course at Wharton, this course will teach you how to motivate individual performance and design reward systems, how to design jobs and organize work for high performance, how to make good and timely management decisions, and how to design and change your organization’s architecture. By the end of this course, you'll have developed the skills you need to start motivating, organizing, and rewarding people in your organization so that you can thrive as a business and as a social organization.

From the lesson

Designing and Changing the Organization's Architecture

This module was created to describe the influence of an organizations architecture on management and its team's performance. You'll explore how inequity fosters disparity among employees and can inhibit a company's success. You'll also look at two real-world examples of leaders who tackled problems within their organizational structures to effect change. By the end of this module you will be able to identify key steps in which you can lead change within your organization.

Designing and Changing Architecture19:02

Performance: Pay and Promotion6:52

Organizational Design5:45

David Pottruck and Charles Schwab Example10:09

Managing People15:04

Manager's Template for Human and Social Capital4:23

Meet the Instructors

Michael Useem
Professor of Management and Director of the Center for Leadership and Change Management
The Wharton School
Peter Cappelli
Professor of Management, Director, Center for Human Resources
The Wharton School

Pulling several strands together of our last 20 or 25 minutes of thinking

this through actually together, I'd like you to be thinking actively about

your own management and work setting as we go forward of course.

That organizational design along with the way we create jobs,

the way we incentivize people, the organizational design,

think the people at Hauser Foods, Jan Boyar in particular,

can be altered, or misdirected, or align.

Or maybe in the more positive sense, we can get a lot more.

Pay no more, not really changing the job, but

just the way we knit all these pieces together.

How people report, how we promote up through a hierarchy,

all part of the, just to use the phrase,

of the design of the organization, the architecture of the enterprise.

With that being said, here's the last problem I'd like us to think about in this

general area of putting in place an organizational design that serves you.

Sometimes though what we have [LAUGH] serving us well,

maybe even not perfectly a couple years ago may no longer do so.

And now we run into just a classic problem of organizational life.

Everybody knows about it, I'm just going to say the blindingly obvious here.

That as we solve a problem this year and build out, we hire people,

build out a design, create jobs, provide an incentive system that seems to solve

the problems of, let's say, last year.

Go ahead five years, market changes, the Internet arrives,

digital everything is here.

We've now got to serve customers in India and China, and not just the US.

The problem we've got now is we've built an architecture which serves the problem

of last year, or five years ago.

And an architecture once constructed, add on a culture to go with it,

a topic that another of my colleagues is going to take up,

we now face the problem of call it inertial guidance.

If you think about a big flywheel, just a big steel wheel that's turning.

Once that gets turning, very hard to slow it down.

It has a lot of inertial momentum to it.

And thus in a sense, once you got architecture going for

you, as the manager, you can actually take off Fridays for

a while [LAUGH] because it just kind of manages itself.

That's inertial guidance.

That's what good architecture does.

But when the world changes,

that architecture of yesteryear may no longer work so well.

Now we've got just a huge impediment.

That is just what we do, the flywheel rotating, the inertial

momentum that's been built up that makes it difficult to change.

To say the obvious,

we've hired people because we're doing X, we're focused on the US.

But now we want to open up in India, or let's make it Brazil.

Well they didn't come to work for

you because they thought one day they might be transferred to India.

But now you need people to run the office New Delhi or Mumbai.

And [LAUGH] if we start going down that particular avenue,

the problems multiply quickly.

If we don't make the change,

aren't ready to have people take on these new tasks, but the people we hired,

almost everything we do militates against that kind of change.

Change is one of the great enemies of organizational design.

So we're going to take a few minutes now and

think briefly about what gets in the way of the design we've created.

Such that as the manager, once we recognize what gets in the way,

we can do something about it.

So let's go right here to the work of a well known observer and

consultant on organizational change.

Again, what does that mean?

We got a design, we want to make it better.

John Cotter has identified eight forces, just to pull them out and

make them more managerially relevant, that seem to get in the way of making changes.

So take a look at number 1 here, for instance.

You, the manager, don't make a compelling case.

Look everybody, we've got a change because the world's changing.

And everybody salutes, great idea and

goes back to work the way they've always done it.

Let's go down to number 4.

He has found, I've seen the same thing myself, that for

people who are saying we've got to really just flatten the organization,

put people more in touch with the customers.

Maybe reorganize like we saw at that Rose Company making plants independently

responsible for everything, that we have to say what we want again and again.

Because the first time it's not believed, or it's questioned second and third time.

It takes on a certain traction.

And people are wondering, okay, boss, do you really want this?

because the costs are going to be high making a change.

So, that's the number 4.

Just briefly take a look, I'm not going to enumerate or

expand out word-wise what the other six say.

But for our purposes right now,

we're going to try to do an organizational restructuring or redesign.

I'd like you to take a look at those eight factors.

Ask yourself which of those have you seen well executed maybe by yourself or

others that you manage with.

But get them much in mind because I want them to

inform where we're going the next few minutes.

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