Chapter 8 - Organization Structure & Design
List the common types of organizational structures, including functional, divisional, matrix, team and network.
A functional structure groups together people with similar skills who perform similar tasks. A divisional structure groups together people working on the same product, in the same area, or with similar customers. A product structure groups together people and jobs working on a single product or service. A matrix structure combines functional and divisional approaches to emphasize project or program teams. A team structure uses permanent and temporary cross-functional teams to improve lateral relations. A network structure uses IT to link with networks of outside suppliers and service contractors.
Explain how a tool known as social network analysis is a way of identifying the informal structures and their embedded social relationships within an organization.
A tool known as social network analysis is one way of identifying the informal structures and their embedded social relationships that are active in an organization. It asks people to identify others whom they turn to for help most often, whom they communicate with regularly, and who energizes and de-energizes them. The results of a social network analysis are often described as a map with lines running from person to person according to frequency of communication and type of relationship maintained. The map shows who is linked with whom and how a lot of work really gets done in organizations, in contrast to the formal arrangements shown on the organization chart. This information can be used to redesign the formal structure for better performance and identify who the key people are for possible leadership and mentoring roles.
Explain how organizations operate within the more spontaneous relationships of informal structures.
An important fact of organizational life is that behind every formal structure also lies an informal structure. You might think of this as a shadow organization made up of unofficial relationships between organizational members. Like any shadow, the shape of the informal structure will be blurry and change with time. You may have to work hard to understand its full complexities.
Why is an organic design likely to be quicker and more flexible in adapting to changes than a mechanistic design?
An organic design tends to be quicker and more flexible because it is very strong in lateral communication and empowerment. People at all levels are talking to one another and interacting as they gather and process information and solve problems. They don't wait for the vertical structure and"bosses" to do these things for them. This means that as the environment changes, they are more likely to be on top of things quickly. It also means that when problems are complex and difficult to solve, they will work with multiple people in various parts of the organization to best deal with them
Why should an organization chart be trusted "only so far"?
An organization chart depicts the formal structure of the organization. This is the official picture of the way things are supposed to be. However, the likelihood is that an organization chart quickly becomes out of date in today's dynamic environments. So one issue is whether or not the chart one is viewing actually depicts the current official structure. Second, there is a lot more to the way things work in organizations than what is shown in the organization chart. People are involved in a variety of informal networks that create an informal structure. It operates as a shadow lying above or behind the formal structure and also influences operations. Both the formal structure and informal structure must be understood; at best, an organization chart helps with understanding the formal one.
Explain how network organizational structures utilize strategic alliances and outsourcing to dramatically reduce the need for full-time staff.
Another development in organizational structures uses strategic alliances and outsourcing to dramatically reduce the need for full-time staff . A network structure links a central core of full-time employees with "networks" of relationships to outside contractors and partners that supply essential services. Because the central core is relatively small and the surrounding networks can be expanded or shrunk as needed, the potential advantages are lower costs, more speed, and greater flexibility in dealing with changing environments.
Explain how a virtual organization utilizes information technologies to operate a constantly shifting network of alliances.
As information technology continues to evolve, a variation of the network structure is appearing. Called the virtual organization, it uses information technologies to operate a constantly shifting network of alliances. The goal is to use virtual networks to eliminate boundaries that traditionally separate a firm from its suppliers and customers and its internal departments and divisions from one another. The intense use of IT allows virtual relationships to be called into action on demand. When the work is done, they are disbanded or left idle until next needed.
Explain why organizations are increasing delegation and employee empowerment.
Decentralization brings with it another trend that is good for organizations and their members: increased delegation and empowerment. Delegation is the process of entrusting work to others by giving them the right to make decisions and take action. You can think of delegation as the foundation for decentralization. Its three steps are: (1) Assign responsibility—explain tasks and expectations to others. (2) Grant authority—allow others to act as needed to complete tasks. (3) Create accountability—require others to report back on the completed tasks. And let's not forget that when delegation is done well it leads to empowerment. This is the process of giving people the freedom to contribute ideas, make decisions, show initiative, and do their jobs in the best possible ways. Empowerment unlocks the full power of talent, experience, and intellect that people bring to their jobs. It is the engine that powers decentralization. And when it becomes part of the organizational culture, it helps everyone act faster and be more flexible when dealing with today's dynamic environments.
Explain the benefits to employees when organizations use alternative work schedules.
Improved morale, lower overtime costs, less absenteeism, and decreased use of sick leave. Flexible Work Week, Telecommuting, job sharing and co-working
___________ splits one job between two people.
Job sharing
Explain how team structures may utilize permanent and temporary teams.
Many organizations adopt team structures that extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks. These teams are often formed across functions and staffed with members whose talents match team tasks. The goals are to reduce the functional chimneys problem, tap the full benefits of group decision making, and gain as much creativity in problem solving as possible.
___________ is the process of arranging people and resources to work toward a common goal.
Organizing
Define and differentiate between a functional organizational structure, a divisional organizational structure, and a matrix organizational structure.
Potential Advantages of Matrix Structures • Performance accountability rests with program, product, or project managers. • Better communication exists across functions. • Teams solve problems at their levels. • Top managers spend more time on strategy. Potential Advantages of Divisional Structures • Expertise is focused on special products, customers, or regions. • Better coordination exists across functions within divisions. • There is better accountability for product or service delivery. • It is easier to grow or shrink in size as conditions change. Potential Advantages of Functional Structures • Economies of scale make efficient use of human resources. • Functional experts are good at solving technical problems. • Training within functions promotes skill development. • Career paths are available within each function.
Discuss why organizations are becoming flatter with fewer levels of management.
Taller organizations have many levels of management and narrow spans of control. A manager with a wide span of control supervises many people. Flatter organizations with fewer levels of management have wider spans of control.
Identify the positive and negatives aspects of informal organizational structures.
The good points of informal structures and both face-to-face and media-enriched social networks. As just pointed out, they can be very helpful in getting work accomplished. Indeed, they may be essential in many ways to organizational success. They fill gaps missing in the formal structure and help compensate for its inadequacies. Things that happen in informal structures may work against the best interests of the organization as a whole. These shadow structures can be susceptible to rumor, carry inaccurate information, breed resistance to change, and even distract members from their work. And if you happen to end up as an "outsider" rather than an "insider in the informal networks," you may feel less a part of things.
How does a matrix structure combine functional and divisional forms?
The matrix structure is organized in a traditional functional fashion in the vertical dimension. For example, a business might have marketing, human resources, finance, and manufacturing functions. On the horizontal dimension, however, it is organized divisionally in a product or project fashion, with a manager heading up each special product or project. Members from the functional departments are assigned to permanent cross-functional teams for each product or project. They report vertically to their functional bosses and horizontally to their product/project bosses. This two-boss system is the heart of the matrix organization.
In what ways can informal structures be good for organizations?
There are two major ways that informal structures can be good for organizations. First, they can help get work done efficiently and well. When people know one another in informal relationships, they can and often do use these relationships as part of their jobs. Sometimes an informal contact makes it a lot easier to get something done or learn how to do something than the formal linkages displayed on an organization chart. Second, being part of informal groups is an important source of potential need satisfaction. Being in an informal network or group can satisfy needs in ways that one's job can't sometimes and can add considerably to the potential satisfactions of the work experience.
Explain how organization charts describe the formal structure of an organization.
This is a diagram of positions and reporting relationships within an organization. A typical organization chart identifies major job titles and shows the hierarchy of authority and communication that links them. It describes the organization's division of labor—people and groups performing different jobs, ideally ones for which they are well skilled.
The functional chimneys problem occurs when people in different functions _________. (a) fail to communicate with one another (b) try to help each other work with customers (c) spend too much time coordinating decisions (d) focus on products rather than functions
a
When an organization chart shows that vice presidents of marketing, finance, manufacturing, and purchasing all report to the president, top management is using a _________ structure. (a) functional (b) matrix (c) network (d) product
a
The lack of communications between functional departments in a functional structure often results in which of the following? a) negative completion can occur between the functional units b) a lack of expertise in solving technical problems c) no clear career paths for employees d) a lack of training within the departments
a) negative completion can occur between the functional units
A "tall" organization will likely have _________ spans of control than a "flat" organization with the same number of members. (a) wider (b) narrower (c) more ambiguous (d) less centralized
b
An organization using a _________ structure should expect that more problems will be solved at lower levels and that top managers will have more time free to engage in strategic thinking. (a) virtual (b) matrix (c) functional (d) product
b
Rumors and resistance to change are potential disadvantages often associated with _________. (a) virtual organizations (b) informal structures (c) functional chimneys (d) cross-functional teams
b
The "two-boss" system of reporting relationships is both a potential source of problems and one of the key aspects of _________ structures. (a) functional (b) matrix (c) network (d) product
b
The bureaucratic organization described by Max Weber is similar to the _________ organization described by Burns and Stalker. (a) adaptive (b) mechanistic (c) organic (d) horizontal
b
The main purpose of organizing as a management function is to _________. (a) make sure that results match plans (b) arrange people and resources to accomplish work (c) create enthusiasm for the needed work (d) link strategies with operational plans
b
Workers following a compressed workweek schedule often work 40 hours in _________ days. (a) 3 ½ (b) 4 (c) 5 (d) a flexible schedule of
b
A manufacturing business with a functional structure has recently acquired two other businesses with very different product lines. The president of the combined company might consider using a _________ structure to allow a better focus on the unique needs of each product area. (a) virtual (b) team (c) divisional (d) network
c
An organization chart is most useful for _________. (a) mapping informal structures (b) eliminating functional chimneys (c) showing designated supervisory relationships (d) describing the shadow organization
c
An organization that employs just a few "core" or essential full-time employees and outsources a lot of the remaining work shows signs of using a _________ structure. (a) functional (b) divisional (c) network (d) team
c
If a student in one of your course groups volunteers to gather information for a case analysis and the other members tell him to go ahead and choose the information sources he believes are most important, the group is giving this student _________ to fulfill the agreed-upon task. (a) responsibility (b) accountability (c) authority (d) values
c
Which alternative work schedule is identified by Working Mother magazine as being used by all companies on its list of "100 Best Employers for Working Moms"? (a) Telecommuting (b) Job sharing (c) Flexible hours (d) Part-time
c
Which organization design would likely be a good fit for a dynamic and changing external environment? (a) Vertical (b) Centralized (c) Organic (d) Mechanistic
c
Organizational charts provide: a) a clear division of work b) lines of supervisory relationships c) recognition of the spans of control d) identification of the major subunits in the organization e) all of the above
e) all of the above
A classical management principal regarding delegation is that authority should _____________ responsibility.
equal
A ____________ organization would have a ___________ span of control.
flat / wide
The departments of Marketing, Engineering, and Manufacturing are examples of _________organizations.
functional
When John, president of Global Products, decided to form a new division for marketing into China, he was implementing a __________structure.
geographical
The major difference between a matrix structure and a team structure is that a team structure:
has no project management
Project managers are a very important part of a __________ structure.
matrix
Good Bank Inc. has many branches. They are all managed by branch managers who have loans, investments, operations and trust managers reporting directly to them. This is an example of a _________ structure.
product
Informally defined organizations made up of unofficial employee working relationships are often referred to as ____________ organizations.
shadow
Which of the following is NOT a form of division structure?
supplier
Network structures are valued because they can offer:
the cost and flexibility gains these systems provide