MGT 2010 Chapter 8
Whether for-profit, nonprofit, or mutual-benefit, organizations have a
number of ele- ments in common. We discuss four proposed by an organizational psychologist, and then describe three others that most authorities agree on.
Symbol
object, act, quality, or event that conveys meaning to others
Responsibility
obligation you have to perform the tasks assigned to you
Flat organization
one with an organizational structure with few or no levels of middle management between top managers and those reporting to them
Observable artifacts
physical manifestations of culture (dress, awards, stories, rituals, decorations, behavior)
Delegation
process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy
Contingency design
process of fitting the organization to its environment
Authority
rights inherent in a managerial position to make decisions, give orders, and utilize resources
Culture can powerfully
shape an organization's long-term success by enhancing its competitive advantage.
Drivers and flow of organizational culture
shows that the consistency among these elements in turn impacts (see the three green boxes) group and social processes (discussed in Chapters 13-15), indi- vidual work attitudes and behaviors (discussed in Chapters 11-12), and the organiza- tion's overall performance. As you can see from the diagram, consistency across strategy, culture, and structure leads to higher performance
Market culture
strong external focus and values stability and control
Barnard's definition of organization
system of consciously coordinated activities or forces of two or more people
Differentiation
tendency of the parts of an organization to disperse and fragment
Integration
tendency of the parts of an organization to draw together to achieve a common purpose
To implement a particular strategy, managers must determine
the right kind of (1) organizational culture and (2) organizational structure. Let's consider these terms.
The study of organizing, the second of the four functions in the management process, begins with
the study of organizational culture and structure, which managers must determine so as to implement a particular strategy. Organizational culture consists of the set of shared, taken-for-granted implicit assumptions that a group holds in the workplace. Organizational structure describes who reports to whom and who does what.
Staff personnel
-Have authority functions; provide advice, recommendations, and research to line managers -Indicated by dotted, horizontal line
Line managers
-Have authority to make decisions and usually have people reporting to them -Indicated by solid, vertical line
How do employees learn culture?
-Symbols -Stories -Heroes -Rites and rituals
What kinds of information does the organization chart reveal about the organizational structure?
-Vertical hierarchy of authority (who reports to whom) -Horizontal specialization (who specializes in what work)
Common elements of organizations (Edgar Schein)
1. Common purpose 2. Coordinated effort 3. Division of labor 4. Hierarchy of authority
Three factors to be considered in designing an organization's structure
1. Environment (mechanistic vs. organic) 2. Environment (differentiation vs. integration) 3. Link between strategy, culture, and structure
Managers taking a contingency approach must consider the following factors in designing the best kind of structure for their particular organization at that particular time:
1. Environment—mechanistic versus organic 2. Environment—differentiation versus integration 3. Link between strategy, culture, and structure
Three levels of organizational culture
1. Observable artifacts 2. Espoused values 3. Basic assumptions
Common elements of organizations (most authorities agree on)
5. Span of control 6. Authority, responsibility, and delegation 7. Centralization versus decentralization of authority
Espoused values
explicitly states values and norms preferred by an organization
Person-organization fit
extent to which your personality and values match the climate and culture in an organization
Adhocracy culture
external focus and value flexibility
The organizational structure of the three types of organizations
for-profit, nonprofit, and mutual-benefit— may be expressed vertically or horizontally on an organization chart.
Organizational structure
formal system of task and reporting relationships that coordinates and motivates an organization's members so that they can work together to achieve the organization's goals
Centralized authority
important decisions are made by higher-level managers
Decentralized authority
important decisions are made by middle-level and supervisory-level managers
Clan culture
internal focus and values flexibility rather than stability and control
Hierarchy culture
internal focus and values stability and control over flexibility
Accountability
managers must report and justify work results to the managers above them
Story
narrative based on true events, which is repeated (and sometimes embellished upon) to emphasize a particular value
Three types of organizations
-For-profit -Nonprofit (hospitals, colleges) -Mutual-benefit (unions, trade associations)
management professor Kathleen Kelley Reardon.
"there is a point in everyone's career where politics becomes more important,"You have to know the political climate of the company you work for, says Reardon, who is author of The Secret Handshake and It's All Politics.16 "Don't be the last person to understand how people get promoted, how they get noticed, how certain projects come to attention. Don't be quick to trust. If you don't understand the political machinations, you're going to fail much more often."17
Two kinds of information that organization charts reveal about organizational struc- ture are
(1) the vertical hierarchy of authority—who reports to whom, and (2) thehorizontal specialization—who specializes in what work.
Hierarchy of authority
(chain of command) control mechanism for making sure the right people do the right things at the right time
Division of labor
(work specialization) arrangement of having discrete parts of a task done by different people
Span of control
-(span of management) number of people reporting directly to a given manager -Narrow/tall: limited number of people reporting -Wide/flat: several people reporting
Organizational culture
-AKA corporate culture -Set of share, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environments
What conclusions emerge from research about the relationship between organizational outcomes and cultures?
-An organization's culture matters -Employees are happier with clan cultures -Elements of these cultures can be used to boost innovation and quality -Changing the organizational culture won't necessarily boost financial performance (but it might) -Market cultures tend to produce better results
Mechanistic organization
-Authority is centralized -Tasks and rules are clearly specified -Employees are closely supervised
Organic organization
-Authority is decentralized -Fewer rules and procedures -Networks of employees are encouraged to cooperate and respond quickly to unexpected tasks
Four types of organizational culture
-Clan -Adhocracy -Market -Hierarchy
1. Clan Culture: An Employee-Focused Culture Valuing Flexibility, Not Stability
A clan culture has an internal focus and values flexibility rather than stability and control.Like a family-type organization, it encourages collaboration among employees, striving to encourage cohesion through consensus and job satisfaction and to increase commit- ment through employee involvement. Clan organizations devote considerable resources to hiring and developing their employees, and they view customers as partners. Southwest Airlines is a good example of a company with a clan culture. So is online shoe seller Zappos, which encourages managers to spend 10%-20% of their off-work hours with employees.19
The Horizontal Specialization: Who Specializes in What Work
A glance to the left and right on the line of an organization chart shows the horizontal special- ization, the different jobs or work specialization. The husband-and-wife partners in a two-person desktop-publishing firm might agree that one is the "outside person," han- dling sales, client relations, and finances, and the other is the "inside person," handling production and research. A large firm might have vice presidents for each task— marketing, finance, and so on. ●
The Vertical Hierarchy of Authority: Who Reports to Whom
A glance up and down an organization chart shows the vertical hierarchy, the chain of command. A formal vertical hierarchy also shows the official communication network—who talks to whom. In a simple two-person organization, the owner might communicate with just a secretary or an assistant. In a complex organization, the president talks principally to the vice presidents, who in turn talk to the assistant vice presidents, and so on.
What Does It Mean to "Fit"? Anticipating a Job Interview
A good fit of this kind is important because it is associated with more positive work attitudes and task performance, lower stress, and fewer expressions of intention to quit. How well an applicant will fit in with the institution's organizational culture is considered a high priority by many interview- ers.
3. Heroes
A hero is a person whose accomplishments embody the values of the organization. IKEA employees are expected to work hard, inspired by an anecdote from their Swedish founder, Invar Kamprad, in his 1976 "A Furniture Dealer's Testa- ment." In that essay he recounts how he was berated by his father for failing repeatedly to get out of bed to milk the cows on his family's farm. Then one day he got an alarm clock. "'Now by jiminy, I'm going to start a new life,' he determined, setting the alarm for twenty to six and removing the 'off button.'"41
4. Hierarchy Culture: A Structured Culture Valuing Stability & Effectiveness
A hierarchy culture has an internal focus and values stability and control over flexibility.Companies with this kind of culture are apt to have a formalized, structured work environment aimed at achieving effectiveness through a variety of control mechanisms that measure efficiency, timeliness, and reliability in the creation and delivery of products. Lots of big organizations, such as General Motors, UPS, and the U.S. Army, have a hierarchy culture. A drawback of such cultures is that they can lead to information "silos" or "stovepipes," in which different divisions don't share information—a key cause of GM's ignition switch scandal. Time magazine described this as "a kind of death from a thousand cuts in which multiple divisions had information that could have prevented the safety issues, which they didn't share, and for which no one person ultimately took responsibility."23
3. Market Culture: A Competitive Culture Valuing Profits over Employee Satisfaction
A market culture has a strong external focus and values stability and control. Because market cultures are focused on the external environment and driven by competition and a strong desire to deliver results, customers, productivity, and prof- its take precedence over employee development and satisfaction. Employees are ex- pected to work hard, react fast, and deliver quality work on time; those who deliver results are rewarded. Kia Motors, which fires executives who don't meet their sales goals, is an example of a company with a very aggressive and competitive market culture.21 Sometimes the culture can be stretched too far: For instance, some Wall Street firms, such as Citgroup Inc., are reported to have such a strong perform-or-die culture—in which executives are pushed to maximize profits and are quickly fired if they fail to deliver—that it is difficult to find talent to promote from within when chief executives leave.22
2. Stories
A story is a narrative based on true events, which is repeated—and sometimes embellished upon—to emphasize a particular value. Stories are oral histories that are told and retold by members about incidents in the organization's history. Example: Marc Benioff is founder of cloud computing business Salesforce.com, a San Francisco company known for its great sense of social responsibility and generosity (and rated No. 7 on Fortune's 2014 "Best Companies to Work For" list).38 Its spirit of philanthropy is embodied in a story called the 1-1-1 rule. "When we started the company," Benioff says, "we took 1% of our equity [stock value] and 1% of our profit and 1% of all our employees' time, and we put it into a . . . public charity. At the time, it was very easy because we had no profit, we had no time, we had no equity. But then, it turned out that our company is worth, you know, tens of billions of dollars."39 Salesforce.com also runs 10,000 nonprofits for free, doesn't charge universities for its services, and, says Benioff, delivers "hundreds of thou- sands of hours of community service." In its latest philanthropic move, Salesforce .com's foundation plans to spend $6 million over three years nationally on job training for underemployed adults.40
1. Symbols
A symbol is an object, act, quality, or event that conveys meaning to others. In an organization, symbols convey its most important values. Example: One of the most iconic products of IKEA, maker of inexpensive home furnishings, whose vision is "to create a better life for the many," is the LACK table, a 22-inch by 22-inch side table that sells for only $9.99.37
3. Division of Labor: Work Specialization for Greater Efficiency
Division of labor, also known as work specialization, is the arrangement of having discrete parts of a task done by different people. Even a two-person crew operating a fishing boat probably has some work specialization—one steers the boat, the other works the nets. With division of labor, an organization can parcel out the entire complex work effort to be performed by specialists, resulting in greater efficiency.
Organizational Culture: The Shared Assumptions That Affect How Work Gets Done
According to scholar Edgar Schein, organizational culture, sometimes calledcorporate culture, is defined as the set of shared, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environments.13 These are the beliefs and values shared among a group of peo- ple in the workplace that are passed on to new employees by way of socialization and mentoring, which significantly affect work outcomes at all levels.14 This is the "social glue" that binds members of the organization together. Just as a human being has a personality—fun-loving, warm, uptight, competitive, or whatever—so an organization has a "personality," too, and that is its culture. The culture helps employees understand why the organization does what it does and how it intends to accomplish its long-term goals. 3M sets expectations for innovation, for example, by having an internship and co-op program, which provides 30% of the company's new college hires. Culture can vary considerably, with different organizations having differing empha- ses on risk taking, treatment of employees, teamwork, rules and regulations, conflict and criticism, and rewards. And the elements that drive an organization's culture also vary. They may represent the values of the founder, the industry and business environ- ment, the national culture, the organization's vision and strategies, and the behavior of leaders.
1. Common Purpose: The Means for Unifying Members
An organization without purpose soon begins to drift and become disorganized. The common purposeunifies employees or members and gives everyone an understanding of the organiza- tion's reason for being.
2. Adhocracy Culture: A Risk-Taking Culture Valuing Flexibility
Anadhocracy culture has an external focus and values flexibility. As we saw with EndoStim in the Example box, this type of culture attempts to create innovative prod- ucts by being adaptable, creative, and quick to respond to changes in the marketplace. Employees are encouraged to take risks and experiment with new ways of getting things done. Adhocracy cultures are well suited for start-up companies, those in indus- tries undergoing constant change, and those in mature industries that are in need of innovation to enhance growth. W. L. Gore, maker of Gore-Tex outerwear, is an example of a company with an adhocracy culture. So was Google once, but now it has grown and the enterprise is struggling to avoid losing its adhocracy "Googliness." In earlier times, all Google en- gineers were urged to spend 20% of their time on personal projects. As the company grew, however, senior managers concluded that letting thousands of employees work on whatever they wanted would lead to disarray, so now newly hired engineers are forced to wait a while before beginning their passion pursuits.20
Level 1: Observable Artifacts—Physical Manifestations of Culture
At the most visible level, organizational culture is expressed in observable artifacts— physical manifestations such as manner of dress, awards, myths and stories about the company, rituals and ceremonies, and decorations, as well as visible behavior exhib- ited by managers and employees. Example: In a conference room reserved for sensitive discussions, online travel company Kayak has a two-foot-high stuffed elephant named Annabelle—the "elephant in the room"—that is an artifact believed to bring forth more honest and constructive communications among employees.31 (The expression "elephant in the room" is used in business and politics to mean an obvious truth that is either being ignored or going unaddressed.)
Level 3: Basic Assumptions—Core Values of the Organization
Basic as- sumptions, which are not observable, represent the core values of an organization's culture—those that are taken for granted and, as a result, are difficult to change. Example: At insurance giant AIG, people worked so hard that the joke around the offices was "Thank heavens it's Friday, because that means there are only two more working days until Monday."34 Another example: Many founders of start-ups hate rules and red tape. College Hunks Hauling Junk, for instance, was co-founded by Nick Friedman with no for- mal policies about dress code, vacation, sick days, and other things because he en- visioned "a real-life Never Never Land where work is always fun, and the culture is always stress-free."35 However, when the enterprise grew from a single cargo van to over 50 franchises, the freewheeling spirit made employees lose focus, and client- service ratings, employee morale, and profitability all declined. The firm had to come up with rules and procedures while at the same time trying to "maintain a healthy balance of fun company culture with an accountable organization and team," Friedman said.
How to Stand Out in a New Job: Fitting into an Organization's Culture in the First 60 Days
Be Aware of the Power of First Impressions Come in 30 Minutes Early & Stay a Little Late to See How People Behave Get to Know Some People & Listen to What They Have to Say Make It Easy for Others to Give You Feedback Overdeliver
2. The Environment: Differentiation versus Integration—the Lawrence & Lorsch Model
Burns and Stalker's ideas were extended in the United States by Harvard University re- searchers Paul R. Lawrence and Jay W. Lorsch.91 Instead of a mechanistic-organic dimension, however, they proposed a differentiation-integration dimension—forces that impelled the parts of an organization to move apart or to come together. The stability of the environment confronting the parts of the organization, according to Lawrence and Lorsch, determines the degree of differentiation or integration that is appropriate.
Four Types of Organizational Culture
Clan, Adhocracy, Market, & Hierarchy
How Employees Learn Culture
Culture is transmitted to employees in several ways, most often through such devices as (1) symbols, (2) stories, (3) heroes, and (4) rites and rituals.36
Level 2: Espoused Values—Explicitly Stated Values & Norms
Espoused values are the explicitly stated values and norms preferred by an organization, as may be put forth by the firm's founder or top managers. Example: The founders of technology company Hewlett-Packard stressed the "HP Way," a collegial, egalitarian culture that gave as much authority and job security to employees as possible. Although managers may hope the values they espouse will directly influence employee behavior, employees don't always "walk the talk," frequently being more influenced by enacted values, which represent the values and norms actually exhibited in the organization.32 Thus, for example, an international corporation hung signs throughout the hallways of its headquarters proclaiming that "trust" was one of its driving principles (espoused value), yet had a policy of searching employees' belongings each time they entered or exited the building (enacted value).33
Mechanistic Organizations: When Rigidity & Uniformity Work Best
In amechanistic organization, authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. Mechanistic organizations, then, are bureau- cratic, with rigid rules and top-down communication. This kind of structure is effective in certain aspects of hotel work because the market demands uniform product quality and cleanliness. In general, mechanistic design works best when an organization is operating in a stable environment. Yet new companies that have gone through a rough-and-tumble start-up period may decide to change their structures so that they are more mechanis- tic, with clear lines of authority.
Organic Organizations: When Looseness & Flexibility Work Best
In anorganic organization, authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unex- pected tasks. Tom Peters and Robert Waterman called this kind of organization a "loose" structure.89 Organic organizations are sometimes termed "adhocracies" because they operate on an ad hoc basis, improvising as they go along. As you might expect, information- technology companies favor the organic arrangement because they constantly have to adjust to technological change. New York-based Dark Arts Consulting, a technology consulting firm, has used the practice of co-working—sharing office space with other businesses—to expand into territories in New Jersey and Pennsylvania, enabling it to hire salespeople and engineers without having the added expense of an underutilized office.90 Companies that need to respond to fast-changing consumer tastes also favor organic arrangements. No doubt you would be more comfortable in some organizational structures than others. If you value autonomy and the chance to make decisions, you probably pre- fer a hollow or virtual structure as opposed to one that is more structured.
1. The Environment: Mechanistic versus Organic Organizations—the Burns& Stalker Model
Making beds—how hard could it be?Actually, a hotel housecleaner may be expected to whip not just beds but entire rooms, 16-30 of them, into spick-and-span shape during an eight-hour shift. Here every job is broken down into the smallest of steps, with vacuuming, dusting, mopping, making beds, and so on, expected to take about 20-24 minutes per room, according to time-motion studies. Making a neatly tucked bed should take no more than 3 minutes.87 Much of this kind of mundane hotel work exemplifies what British behavioral sci- entists Tom Burns and G. M. Stalker call a mechanistic organization, as opposed to an organic organization.8
6. Authority, Responsibility, & Delegation: Line versus Staff Positions
Male sea lions have to battle other males to attain authority over the herd. In human organizations, however, authority is related to the management authority in the organi- zation; it has nothing to do with the manager's fighting ability or personal characteristics. With authority goes accountability, responsibility, and the ability to delegate one's authority. Accountability Authority refers to the rights inherent in a managerial position to make decisions, give orders, and utilize resources. (Authority is distinguished from power, which, as we discuss in Chapter 14, is the extent to which a person is able to influence others so they respond to orders.) In the military, of course, or- ders are given with the expectation that they will be obeyed, disobedience making one liable to a dishonorable discharge or imprisonment. In civilian organizations, disobeying orders may lead to less dire consequences (demotion or firing), but subordinates are still expected to accept that a higher-level manager has a legiti- mate right to issue orders. Authority means accountability—managers must report and justify work results to the managers above them. Being accountable means you have the responsibility for performing assigned tasks. Responsibility With more authority comes more responsibility. Responsibility is the obligation you have to perform the tasks assigned to you. A car assembly-line worker has little authority but also little responsibility: just install those windshields over and over. A manager, however, has greater responsibilities. It is a sign of faulty job design when managers are given too much authority and not enough responsibility, in which case they may become abusive to subordinates and capricious in exerting authority.65 Conversely, managers may not be given enough au- thority, so the job becomes difficult. Delegation Delegation is the process of assigning managerial authority and re- sponsibility to managers and employees lower in the hierarchy. To be more efficient, most managers are expected to delegate as much of their work as possible. However, a business entrepreneur may fall into the common trap of perfection, believing, as one writer puts it, that "you are the only person who can handle a given situation, work with a special client, design a program."66 But a surprising number of managers fail to realize that delegation is an important part of their job. Line Position Executive Administrative Director Line managers have authority to make decisions and usually have people reporting to them. Examples: the president, the vice presidents, the director of personnel, and the head of accounting. Line positions are indicated on the organization chart by a solid line (usually a vertical line). Staff Position Staff personnel have authority functions; they provide advice, recom- mendations, and research to line managers (examples: specialists such as legal counsels and special advisers for mergers and acquisitions or strategic planning). Staff positions are indicated on the organization chart by a dotted line (usually a horizontal line).
The Three Levels of Organizational Culture
Organizational culture appears as three layers: (1) observable artifacts, (2) espoused values, and (3) basic assumptions.30 Each level varies in terms of outward visibility and resistance to change, and each level influences another level.
Common Elements of Organizations: Four Proposed by Edgar Schein
Organizational psychologist Edgar Schein proposed the four common elements of (1) common purpose, (2) coordinated effort, (3) division of labor, and (4) hierarchy of authority.61
4. Rites & Rituals
Rites and rituals are the activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's life. Military units and sports teams have long known the value of ceremonies handing out decorations and awards, but many companies have rites and rituals as well. Example: Employees of New Belgium Brewery in Fort Collins, Colorado, which makes Fat Tire Ale, are given a cruiser bicycle during their first year. After five years, they get a free brewery-hopping trip to Belgium. Ten years of employment is acknowl- edged with a tree planted in their name in the campus orchard. (The company boasts a 97% employment retention rate.42)
Five conclusions emerge from this research:
Sometimes culture can be strong enough to take the place of bureaucracy; that is, the expectations of the culture replace formal rules and regulations. In these cases, the sense of orderliness and predictability that employees look to for guidance are pro- vided by the culture rather than by a rule book. An organization's culture matters. The type of organizational culture can be a source of competitive advantage. Employees are happier with clan cultures. Employees are more satisfied with and committed to organizations with clan cultures, which value flexibil- ity over stability and control and which are more concerned with satisfying the needs of employees than those of shareholders or customers. Elements of these cultures can be used to boost innovation and quality.Managers can build into their organizations characteristics of some or all of these three cultures—clan, adhocracy, and market—to increase innovation and improve the quality of their products. Changing the organizational culture won't necessarily boost financial performance (but it might). There are no guarantees that making changes in a firm's organizational culture will lead to a jump in revenues and profits, although any changes that improve its competitive advantage may produce financial benefits. Market cultures tend to produce better results. As the chart shows, market cultures tend to lead to better outcomes in employee attitudes, performance, and organizational effectiveness, thereby leading to competitive advantage. Managers are encouraged, therefore, to consider how they might make their cultures more market oriented.
2. Coordinated Effort: Working Together for Common Purpose
The com- mon purpose is realized through coordinated effort, the coordination of individual ef- forts into a group or organizationwide effort. Although it's true that individuals can make a difference, they cannot do everything by themselves.
4. Hierarchy of Authority: The Chain of Command
The hierarchy of authority,or chain of command, is a control mechanism for making sure the right people do the right things at the right time. If coordinated effort is to be achieved, some people— namely, managers—need to have more authority, or the right to direct the work of others. Even in member-owned organizations, some people have more authority than others, although their peers may have granted it to them. In addition, authority is most effective when arranged in a hierarchy. Without tiers or ranks of authority, a lone manager would have to confer with everyone in his or her domain, making it difficult to get things done. Even in newer organizations that flatten the hierarchy, there still exists more than one level of management.62 A flat organizationis defined as one with an organizational structure with few or no levels of middle man- agement between top managers and those reporting to them. Finally, a principle stressed by early management scholars was that of unity of com- mand, in which an employee should report to no more than one manager in order to avoid conflicting priorities and demands. Today, however, with advances in computertechnology and networks, there are circumstances in which it makes sense for a person to communicate with more than one manager (as is true, for instance, with the organi- zational structure known as the matrix structure, as we'll describe).
These are the four most frequently asked interview questions used by hiring manag- ers, according to a survey involving 285,000 kinds of interview question
What's your favorite movie?" the job interviewer asks you. "Your favorite website?" "What's the last book you read for fun?" "What makes you uncomfortable?"
5. Span of Control: Narrow (or Tall) versus Wide (or Flat)
The span of control, or span of management, refers to the number of people reporting directly to a given manager.63 There are two kinds of spans of control, narrow (or tall) and wide (or flat). Narrow Span of Control This means a manager has a limited number of people reporting—three vice presidents reporting to a president, for example, instead of nine vice presidents. An organization is said to be tall when there are many levels with nar- row spans of control. Wide Span of Control This means a manager has several people reporting—a first-line supervisor may have 40 or more subordinates, if little hands-on supervision is required, as is the case in some assembly-line workplaces. An organization is said to be flat when there are only a few levels with wide spans of control. Historically, spans of about 7 to 10 subordinates were considered best, but there is no consensus as to what is ideal. In general, when managers must be closely involved with their subordinates, as when the management duties are complex, they are advised to have a narrow span of control. This is why presidents tend to have only a handful of vice presidents reporting to them. By contrast, first-line supervisors directing subordi- nates with similar work tasks may have a wide span of control. Today's emphasis on lean management staffs and more efficiency means that spans of control need to be as wide as possible while still providing adequate supervision. Wider spans also fit in with the trend toward allowing workers greater autonomy in decision making. Research suggests that, when aided by technology to communicate and monitor, a manager can oversee 30 employees or more.64
Common Elements of Organizations: Three More That Most Authorities Agree On
To Schein's four common elements we may add three others that most authorities agree on: (5) span of control, (6) authority, responsibility, and delegation, and (7) cen- tralization versus decentralization of authority.
The Organization Chart
Whatever the size or type of organization, it can be represented in an organization chart. This is the family-tree-like pattern of boxes and lines posted on workplace walls and given to new hires, such as the following for a hospital.
Three Factors to Be Considered in Designing an Organization's Structure
When managers are considering what organizational arrangements to choose from, such factors as stage of development are among the factors, or contingencies, they must consider. Recall from Chapter 2 that the contingency approach to management emphasizes that a manager's approach should vary according to—that is, be contin- gent on—the individual and environmental situation. Thus, the manager following the contingency approach simply asks, "What method is the best to use under these par- ticular circumstances?" The process of fitting the organization to its environment is called contingency design.
Organizational Structure: Who Reports to Whom & Who Does What
Whether an organization is for-profit or nonprofit, the challenge for top managers is to align the organization's vision and strategies with its organizational culture and organizational structure, as shown in the two orange boxes in the drawing below.
7. Centralization versus Decentralization of Authority
Who makes the im- portant decisions in an organization? That is what the question of centralization versus decentralization of authority is concerned with. Centralized Authority With centralized authority, important decisions are made by higher-level managers. Very small companies tend to be the most centralized, although nearly all organizations have at least some authority concentrated at the top of the hierar- chy. Kmart and McDonald's are examples of companies using this kind of authority. An advantage in using centralized authority is that there is less duplication of work, because fewer employees perform the same task; rather, the task is often performed by a department of specialists. Another advantage of centralization is that procedures are uniform and thus easier to control; all purchasing, for example, may have to be put out to competitive bids. Decentralized Authority With decentralized authority, important decisions are made by middle-level and supervisory-level managers. Here, obviously, power has been delegated throughout the organization. Among the companies using decentral- ized authority are General Motors and Harley-Davidson. An advantage in having decentralized authority is that managers are encouraged to solve their own problems rather than to buck the decision to a higher level. In addition, decisions are made more quickly, which increases the organization's flexibility and efficiency. ●
How can you determine how well you might fit in before you go into a job inter- view?
You should write down your strengths, weaknesses, and values—and then do the same for the organization you're interviewing with, by researching it online and talk- ing with current employees. You can then prepare questions to ask the interviewer about how well you might fit. Example: If being recognized for hard work is important to you, ask the inter- viewer how the company rewards performance. If the answer doesn't show a strong link between performance and rewards ("Well, we don't really have a pol- icy on that"), you'll probably have a low person-organization fit and won't be happy working there.
Hero
a person whose accomplishments embody the values of the organization
Rites and rituals
activities and ceremonies, planned and unplanned, that celebrate important occasions and accomplishments in the organization's life
Unity of command
an employee should report to no more than one manager
Organization chart
box-and-lines illustration showing the formal lines of authority and the organization's official positions or work specializations
Coordinated effort
coordination of individual efforts into a group or organizationwide effort
Basic assumptions
core values of the organization
Once an organization's vision and strategy have been determined, as we stated at the beginning of this chapter, the challenge for top managers is, first, to
create a culture that will motivate its members to work together and, second, a structure that will coor- dinate their actions to achieve the organization's strategic goals. Here let us begin to consider the second part—an organization's structure.
The Organization: Three Types
there are three types of organizations classified according to the three different purposes for which they are formed:59 For-profit organizations. These are formed to make money, or profits, by offering products or services. Nonprofit organizations. These are formed to offer services to some clients, not to make a profit (examples: hospitals, colleges). Mutual-benefit organizations. These are voluntary collectives whose pur- pose is to advance members' interests (examples: unions, trade associations). Clearly, you might have an occupation (such as auditor or police officer) that is equally employable in any one of these three sectors. As a manager, however, you would be principally required to focus on different goals—making profits, delivering public services, or satisfying member needs—depending on the type of organization.
Common purpose
unifies employees or members and gives everyone an understanding of the organization's reason for being
Enacted values
values and norms ACTUALLY exhibited in the organization
Three factors that should be considered when determining the best organizational culture involve
whether an organization's environment is mechanistic or organic, whether its environment stresses differentiation or integration, and how its strategy can affect its structure.
