CM, Ch. 3 Organizational Structure and Culture

Boss of Product Team

Evaluates an individuals performance on the team.

Organizational culture is shaped by the interaction of four factors:

Organizational Ethics, Organizational Culture, The Employment Relationship, Characteristics of the Organization's People

Task Analyzability

The degree to which programmed solutions are available to people or functions to solve the problems they encounter.

Hierarchy of authority

an organization's chain of command, specifying the relative authority of each manager.

The first step in organizational design is...

grouping tasks into jobs or job design.

Job Simplification

process of reducing the number of tasks that each worker performs.

Organizational Structure

A formal system of task and reporting relationships that coordinates and motivates organizational members so they work together to achieve an organization's goals.

Integrating Roles

A role whose only function is to increase coordination and integration among functions or divisions to achieve performance gains from synergies. The more complex an organization and the greater the number of its divisions, the more important integrating roles are.

There are two types of cultures within organizations:

Adaptive and Inert Culture

Functional Boss

Assigns individuals to a team and evaluates their performance from a functional perspective.

Task Forces

Committees of managers from various functions or divisions who meet to solve a specific, mutual problem; also called ad hoc committees. Task forces are often called ad hoc committees, because of the fact that they are temporary.

Strategy

Different strategies call for the use of different organizational structures and cultures. A differentiation strategy would benefit from a flexible structure, while a low-cost strategy would benefit from a formal organizational structure.

Businesses can operate in two different external environments:

Dynamic Environment, Stable Environment

Organizational structure and design is influenced by internal and external factors that include:

Environment Strategy Human Resources Technology

Stable Environment

Environments where uncertainty is low and resources are readily available. Businesses in this environment have decision-making that occurs within a defined hierarchy of authority according to rules and SOPs. The business culture encourages compliance and cooperation, which supports a mechanistic form of organization.

Dynamic Environment

Environments with constantly changing customer demands and high levels of uncertainty. Businesses in this environment are likely to decentralize authority, empower lower-level employees to make decisions, and utilize self-managed teams. The business culture supports an organic form of organizations that encourages change and innovation.

Typical functions and divisions that managers use to group jobs include:

Functional Structure Divisional Structure Matrix and Product Team Structures Service Organization Structure

Liaison Roles

Giving a manager in each function or division the responsibility for coordinating with the other. Coordinating is part of the liaison's full-time job, and usually an informal relationships develops between the people involved, greatly easing strains between functions.

Job Enrichment

Increasing the degree of responsibility a worker has over his or her job. Job enrichment increases a workers responsibility which increases their involvement in their jobs and improves their interest in the quality of goods they make or the services they provide.

Job Enlargement

Increasing the number of different tasks in a given job by changing the division of labor. Job enlargement increases the range of tasks performed by a worker which helps reduce boredom and fatigue, and often times increases motivation to perform at a high level.

When information technology or customer needs are changing rapidly, and the environment is uncertain, managers must design the most flexible kind of organizational structure available, either a:

Matrix Structure or Product Team Structure

Job Characteristics Model

Model developed by J.R. Hackman and G.R. Oldham Model explains how managers can make jobs more interesting and motivating. The model suggests that every job has five characteristics that determine how motivating a job is.

The challenge facing all companies is to design a structure and culture that:

Motivate managers and employees to work hard and to develop supportive job behaviors and attitudes. Coordinate the actions of employees, groups, functions, and divisions to ensure they work together efficiently and effectively.

Human Resources

Organizations with a flexible/decentralized structure typically have a more highly skilled workforce, and have a greater number of employees who work in groups or teams. When designing an organizational structure managers must pay close attention to the needs of the workforce and to the complexity and kind of work employees perform.

Job Characteristics Model 5 job characteristsics

Skill Variety Task Identity Task Significance Autonomy Feedback

Tall vs. Flat Organizations

Tall organizations have many levels of authority relative to a company's size. Flat organizations have fewer levels relative to a company's size. Communication problems may arise when organizations have many levels in the hierarchy, such as a tall organization. Tall hierarchies/organizations indicate that a company is employing many layers of management (first-line, middle, and senior managers).

Two factors determine how complicated or nonroutine technology is:

Task Variety and Task Analyzability

Cross-functional Teams

Team that is formed to help address recurring problems that an organization faces.

Autonomy

The degree to which a job given an employee freedom and discretion needed to schedule different tasks and decide how to carry them out.

Task Significance

The degree to which a worker feels his or her job is meaningful because of its effect on people inside or outside the organization.

Task Identity

The extent to which a job requires that a worker perform all the tasks necessary to complete the job, from the beginning to the end of the production process.

Skill Variety

The extent to which a job requires that an employee use a wide range of skills, abilities, or knowledge.

Feedback

The extent to which actually doing a job provides a worker with clear and direct information about how well he or she has performed the job.

Organizational Ethics

The moral values, beliefs, and rules that establish the appropriate way for an organization and its members to deal with each other and with people outside the organization.

Task Variety

The number of new or unexpected problems or situations that a person or function encounters in performing jobs or tasks.

Organizational Architecture

The organizational structure, control, systems, culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used.

Organizational Design

The process by which managers make specific organizing choices that result in a particular kind of organizational structure.

Organizational Culture

The shared set of beliefs, values, and norms that influence how people and groups work together to achieve an organization's goals.

Adaptive Cultures

Those cultures whose values and norms help an organization to build momentum and to grow and change as needed to achieve its goals and be effective. In adaptive cultures, employees often receive rewards linked directly to their performance and to the performance of the company as a whole.

Inert Cultures

Those whose values and norms fail to motivate or inspire employees; they lead to stagnation, and often failure over time. In inert cultures, poor working relationships frequently develop between the organization and its employees, and instrumental values of noncooperation, laziness, loafing and work norms of output restriction are common.

Service organization structure

a decentralized structure that allows employees to assume multiple roles using a combination of interpersonal and technical skills. Design for organizations that provide services not products to customers. Service organizations have fewer distinct roles, broader skillsets, and blurred boundaries between roles.

Function

a group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs.

Minimum chain of command

a principle that states that top managers should always construct a hierarchy with the fewest levels of authority necessary to efficiently and effectively use organizational resources. Effective mangers constantly scrutinize their hierarchies to see whether or not the number of levels can be reduced.

Functional structure

an organizational structure composed of all the departments that an organization requires to produce its goods or services. Functional structures let managers create the set of functions they need to scan and monitor the competitive environment and obtain information about how it is changing. Functional structures have several advantages when people who perform similar jobs are grouped together. The individuals can learn from observing one another and become more specialized and perform at a higher level. It is easier for managers to monitor and evaluate their performance.

Divisional structure

an organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer. The goal behind a divisional structure is to create smaller, more manageable units within an organization. There are three forms of divisional structures: Product Structure Geographic Structure Market Structure

Market structure

an organizational structure in which each kind of customer is served by a self-contained division; also called a customer structure Market structures let managers respond to the needs of their customers and allows them to act flexibly in making decisions in response to customer needs.

Product structure

an organizational structure in which each product line or business is handled by a self-contained division. Grouping functions into divisions focused on particular products has several advantages. A product structure allows functional managers to specialize in only one product area which can help build expertise and fine-tune their skills. Each division's managers can become experts in their industry, which can help them choose and develop a business-level strategy to obtain a competitive advantage. A product structure frees corporate managers from the need to supervise directly each division's day-to-day operations. Product structures put divisional managers closer to their customers and lets them respond quickly and appropriately to the changing task environment.

Geographic structure

an organizational structure in which each region of a country or area of the world is served by a self-contained division. A global geographic structure is when managers locate different divisions in which of the world regions where the organization operates. A global product structure is where each product division, not the country and regional managers, take responsibility for deciding where to manufacture its products and how to market them.

Product team structure

an organizational structure in which employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his or her direct subordinates. Cross-functional team is a group of managers brought together from different departments to perform organizational tasks. A product team structure differs from a matrix structure in two ways: Does away with the dual reporting relationships and two-boss employees. Functional employees are permanently assigned to a cross-functional team that is empowered to bring a new or redesigned product to market.

Matrix structure

an organizational structure that simultaneously groups people and resources by function and by product. The result of a matrix structure is a complex network of reporting relationships among product teams and functions that makes the matrix structure very flexible. Matrix teams remain flexible when product teams are empowered and team members are responsible for making most of the important decisions involved in product development.

Decentralization of authority

gives lower-level managers and nonmanagerial employees the right to make important decisions about how to use organizational resources. It allows an organization and its employees to behave in a flexible way even as the organization grows and becomes taller. Too much decentralization of authority has some disadvantages: If division, functions, or teams are given too much decision-making authority, they may begin to pursue their own goals at the expense of the organizations. Can cause a lack of communication among functions or divisions, which prevents the synergies of cooperation from ever materializing, causing organizational performance to suffer.

Integrating mechanisms

organizing tools that managers can use to increase communication and coordination among functions and divisions. The greater the complexity of an organization's structure, the greater the need for coordination among people, functions, and divisions. Several integrating mechanisms are available to managers to increase communication and coordination, which include: Liaison Roles Task Forces Cross-functional Teams Integrating Roles

Job design

process by which managers decide how to divide tasks into specific jobs. Division of labor among employees is a critical part of the organizing process, and helps to increase efficiency and effectiveness. Managers must analyze the range of tasks to be performed and create jobs that best allow the organization to give customers the goods and services they want.

Span of control

the number of subordinates who report directly to a manager.

Authority

the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources.