Management 301, Chapter 10

Three characteristics of authority

1. Authority is vested in organizational positions, not people 2. Authority flows down the vertical hierarchy 3. Authority is accepted by subordinates

Factors that affect centralization vs decentralization

1. Greater change and uncertainty in the environment is usually associated with decentralization 2. The amount of centralization or decentralization should fit the firm's strategy 3. In times of crisis or risk of company failure, authority may be centralized at the top

Characteristics of a matrix approach

1. Has dual lines of authority, two-boss employees 2. Matrix boss 3. Top Leaders 4. Advantages: highly effective in a complex, rapidly changing environment in which the organization needs to be flexible, innovative and adaptable. Allows new issues to be raised and resolved. Makes efficient use of HR because specialists can be transferred from one division to another. 5. Disadvantages: confusion and frustration caused by the dual chain of command. Can generate high level of conflict because it pits divisional against functional goals in a domestic structure or product lines vs country goals in a global structure. There is time lost to meetings and discussions devoted to resolving this conflict.

Factors shaping structure

1. Strategic Goals 2. nature of the workflow technology (strategic needs: environment, strategy, goals) (Operational needs: technology, work processes)

Advantages/Disadvantages of virtual network approach

A: a company can concentrate on what it does best and contract out other activities to companies with distinctive competence in those specific areas, which enables a company to do more with less. Leanest of all approaches because little supervision is required D: lack of hands-on control. Customer service and loyalty can suffer if outsourcing partners fail to perform as expected

Why is organization important?

It follows strategy, strategy defines what to do, organization defines how to do it

How can you increase decision-making speed and efficiency

Reducing management levels

What can too much division of labor/specialization cause?

Too much DOL: can cause employees to be isolated and do only one single boring job Too much specialization: can create separation and hinders the coordination that is essential for organizations to be effective

Project Manager

a person who is responsible for coordinating the activities of several departments for the completion of a specific project. The person is not a member of one of the departments being coordinated

Cross-functional teams

consists of employees from various functional departments who are responsible to meet as a team and resolve mutual problems. Can provide needed horizontal coordination to complement an existing divisional or functional structure

Decentralization

decision authority is pushed downward to lower organizational levels

Mass production

distinguished by standardized production runs. A large volume of products is produced, and all customers receive the same product

Outsourcing:

farming out certain activities, such as manufacturing or credit processing, has become a significant trend

Dual lines of authority/two-boss employees

functional runs vertically, divisional hierarchy of authority runs horizontally. Two-boss employees report to two supervisors simultaneously, must resolve conflicting demands from the matrix bosses. Need excellent HR skills with which to confront managers and resolve conflicts

Cross-functional team

furthers horizontal coordination because participants from several departments meet regularly to solve ongoing problems of common interest

Organic

goals of innovation and a rapidly changing environment. Organization tends to much looser, free-flowing and adaptive. Structure is more horizontal and decision-making authority is decentralized

Staff Authority

is narrower and includes the right to advise, recommend, and counsel in the staff specialists' are of expertise. A communication relationship; staff specialists advise managers in technical areas

Line Authority

means that people in management positions have the formal authority to direct and control immediate subordinates

Line departments

perform tasks that reflect the organization's primary goal and mission

Small-batch production firms

produce goods in batches of one or a few products designed to customer specification. Close to traditional skilled-craft work because human beings are a large part of the process

Scalar principle

refers to a clearly defined line of authority in the organization that includes all employees

Coordination:

refers to the managerial task of adjusting and synchronizing the diverse activities among different individuals and departments. The outcome of information and cooperation

Re-engineering

refers to the radical redesign of business processes to achieve dramatic improvements in cost, quality, service and speed. Generally leads to a shift away from a strong vertical structure to one emphasizing stronger horizontal coordination

Top Leader

responsible for the entire matrix, oversees both the product and functional chains of command. His/her responsibility is to maintain a power balance between two sides of the matrix

Departmentalization

the basis for grouping positions into departments and departments into the total organization

Technical Complexity

the degree to which machinery is involved in the production to the exclusion of people

Organizing

the deployment of organizational resources to achieve strategic goals. Deployment of resources is reflected in the organization's division of labor into specific departments and jobs, formal lines of authority and mechanisms for coordinating diverse tasks

Responsibility

the duty to perform the task or activity assigned

Team-based structure

the entire organization is made up of horizontal teams that coordinate their work and work directly with customers to accomplish the organization's goals

Continuous process production

the entire workflow is mechanized in a sophisticated and complex form of production technology. No starting and stopping, human operators are not part of actual production because machinery does all the work

Division of Labor

work specialization, the degree to which organizational tasks are subdivided into separate jobs. Work can be performed more efficiently if employees are allowed to specialize.

Service Technology

1. Intangible output: services are perishable, and unlike physical products, cannot be stored in inventory. Service is either consumed immediately or lost forever 2. Direct contact with customers, production and consumption are simultaneous 3. Service technology that directly influences structure is the need for employees to be close to the customer. Tend to be flexible, informal and decentralized. Horizontal communication is high

Advantages/Disadvantages to divisional structure

A: organization will be flexible and responsive to change because each unit is small and tuned to its environment. Concern for customers is high and coordination across functional departments is better because employees are grouped together in a single location and committed to one product line D: Coordination across divisions is poor, problems can occur when autonomous divisions go in opposite directions. Duplication of resources and the high cost of running separate divisions. Organization losses efficiency and economies of scale. The small size of departments within each division may result in a lack of technical specialization, expertise and training

Task force

a temporary team or committee designed to solve a problem involving several departments. Task force members represent their departments and share information that enables coordination

Functional Structure (U-form; unitary structure)

activities are grouped together by common function from the bottom to the top of the organization. The functional structure groups positions into departments based on similar skills, expertise, work activities and resource use

Chain of Command

an unbroken line of authority that links all employees in an organization and shows who reports to whom

Team Approach

gives managers a way to delegate authority, push responsibility to lower levels and be more flexible and responsive in a complex and competitive global environment

Tall Structure

has an overall narrow span and more hierarchical levels

Primary difference between divisional and functional structure

in a divisional structure, the chain of command from each function converges lower in the hierarchy. Divisional structure encourages decentralization

Technology

includes the knowledge, tools, techniques, and activities used to transform organizational inputs into outputs. includes machinery, employee skills, and work procedures

Unity of Command

means that each employee is held accountable to only one supervisor

Divisional Structure (M-form; multidivisional or decentralized form)

occurs when departments are grouped together based on similar organizational outputs, separate divisions can be organized with responsibility for individual products, services, product groups, major projects or programs, divisions, businesses, or profit centers. Diverse departments are brought together to produce a single organizational output

Virtual Network Approach

the firm subcontracts mosts of its major functions to separate companies and coordinates their activities from a small organization at headquarters

Authority

the formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes.

Accountability

the mechanism through which authority and responsibility are brought into alignment. It means that people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command

Span of management

the number of employees reporting to supervisor. Sometimes called span of control, this characteristic of structure determines how closely a supervisor can monitor subordinates

Organization Chart

the visual representation of an organization's structure, the set of formal tasks and formal reporting relationships provides a framework for vertical control of the organization

What has been the trend in the US and Canada over the past 30 years?

toward greater decentralization of organizations. It is believed to relive the burden on top managers, make greater use of employees' skills and abilities, ensure that decisions are made close to the action by well-informed people, and permit more rapid response to external changes.

Characteristics of a divisional structure

1. Many companies shift to a divisional structure when they become so large that the disadvantages of a functional structure become too great. 2. Divisions are created as self-contained units, with separate functional departments for each division 3. Could group companies by geographic region of customer group

Functional Structure characteristics

1. Strong vertical design, information flows up and down the vertical hierarchy, and the chain of command converges at the top of the organization 2. Advantages: economies of scale, efficient resource use, offers a way to centralize decision making and provide unified direction from top managers 3. Disadvantages: barriers can exist across departments, communication and coordination across functions are often poor causing a slow response to environmental changes. Innovation and change require involvement of several departments. Decision involving more than one department may pile up at the top of the organization and be delayed

Organization Structure

1. The set of formal tasks assigned to individuals and departments 2. Formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical levels, and span of managers' control 3. The design of systems to ensure effective coordination of employees across departments

Two underlying principles of a chain of command

1. Unity of command 2. Scalar Principle

Advantages/Disadvantages to the Team Approach

A: breaks down barriers across departments and improves coordination and cooperation. Team member's know one another's problems and compromise rather than blindly pursuing their own goals. Enables the organization to adapt more quickly to customer requests and environmental changes and speeds decision making because decisions need not go to the top of the hierarchy for approval. Morale boost, employees are typically enthusiastic about their involvement in bigger projects rather than in narrow departmental tasks. D: employees may experience conflicts and dual loyalties. May make different work demands on members than do their department managers and members who participate in more than one team must resolve these conflicts. A large amount of time is devoted to meetings. May cause too much decentralization

Matrix Approach

combines aspects of both functional and divisional structures simultaneously, in the same part of the organization. Evolved as a way to improve horizontal coordination and information sharing

Mechanistic

goals of efficiency and a stable environment

Permanent Teams

groups of employees who are organized in a way similar to a formal department. Each team brings together employees from all functional areas focused on a specific task or project. Emphasis is on horizontal communication and information sharing because representatives from all functions are coordinating their work and skills to complete a specific organizational task

Flat Structure

has a wide span, is horizontally dispersed and has fewer hierarchical levels

Relational Coordination

highest level of horizontal coordination, refers to "frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge, and mutual respect". this is part of the fabric and culture of the organization

Staff Departments

include all those that provide specialized skills in support of line departments. Have an advisory relationship with line departments and typically include marketing, labor relations, research, accounting and HR

Collaboration

means a joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose and that are typically greater than what any of the individuals or departments could achieve working alone

Centralization

means that decision authority is located near the top of the organization

Delegation

the process that manages use to transfer authority and responsibility to positions below them in the hierarchy

Matrix boss:

the product or functional boss, who is responsible for one side of the matrix.