309 chapter 14

bureaucratic structure

An organizational structure with formal division of labor, hierarchy, and standardization of work procedures Bureaucracies are most appropriate in large organizations when work tasks are well-understood and it is possible to specify the best way to execute them.

Communities of practice

Groups of people whose shared expertise and interest in a joint enterprise informally binds them together

team-based structure

Horizontal or vertical teams define part or all of the organization

decentralized organizations

The authority for making decisions affecting an organization is distributed increases organizational commitment through greater involvement in the organization and identification with the organization's mission and values

wide vs narrow spans of control

narrow spans of control are more costly, but they also provide closer supervision and more coaching. Narrower spans of control are necessary for novel and complex tasks. Wider spans of control give subordinates greater autonomy and responsibility for self-management, and are best for routine, production-type work.

generalists

often less expensive than specialists, organizations employing a greater proportion of generalists may be able to reduce costs. Because they are not experts, they often need more time to make decisions and to respond to environmental changes because they need to do additional research.

Mechanistic organizations

Rigid, traditional bureaucracies with centralized power and hierarchical communications

behavioral expectations

the organization's expectations of how employees should behave, and what attitudes it wants to encourage or suppress. This decision is based in part on the company's values. If employees are to be encouraged to make decisions and work collaboratively, a decentralized and flat structure is appropriate. If employees are expected to follow explicit rules and procedures, a more hierarchical, centralized structure would be called for. Because power plants and pharmaceutical manufacturing facilities need employees to follow explicit rules and procedures, they tend to be very centralized and hierarchical.

Matrix structures generate complex reporting relationships because a matrixed employee essentially has two bosses:

the project or product boss and his or her functional manager

A "command and control" management style is

unlikely to foster successful communities of practice. Successful managers cultivate communities of practice by identifying and bringing the right people together, building trust, and providing an appropriate infrastructure

Dividing work into specialized jobs increases

work efficiency.

cross-functional team

A permanent task force created to address specific problems or recurring needs

having more than _____ direct reports is often considered too many to effectively manage

9

liaison role

A manager or team member is held formally accountable for communicating and coordinating with other groups

task force

A temporary committee formed to address a specific project or problem

functional structure

An organizational structure that groups people with the same skills, or who use similar tools or work processes, together into departments work well for organizations in stable environments selling only a few products or services because of the increased economies of scale possible disadvantages of a functional structure include poor coordination and communication across functions and a lack of clear responsibility for the delivery of a product or service. There is also an increased risk of conflict if employees develop a narrow perspective relevant to their function and not the organization as a whole.

Joint payoffs:

Because networks are organized around specific products or projects, payments are arranged based on the final product, so that if the product does not make it, no firm makes a profit. This motivates everyone to do their best.

matrix structure

Employees report to both a project or product team and to a functional manager

Restricted access:

By restricting their exchanges to just a few long-term partners, networked organizations are more dependent on each other. By increasing their chances for future business, long-term relationships decrease the incentive for one organization to take advantage of another because they will get kicked out of the network and lose the opportunity to have future work.

centralized organizations

Concentrate power and decision-making authority at higher levels of the organization

lattice structure

Cross-functional and cross-level subteams are formed and dissolved as necessary to complete specific projects and tasks This structure is common in consulting organizations.

decentralized vs centralized

Decentralized organizations tend to have flatter structures than centralized organizations because employees' greater autonomy decreases the need for middle management. Flatter structures promote innovation and increase the speed of decision making, and can save money as a result of fewer management layers. Decentralization is best when the organization performs nonroutine tasks in complex environments because it empowers the managers closest to the environment to make decisions and quickly implement them.

Characteristics of Organizational Structure

Division of labor: the extent to which employees specialize or generalize Span of control: the number of people reporting directly to an individual Hierarchy: the degree to which some employees have formal authority over others Formalization: the extent to which organizational rules, procedures, and communications are written down and closely followed Centralization: the degree to which power and decision-making authority are concentrated at higher levels of the organization rather than distributed

Here are six common bases for grouping employees:

Employee knowledge and skills: Employees are grouped by what they know; for example, pharmaceutical organizations have departments like oncology and genetics. Business function: Employees are grouped by business function; for example, many organizations have departments of human resources, marketing, and research and development. Work process: Employees are grouped based on the activities they do; for example, a retailer may have different retail store and online departments reflecting two different sales processes. Output: Employees are grouped based on the products or services they work on; for example, Colgate-Palmolive has two business divisions: One division includes oral, personal, and home care products and the other focuses on pet nutrition. Client: Employees are grouped based on the type of clients they serve; for example, Dell Computer has different departments supporting home, medium and small business, the public sector, and large business customers. Location: Employees are grouped based on the geographical areas they serve; for example, many retailers including Lowe's Home Improvement divide employees by regions.

organic organizations

Flexible, decentralized structures with less clear lines of authority, decentralized power, open communication channels, and a focus on adaptability in helping employees accomplish goals benefit from faster awareness of and response to market and competitive changes, better customer service, and faster decision making

four primary organizational structures that support global business:

Global product division structure (e.g., McDonald's): All functional activities are controlled by a product group at headquarters; local managers do not usually provide input into product decisions and are involved only in local administrative, legal, and financial affairs. This structure is appropriate when the benefits of global integration are large and local differences are small. Global area division structure (e.g., Frito Lay): Regional and/or country managers are given substantial autonomy to adapt strategies to fit local situations. This structure is appropriate when local differences are large and the benefits of global integration are small. Global transnational division structure (e.g., Kraft Foods ): A balanced, matrixed relationship between local managers and headquarters with a two-way flow of ideas, resources, and employees between the two locations. This structure works best when both global integration and local responsiveness are needed. Regional headquarters structure (e.g., Coca-Cola and Sony): A regional headquarters is established in major geographical areas (often North America, Asia, Latin America, and Europe) that works collaboratively with the product divisions to give the local units clearer operational goals and directions than typically happens under the global transnational division matrix structure. This structure is best when a balance of global integration and local responsiveness is needed.

continuous production

Machines constantly make the product At the bottom of the organization, continuous production requires a mechanistic structure and low levels of supervision because machines do most of the work. The structure of a firm using continuous production is often tall and thin, or even an inverted pyramid

direct contact

Managers from different units informally work together to coordinate or to identify and solve shared problems

unit production

Producing in small batches or making one-of-a-kind custom products Employees' talents are more important than the machines being used, and it is difficult to specify rules and procedures in advance. flat structure with a low managerial span of control is most appropriate used by advertising and consulting firms

external environment

Rapidly changing environments require more flexible structures to deal effectively with the constant changes. This usually means that authority needs to be decentralized in some way to process relevant information and adjust to the changing environment.

business strategy

Simple designs are appropriate for simple strategies, and more complex designs are necessary when strategies require more complex processes and interactions. Matching organizational structure to the business strategy leads to higher firm performance

prebureaucratic

Smaller organizations with low standardization, total centralization, and mostly one-on-one communication This type of structure is best for simple tasks and entrepreneurial organizations as the founder is able to control the organization's decisions and growth. The founder's personal characteristics and values drive many of a company's prestructural characteristics, which often stay with the firm as it grows

hierarchy

The degree to which some employees have formal authority over others establishes the "tallness" or "flatness" of an organizational chart.

organizational structure

The formal system of task, power, and reporting relationships the core of what coordinates, controls, and motivates employees to cooperate toward the attainment of organizational goals

organization size

The larger an organization and its subunits, the taller the hierarchy, the greater the centralization, and the more bureaucratically it operates, and the greater the chances of conflict between managers and employees

span of control

The number of people reporting directly to an individual

Organizational design

The process of selecting and managing aspects of organizational structure and culture to enable the organization to achieve its goals

A network organization is

a collection of autonomous units or firms that act as a single larger entity, using social mechanisms for coordination and control. Because network organizations contract out any function that can be done better or more cheaply by outside firms (e.g., marketing and payroll), managers spend a lot of time coordinating and controlling the network of contractors and strategic alliances. best for functions that do not require frequent exchanges, do not suffer from supply uncertainty, and do not require customization.

A division is

a collection of functions organized around a particular geographic area (geographic structure), product or service (product structure), or market (market structure). Divisional structures are common among organizations with many products or services, geographic areas, and customers.

nature of the organization's talent.

a flexible structure is more appropriate if highly skilled workers, who often have professional norms guiding their behavior and decisions (e.g., doctors or lawyers), need to work in flat, team-based structures to get the work done most effectively. Advertising and marketing firms are often organized into teams.

disadvantages of a divisional structure

are that rivalries and conflict might emerge across divisions, economies of scale are reduced because resources and skills are duplicated across divisions, and employees may become focused on divisional rather than organizational goals.

Virtual organizations tend to

be very complex. The loss of control over the outsourced functions creates many challenges, including communication, ambiguity over organizational membership and career paths, and skills for managing at a distance. Nonetheless, the reduced costs and increased flexibility from being virtual create a competitive advantage for many firms.

Ineffective organizational structures

block communication and cooperation, and drain employee motivation

Centralization creates

clear lines of communication and responsibility, and the implementation of decisions tends to be straightforward. Centralization is best in noncomplex, stable environments.

Organizational structures reflect the company's

division of labor, span of control, hierarchy, formalization, and centralization

Organizational structure is related to

employee satisfaction, commitment, and turnover

matrix structures are good at

good at providing quality customer service, are very flexible, and can respond quickly to changes because the work units contain all of the needed functional expertise to make decisions.

Because specialists are experts, they often have

greater autonomy and decision-making authority, which increases the firm's ability to respond quickly to environmental changes

employees tend to be more isolated when division of labor is ____

high

Effective organizational structures

improve the working efficiency of the organization, motivate employees rather than frustrate them, and facilitate working relationships among employees and across organizational units.

culture boosts organizational performance when

it (1) is strategically relevant, (2) is strong, and (3) emphasizes innovation and change to adapt to a changing environment. [Footnote]

mass production,

it makes large volumes of identical products, typically using assembly lines and machines. In this case, a tall, bureaucratic structure with a large managerial span of control would be appropriate

Formalization

reflects the extent to which organizational rules, procedures, and communications are written down.