Chapter 7 Management
Disadvantages of Grouping Jobs into Functions
Difficult for departments to communicate with others. Preoccupation with own department and losing sight of organizational goals.
Market Structure
Each kind of customer is served by a self-contained division Also called customer structure
Global Product Structure
Each product division, not the country or regional managers, takes responsibility for deciding where to manufacture its products and how to market them in foreign countries
Product Structure
Each product line or business is handled by a self-contained division
Geographic Structure
Each region of a country or area of the world is served by a self-contained division
Autonomy
Employee has freedom to schedule tasks and carry them out
Product Team Structure
Employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his direct subordinates
Advantages of Grouping Jobs into Functions
Encourages learning from others doing similar jobs Easy for managers to monitor and evaluate workers
Flat Organization
Fewer levels of authority relative to company size
Decentralizing Authority
Giving lower level managers and non-managerial employees the right to make important decisions about how to use organizational resources
Factors that Affect and Determine the Design of the Organizational Structure
Organizational Environment Technology Strategy Human Resources
Line Manager
Someone in the direct line or chain of command who has formal authority over people and resources
Span of Control
The number of subordinates who report directly to a manager
Job Design
The process by which managers decide how to divide tasks into specific jobs
Skill Variety
employee uses a wide range of skills
Types of Divisional Structures
product, geographic, market
Job Characteristics
skill variety, task identity, task significance, autonomy, feedback
hierachy of authority
An organization's chain of command, specifying the relative authority of each manager
Functional Structure
An organizational structure composed of all the departments that an organization requires to produce its goods or services.
Strategic Alliance
A formal agreement that commits two or more companies to exchange or share their resources in order to produce and market a product
Cross Functional Team
A group of managers brought together from different departments to perform organizational tasks.
Would a flexible or a more formal structure be appropriate for these organizations: (a) a large department store, (b) a Big Four accountancy firm, or (c) a biotechnology company? Explain your reasoning. [LO 7-1, 7-2]
A large department store should utilize a formal structure. The retail business is a relatively stable environment. Resources are readily available, and uncertainty is low. Less coordination and communication among people and functions is needed to obtain resources. In a department store, most important decisions can and should be made by top managers within a clearly defined hierarchy of authority. Employees do not need to decide which products to sell, or how the store will market itself. Employee activities should be governed by extensive rules and standard operating procedures. A Big Five accountancy firm should utilize a more flexible structure. Most of these firms are expanding globally, and global expansion is facilitated by a flexible structure that allows for more autonomy at lower levels in the organization. Also primarily, professionals staff an accounting firm. Flexible structures are best suited to the needs of highly skilled people. Most accountants have learned professional honesty and integrity in their training, and would likely resent close supervision, a distinct feature of a formal structure. A biotechnology firm should also implement a flexible structure, due to the ever-changing and developing environment in which it operates. A flexible structure makes it easier to speed decision making and communication, and makes it easier to obtain resources. In addition to the environment, technology is also a factor. The more complicated the technology, the greater the need for a more flexible structure. Biotechnology firms have incredibly complicated skills, knowledge, tools, machines, and computers that they use to conduct research and develop products. Many of their human resources are skilled, as scientists or doctors, and do not require close management supervision.
B2B Network Structure
A series of strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product
Using the job characteristics model as a guide, discuss how a manager can enrich or enlarge subordinates' jobs [LO 7-2]
A university has many different departments and positions, so a typical job may not be easy to identify. Since a secretary would be found in most departments, that will be used as an example. A secretary of a department may have duties like typing, answering the telephone, taking messages, accepting packages, and mailing out information. The skill variety may be sufficient if the secretary feels that a wide range of skills, abilities, and knowledge are being used. Task identity may not be very high for a secretary, since most tasks, such as typing a letter or sending out department information, probably don't require much process. Increased task identity can be gained by having the secretary give input concerning the type of information the department sends out, or having the secretary contribute to the content of this information. Secretaries can often feel that they have task significance when faculty or staff thank them for completing a task and therefore show them that their work is important.
How might a salesperson's job or a secretary's job be enlarged or enriched to make it more motivating? [LO 7-2, 7-3]
Allowing them to schedule their various activities and be responsible for reporting to management on their progress could enrich a salesperson's job. A salesperson could also be charged with the task of finding new ways to approach customers or close a sale that make repeat business more likely. Management might encourage their sales force to develop new skills, such as marketing techniques and knowledge that can be applied to their current jobs. A workshop for salespeople could be arranged to help figure out ways to respond to unexpected situations, with various workshop members offering suggestions and solutions. Giving him or her the opportunity to handle new responsibilities could enrich a secretary's job. A manager could encourage a secretary to develop new skills or extend the opportunity to decide how to do the work, for example, developing a new way of organizing files or documents. Allowing a secretary to monitor and measure their own performance might also give him or her a feeling of job involvement, and encourage flexibility rather than rigidity in the work setting.
Advantages of Product Structure
Allows functional managers to specialize in one product area Division managers become experts in their area Removes need for direct supervision of division by corporate managers Divisional management improves the use of resources
Boundaryless Organization
An organization whose members are linked by computers, faxes, computer-aided design systems, and video teleconferencing and who rarely, if ever, see one another face-to-face.
Matrix Structure
An organizational structure that simultaneously groups people and resources by function and product
Organizational Structure
Formal system of task and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals
How do matrix structures and product team structures differ? Why is the product team structure more widely used? [LO 7-1, 7-3, 7-4]
In a matrix structure, managers group people and resources in two ways simultaneously: by function and by product team. In developing this structure, managers build a network of reporting relationships among product teams and functions. Each person in a product team reports to both a functional and a product team boss (known as two boss managers.) Matrix structure makes the most use of human resources because people are only part of the team when their skills are needed, and leave the team after they have completed their assignment. A product team structure is different from a matrix structure in that (1) it does away with dual reporting relationships and two boss managers; and (2) in a product team structure, employees are permanently assigned to cross-functional team, and the team is empowered to bring a new or redesigned product to market. Members of a cross-functional team report only to the product team manager or one of his/her direct subordinates. The product team structure is more widely used today because dual reporting relationships that characterize the matrix structure are difficult for managers and employees to handle. Often, the two bosses make conflicting demands, leaving employees confused and frustrated. Functional and product team bosses may come into conflict over who is in charge of which team members for how long, since members are not permanently assigned to a cross-functional team in a matrix structure, like they are in a product team structure. A product team structure is used because it allows flexibility with a structure that is easier to operate.
When and under what conditions might managers change from a functional to (a) a product, (b) a geographic, or (c) a market structure? [LO 7-1, 7-3]
In a matrix structure, managers group people and resources in two ways simultaneously: by function and by product team. In developing this structure, managers build a network of reporting relationships among product teams and functions. Each person in a product team reports to both a functional and a product team boss (known as two boss managers.) Matrix structure makes the most use of human resources because people are only part of the team when their skills are needed, and leave the team after they have completed their assignment. A product team structure is different from a matrix structure in that (1) it does away with dual reporting relationships and two boss managers; and (2) in a product team structure, employees are permanently assigned to cross-functional team, and the team is empowered to bring a new or redesigned product to market. Members of a cross-functional team report only to the product team manager or one of his/her direct subordinates. The product team structure is more widely used today because dual reporting relationships that characterize the matrix structure are difficult for managers and employees to handle. Often, the two bosses make conflicting demands, leaving employees confused and frustrated. Functional and product team bosses may come into conflict over who is in charge of which team members for how long, since members are not permanently assigned to a cross-functional team in a matrix structure, like they are in a product team structure. A product team structure is used because it allows flexibility with a structure that is easier to operate.
Job Enrichment
Increasing the degree of responsibility a worker has over a job
Job Enlargement
Increasing the number of different tasks in a given job by changing the division of labor
Global Geographic Structure
Managers locate different divisions in each of the world regions where the organization operates Generally occurs when managers are pursuing a multi-domestic strategy
As high-powered, low-cost wireless technologies continue to grow, many managers soon may not need to come to an office to do their jobs but may work at home. What are the pros and cons of such an arrangement? [LO 7-5]
Managers who do not come to an office but instead do their jobs at home are taking part in boundaryless organization. Such an organization is composed of people linked by technology who may rarely, if ever, see one another face-to-face. People are utilized when their services are needed, much as in a matrix structure, but they are not formal members of an organization; they are functional experts who form an alliance with an organization, fulfill their contractual obligations, and then move on to the next project. Like the matrix structure, the boundaryless organization offers flexibility, allowing managers to innovate quickly, form teams to meet new and changing needs, and keep pace with an increasingly complex environment. However, a disadvantage of this structure is that people who work for the company will often have little or no loyalty to the firm because they are hired experts. As a result, team chemistry and support will suffer and workers might not be motivated to do their best job.
Tall Organization
Many levels of authority relative to company size
Integrating Mechanism
Organizing tools that managers can use to increase communication and coordination among functions and divisions
Staff Managers
Someone responsible for managing a specialist function, such as finance or marketing
Organizational Design
The process by which managers make specific organizing choices that result in a particular kind of organizational structure
Organizing
The process by which mangers establish the structure of working relationships among employees to achieve goals.
Job Simplification
The process of reducing the number of tasks that each worker performs
Outsource
To use outside suppliers and manufacturers to produce goods and services
task significance
Worker feels the task is meaningful to organization
Feedback
Worker gets direct information about how well the task is done
Task Identity
Worker is involved in all tasks of the job from beginning to end of the production process
Knowledge Management System
a company-specific virtual information system that systematizes the knowledge of its employees and facilitates the sharing and integrating of their expertise
Divisional Structures
an organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a customer.
Authority
the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources
