Organizational Culture, Structure, and Design

Sometimes too many direct reports to a specific manager can cause employees

(and their boss) to become frustrated that they're not being supervised effectively.

______ is related to the division of labor and grouping of tasks.

Horizontal differentiation

Factors That Influence Organizational Structure

If a company's managers decide to enter a marketplace where low costs are important, a mechanistic, taller organizational structure with tight controls would be essential. On the other hand, if managers are looking to create competitive advantage by differentiating their products or services from the competition, an organic, flatter structure would allow for company employees to respond quickly to changes in the business environment and avoid delays in decision making because they don't have to go up the chain of command and get formal approval for every action they take.

Influences on Span of Control (three major factors).

Professionalism Subordinates with higher levels of education often can supervise themselves. Because of their professionalism, the supervisor can take on more subordinates, widening his or her span of control. Informal Reporting Relationships Today's supervisors often have many informal reporting relationships, such as task forces, in addition to their formal subordinates. Such informal relationships widen a supervisor's span of control but make measuring it difficult. Technology Digital tools and other information systems that enhance communication between managers and employees tend to widen a manager's span of control. For example, many managers supervise employees who work off-site.

______ is a goal of standardization in organizations.

Similarity and control

Vertical differentiation focuses on ______ differences at each level of the organization's structure

authority

Informal reporting relationships ______ a manager's span of control.

increase

Liaisons are defined as ______

individuals who act informally as bridges between their departments and other departments within the organization

Measuring the span of control of managers in modern organizations is not as easy it was 20 to 30 years ago, due to changes in ______.

informal reporting relationships

The process of coordinating people and activities throughout the organization is known as ______ in organizational structure.

integration

Standardization

is the degree of routine and predictable actions that result from formalization.

Technology

is the combination of skills, knowledge, and materials used to convert inputs into valuable outputs.

Formalization

is the degree to which written rules and procedures are utilized to guide employee actions.

Strategy

is the manipulation of the relationship between an organization and its environment to better achieve the firm's goals and objectives.

Span of control

is the number of employees a manager supervises.

Departmentalization

is the process of combining jobs and tasks into specific groups or units.

Integration

is the process of coordinating people and activities throughout the organization.

An effective organizational structure ______.

makes clear who reports to whom in the organization

Employees with higher levels of education and job experience tend to have ______.

more self-supervision greater professionalism

Complexity

refers to the number of different positions and departments, as well as the number of authority levels in a company. Larger firms tend to be more complex than smaller ones.

Widened spans of control due to ongoing technological developments can ______.

speed decision making empower employees

An organization with a matrix structure may have ______.

strict divisions along functional lines, along with the flexibility to allow employees from one department to assist in another when needed

Temporary work teams made up of individuals from several departments, brought together to solve a specific problem or perform a particular function, are known as ______.

task forces

Integration in organizational structure is defined as ______.

the process of coordinating people and activities throughout the organization

Managers need to develop integrating roles and mechanisms to overcome the barriers that arise due to ______.

the way work is divided

In other situations, too few direct reports to a specific manager

will cause the manager to spend too much time supervising each employee, which can also lead to frustration and resignations.

Which of the following represent stories and myths being used to communicate an organization's culture?

Recollections of factual events being repeated to employees Embellished, fantastical tales of something in the organization's history

Approaches to Change

Restructuring the corporation Changing upper management Merging with another company Unfreezing values, changing those values, and refreezing new values

Rites and Rituals

Rites Ceremonial acts or actions, often to celebrate important accomplishments Reinforce values in the organization Rituals Established observances for a company Can involve a rite or ceremonial action Reinforce values in the organization

Which of the following are weaknesses of a functional structure

Slow response to environmental uncertainty Disregard of organizational issues that do not concern the department

Stories and Myths

Stories Recollections of factual events Repeated and told to demonstrate the importance of values Myths Stories embellished to a point that they are no longer supported by any factual evidence Despite embellishments, remain consistent with company values

Match each description with either functional, divisional, or matrix structure.

Strengths include economies of scale and efficiency----------Functional structure Strengths include environmental responsiveness and increased control over outputs.-----Divisional structure Strengths include integration of the organization and ability of the organization to meet the dual demands of its customers and environment.----Matrix structure

Which of the following can managers use to plan and coordinate efforts to ensure organizational success?

Task forces Liaisons

Flat organization

Tends to have very few layers of management "Organic" structure is designed to encourage flexibility and the ability to respond quickly to changes in the organization's business environment, such as the changes tech companies react to quickly to stay ahead of the competition.

Theorist R.L. Daft identified three basic components of an effective organizational structure.

The first two elements describe the vertical framework of the organization. The third element focuses on horizontal structure and integration across departments.

Organizational Design

The process managers engage in to build an organization's structure

Key Characteristics of Strategy

The relationship between strategy and structure is important in determining the overall effectiveness of the company. If management does not focus its strategy around the strengths of the organization's structure, the firm will be at a competitive disadvantage and its performance will suffer. If one were implementing a low-cost leadership strategy to increase market share and focus on efficient production, a mechanistic organizational structure with tight controls would be preferred.

Researchers Burns and Stalker determined that the external environment and the organization's structure are interrelated.

They identified two types of structures that were at opposite ends of the spectrum—namely the mechanistic and the organic organization. They also identified the optimal environment in which each structure should operate.

Managers who develop an organization's structure must make decisions regarding the levels of vertical differentiation

This often involves establishing a chain of command.

Select the accurate statements regarding the relationship between strategy and organizational structure.

Failure to recognize the significant relationship between strategy and structure can put the organization at a competitive disadvantage. Organizational performance will suffer if structure and strategy do not support one another.

According to researcher Joan Woodward, different technologies affect organizational structure.

Firms with Complex Technology Have more levels (taller) Have higher levels of formalization and centralization Tend to use a mechanistic structure Firms with Simpler Technology Have little standardization of products Have low levels of formalization and decentralized decision making Use a more organic structure

Task Specialization

Focusing employees' work duties on a specific area of expertise and allowing them to develop unique skills and become more productive

Organizational Structure

Framework used by businesses and other organizations to define how tasks are assigned, resources are deployed, and departments and company functions are linked

Tall organization

Has many management layers "Mechanistic" structure tends to be used in business environments that are stable and predictable where employees perform specialized tasks, such as delivering overnight packages for UPS or FedEx.

National Culture

Values are learned at an early age. Values include good vs. evil, right vs. wrong, safety vs. danger. Values set the boundaries for acceptable organizational culture.

Organizational Culture

Values relate directly to organizational issues and practices. Values include sales vs. service, results vs. relationships, innovation vs. efficiency. Values will be less effective if they are outside the boundaries of national culture.

Organizational Chart

Visual representation of how an organization is structured

Which of the following are strengths of a divisional departmentalization by product?

Increased control over outputs Environmental responsiveness

The competing values framework, created by researchers Cameron and Quinn, classifies organizational culture based on two dimensions:

Internal focus and integration versus external focus and differentiation Stability and control versus flexibility and discretion

A formal organization has extensive rules that are strictly enforced

It also has clearly specified work goals and job descriptions. Goals of Formalization

Language and Symbols

Language The unique dialect created in a particular organization to communicate with its members Includes the spoken and written word, how employees dress, and how they decorate their work space Symbols Convey meaning to others May include things like large corner offices (representing success) or open floor plans (representing the importance of interaction)

Heroes and Legends

Legends Stories set in a historic time period Includes stories about founding of companies Heroes People whose accomplishments serve as the ideal for upholding the organization's cultural norms and values Usually founders or persons who moved the company in a successful direction

Which of these are disadvantages of decentralization in organizational structure?

Losses of control Problems with integration

Managing and Changing Organizational Culture

Managed correctly, organizational culture can be a tool for competitive advantage and create value for stakeholders. If there is no dominant culture, or if there are competing subcultures in the company, the organization's effectiveness will be compromised. There are many approaches to changing an organization's culture. Most of them call for drastic measures.

Decentralized Organization

Managers delegate authority and decision-making to all levels of the organization. Advantages Increases employee morale Decreases reaction time to environmental changes Makes managers more accountable Disadvantages Hinders upper management's planning and control Hinders upper management's integration and coordination

Organizational Design Decisions

Managers must integrate roles and mechanisms to overcome communication and cooperation barriers caused by divisions between job tasks and departments.

Span of Control and Organizational Structure

Wide Span of Control 1. Short, flat organizational structure 2. Few layers in company hierarchy 3. Many employees under each supervisor 4. Many supervisors under each manager 5. Low managerial control Narrow Span of Control 1. Tall organizational structure 2. Many layers in company hierarchy 3. Few employees under each supervisor 4. High number of supervisors and managers needed 5. High managerial control

When building an internal structure, a company's managers need to

determine how many departments there need to be, as well as how many employees every manager should supervise in order to be successful.

All aspects of a product line being placed in one division, along with a set of support functions to service the product line, describes characteristics of organizations with a ______.

divisional departmentalization by product

Most larger U.S. companies use a ______.

divisional departmentalization by product

There has been a trend toward widening a manager's span of control, due to sophisticated digital tools that ______.

enhance communication share information increase collaboration

Standardizing operating procedures is a goal of ______ in organizations.

formalization

The ______ structure is the most widely used form of departmentalization.

functional

In the competing values framework, an internal focus is associated with ______, while an external focus is associated with ______.

integration; differentiation

Types of Organizational Culture and Characteristics

1. Clan culture Built on friendliness and collaboration Friendly and built on collaboration Employee morale important for success Similar to being part of a family Leaders seen as parental figures Company reinforced by loyalty and goodwill 2. Adhocracy culture Focused on research, development, and innovation Values research and development Dynamic and creative environment Creates new initiatives that allow a company to grow Hires employees who are internally driven and gives them freedom needed to be successful 3. Market culture Built on results, profits, and productivity Driven by results, Emphasizes profitability and productivity over employee growth and satisfaction Employees competitive and focused on goals Firm held together by winning. 4. Hierarchy culture Focused on a work environment that is formal and highly structured Formal and highly structured Values guided by policies and procedures Focus on efficiency and cost-cutting Creates repetitive routines to keep the company running smoothly

Vertical Differentiation

1. Creates an organizational hierarchy by classifying employees and positions according to rank and authority 2. Emphasizes reporting relationships and often leads to increased efficiency and control in firms

Organizational Structure Components

1. Designating formal reporting relationships, hierarchical levels, and span of control 2. Grouping individuals into departments 3. Designing systems to ensure effective communication, coordination, and integration of efforts across departments

There are three major types of departmentalization:

1. Functional structures Definition Organizational structure in which individuals are grouped together based on the similarity of their task. Example A typical hospital includes surgery, pediatrics, nursing, physical plant, pharmacy, human resources, and food service. These functions serve as a guideline for grouping workers. 2. Divisional structure groups individuals by the types of products produced or by geographic region. Definition Organizational structure in which individuals are grouped together based on product offering or geographic location Example Automobile companies tend to build divisions around different makes and models of cars. Each division has its own marketing, finance, and operations departments and is considered a freestanding entity within the overall firm. 3. Matrix structure combines two or more other organizational designs, such as functional and divisional structures. Definition Organizational structure that combines two or more other organizational designs, such as functional and divisional structures.

Goals of Standardization

1. Give managers a high level of control over their employees. 2. Reduce the need for a large number of supervisors.

Communicating Organizational Culture

1. Language and Symbols 2. Stories and Myths 3. Heroes and Legends 4. Rites and Rituals

The following types of people and relationships can help with Integration

1. Liaisons Individuals who act informally as a bridge between their department and another department within an organization. Learn flexibility and adaptability 2. Task Force Temporary work team made up of individuals from several departments, brought together to solve a specific problem or perform a particular function. Disband after work is done 3. Team A permanent work group or committee made up of individuals from different company functions that coordinate activities across departments over a long period. Focus on long-term strategic situations Become one of the strongest integrating factors in an organization 4. Direct Contacts Continuing relationships between managers and employees of different departments that alert these individuals to challenges faced by other departments. Based on continuing personal relationships Expose individuals to challenges other departments face. Force employees and managers to bridge the "moat" separating departments. Allow employees across departments to work together to solve common problems 5. Integrators Individuals, with little or no formal authority, who are responsible for ensuring that departments within an organization coordinate their activities with each other. Exist solely to integrate the organization Located outside the departments they are responsible for integrating. Have little or no formal authority Rely on communication and social skills

Types of Organizational Design Decisions

1. Liaisons a. Act informally as a bridge between departments b. Represent their department to other departments c. Learn flexibility and adaptability 2. Task Forces a. Made up of individuals spanning several departments b. Brought together to solve a specific problem or perform a particular function c. Disband after work is done 3. Teams a. Consist of individuals from several departments working together permanently b. Focus on long-term strategic situations c. Become one of the strongest integrating factors in an organization 4. Direct Contacts a. Based on continuing personal relationships b. Expose individuals to challenges other departments face c. Force employees and managers to bridge the "moat" separating departments d. Allow employees across departments to work together to solve common problems 5. Organizational Integrators a. Exist solely to integrate the organization b. Located outside the departments they are responsible for integrating c. Have little or no formal authority d. Rely on communication and social skills

Chain of Command

1. Line of authority in an organization that links all employees 2. Shows who reports to whom

Goals of Formalization

1. To standardize operating procedures so that employee behavior becomes predictable and the procedures become second nature 2. To give managers a wider span of control because rules and regulations play a supervisory role in guiding employee behavior

Characteristics of Complex firms:

1. Value learning and adapting rather than maximizing efficiency and control. 2. Are more difficult to control and coordinate than simple ones. 3. Have highly focused positions and specialized labor.

Evaluate the effectiveness of an organizational structure focusses on

1. Who has the authority to make decisions. 2. How written rules and procedures are used to guide employee actions. 3. Whether standard operating procedures (routine and predictable actions undertaken by employees) are used. 4. The level of complexity in the organization's structure when it comes to the number of job positions and departments.

An effective organizational structure includes the design of systems to ensure effective ______ of efforts across the organization's departments. (Select all that apply.)

1. communication 2. coordination 3. integration

______ organizations are much more difficult to control, due to the effort and attention required for integration.

Complex

Which of the following are characteristics of an organic organizational structure?

Decentralized decision making A low level of formalization

Centralized Organization

Decision-making and authority are at the top of the hierarchy. Advantages Provides upper-level managers with large amount of control Encourages top managers to be qualified and dedicated Disadvantages Reduces employee morale Often overloads top management

Horizontal differentiation

Dividing labor into separate tasks and then grouping these tasks into separate departments. Should provide: 1. A job description for each position that shows its role within the department 2. A guide for each department that shows its role in achieving company goals and objectives

Which of the following are strengths of a functional structure?

Efficiency Achievement of functional goals

Key Characteristics of Standardization

Employees conform to a set of rules and procedures, so that their behaviors are similar and predictable in many situations.

Match each description with either functional, divisional, or matrix structure.

Employees who engage in similar tasks are grouped together.---Functional structure Employees who work on the same product line are grouped together.----Divisional structure Employees are grouped according to two or more other organizational designs.----Matrix structure

Mechanistic Structure

Encourages flexibility and quick responses to changes in the business environment. Characteristics 1. Centralized decision making at the top of the organization 2. High levels of formalization that result in many rules 3. High levels of standardization that lead to predictable employee behaviors 4. Highly specialized and defined tasks 5. Clearly delineated chain of command that extends over many levels in a tall organization 6. Optimal in environments that are stable and predictable

Organic Structure

Encourages flexibility and quick responses to changes in the business environment. Characteristics 1. Decentralized decision making with decisions made at lower levels 2. Low levels of formalization with few rules to impede or direct employees 3. Low levels of standardization that allow quick reactions 4. Diverse, undefined tasks 5. High levels of horizontal communication and focused integration 6. Optimal for organizations exposed to high levels of environmental uncertainty

The organization's culture significantly influences its structure.

Example Technologically enhanced work environments often lead to organizational cultures that foster creativity and allows employees to solve issues. Such environments enable employees to create their own schedules, work from home, focus on task completion, and direct their own career paths. As a result, the organizational structure become more flexible and organic

______ culture helps to shape what is considered acceptable ______ culture.

National; organizational

Which of the following are weaknesses of a divisional departmentalization by product?

No functional economies of scale Loyalty to separate divisions instead of to the overall organization

Organizational Culture vs. National Culture

Organizational culture is the set of values, norms, attitudes, and beliefs shared by members of an organization, which create the boundaries for good and bad behavior within the organization National culture is the set of values, norms, attitudes, and beliefs shared by members of a nation, which create the boundaries for good and bad behavior within the nation.

Which of the following can managers use to plan and coordinate efforts to ensure organizational success?

Organizational integrators Teams Direct contacts

Centralization

describes where the decision-making authority rests in the organizations. An organization can be centralized or decentralized.

An organization with functional departmentalization may have ______.

departments assembled according to the specific activities employees perform