Ch 16 OFFICIAL

Organizational Structure

the formal system of task and job reporting relationships that determines how employees use resources to achieve the organization's goals

Disadvantages of a functional structure

1. When the range of products or services that a company produces increases, its various functions can begin to experience difficulties. 2. Coordination problems may arise. As organization's attract customers with different needs, it may find it hard to service these different needs by using a single set of functions. 3. As companies grow, they often expand their operations nationally. Servicing the needs of different regional customers with a single set of manufacturing, sales, or purchasing functions becomes very difficult.

Market structure. What are the advantages and disadvantages?

A divisional organizational structure that groups functions by types of customers so that each division contains the functions it needs to service a specific segment of the market. (group functions into divisions to respond to the needs of particular types of customers). Advantages: Delivers products to customers in a way that best meets customer needs. Grouping different functions together in a market division to serve one type of customer enables the functions to coordinate their activities and better serve their customers. Disadvantages: (refer to divisional structure disadvantages)

Product structure. What are the advantages and disadvantages?

A divisional organizational structure that groups functions by types of product so that each division contains the functions it needs to service the products it produces. Advantages: It allows a company to increase its division of labor so that it can make and sell a wider range of products. Allows the company to reduce costs and make better use of their resources. Disadvantages: (refer to divisional structure disadvantages)

Geographic Structure. What are the advantages and disadvantages?

A division organizational structure that groups functions by region so that each division contains the functions it needs to service customers in a specific geographic area. Advantages: Gives regional managers the flexibility they need to choose the range of products best suited to their customers. puts managers closer to the scene of operations than managers at central headquarters. They are able to find solutions to specific problems in those areas and use available resources more effectively than managers at headquarters can. Disadvantages: (refer to divisional structure disadvantages)

Division

A group of functions created to allow an organization to produce and dispose of a particular kind of good or service to customers.

Function

A group of people who perform the same types of tasks or hold similar positions in an organization

Continuous-process technology

A method of production involving the use of automated machines working in sequence and controlled through computers from a central monitoring station.

Mass-production technology

A method of production using automated machines programmed to perform the same operations time and time again.

Small-batch technology

A method used to produce small quantities of customized, one-of-a-kind products based on the skills of people who work together in small groups

Liaison roles

A permanent managerial position in which the manager's only role is to coordinate the activities of different divisions. Giving specific functional managers the formal responsibility of communicating with managers in another function to solve common problems. To facilitate communication, managers in liaison roles meet regularly to exchange info and members of one function transmit requests to other functions through these liaison personnel.

What is a divisional structure and what are the three types of divisional structures?

A structure that groups employees into functions but who then focus their activities on making a particular product or serving a specific type of customer. Three types: Product structure, market structure, and geographic structure Coordination advantages: Helps a division create high-quality products and provide high-quality customer service Motivational advantages: gives rise to a new level of management: corporate management Makes it easier for organizations to evaluate and reward the performance of individual divisions and their managers and reward them in a way that is closely linked to their performance. managers enjoy a large measure of autonomy because they- not corporate management- are responsible for operations. Their autonomy tends to promote positive work attitudes and boost performance. Regional managers and employees are close to their customers and are more likely to develop close relationships with them as a result. Employees close identification with their division can increase their commitment, loyalty, and job satisfaction. Disadvantages: The operating costs of managing an organization increase. Communication may suffer when a divisional structure is implemented. Because divisional structures normally have more managers and more levels of management than functional structures, communication can become more complex. Divisions may start to compete for organizational resources and pursue their own goals at the expense of organizational goals.

Hierarchy of authority

An organization's chain of command that defines the relative authority of each level of management.

Mechanistic Structure

An organizational structure designed to induce employees to behave in predictable, accountable ways. Favored: The more stable the organization's environment, the less complex and more well understood its technology, and the less skilled its work force, the more likely are managers to design an organizational structure that is formal and controlling.

Organic Structure

An organizational structure designed to promote flexibility so that employees can initiate change and adapt quickly to changing conditions. Favored when: The greater the level of uncertainty in the environment of the organization, complexity of its technology, and skill of its work force, the more likely managers are to design a flexible structure.

Functional structure

An organizational structure that groups together people who hold similar positions, perform a similar set of tasks, or use the same kinds of skills. For example: The salespeople in a car dealership belong to the sales function. Together, car sales, car repair, car parts, and accounting are the set of functions that allow a car dealership to sell and service cars.

Matrix structure

An organizational structure that simultaneously groups people by function and by product team.

centralization versus decentralization

Another way to keep the organizational hierarchy flat is to decentralize authority to lower-level managers and non-managerial employees. Advantage: When lower-level managers and non managerial employees have the responsibility to make important decisions, the problems of slow and distorted communication is kept to a minimum. This can increase motivation by making lower-level jobs more interesting and rewarding. Disadvantage: If divisions, functions, or teams are given too much decision-making authority, they may begin to pursue their own goals at the expense of the organization's goals. Also, a lack of communication among functions or divisions may prevent synergies among them from materializing and organizational performance may suffer. If an organization operates in a stable environment using well-understood technology, for example, then there is no pressing need to decentralize authority and top-level managers can make most of the decisions.

Cross-functional teams

Consist of people from different functions who are permanently assigned to work full time on a team to bring a new good or service to the market. Cross-functional teams are composed of functional personnel who are assigned full-time to work in the team.

What are the advantages of a matrix structure?

Coordination advantage: The flexibility of a matrix structure allows an organization to make best use of its human resources. Motivational advantage: Provides a work setting giving employees freedom and autonomy over their work activities. Allow for such motivation and encourage work behaviors that enhance quality and innovation.

What are the advantages of a functional structure?

Coordination advantages: People grouped together according to similarities in their positions can EASILY COMMUNICATE AND SHARE INFO WITH EACH OTHER. A functional grouping also makes it easier for PEOPLE TO LEARN FROM EACH OTHER'S EXPERIENCES. A functional structure HELPS EMPLOYEES ENHANCE THEIR SKILLS and thereby enhances INDIVIDUAL AND ORGANIZATIONAL PERFORMANCE. Motivational advantages: improves an organization's ability to motivate employees, supervisors are in a good position to monitor individual performance, reward high performance, and discourage social loafing. Allows group members to monitor and control one another's behavior and performance levels. Lead to the development of norms, values, and group cohesiveness that promote high performance. Creates a career ladder to motivate employees.

specialization

Degree to which activities in the organization are divided into separate jobs.

Direct contact

Managers from different functions establish face-to-face working relationships that allow them to solve common problems informally without having to go through the formal channels of authority in the hierarchy.

What are the disadvantages of a matrix structure?

Matrix structures can increase role conflict and ambiguity and high levels stress within them can sometimes ensue. Employees might have trouble demonstrating their personal contributions to team performance because they move so often from team to team.

Teams and task forces

Organizations often create teams and task forces composed of employees from different functions to facilitate communication and cooperation. While a team is a permanent group made up of representatives from two or more functions that meets regularly, a task force is a temporary, or ad hoc, group set up to solve a specific problem. An organization might set up a task force to study problems it expects to encounter as it expands its operations into another country.

What are integrating mechanisms? What kinds of integrating mechanisms do organizations typically use to facilitate mutual adjustment?

Organizing tools used to increase communication and coordination among functions and divisions. Direct contact, liaison roles, teams and task forces, and cross-functional teams

departmentalization

The basis by which jobs are grouped together. Grouping based on: functions, product/service, and geography

Technology

The combination of skills, knowledge, tools, machines, computers, and equipment used in the design, production, and distribution of goods and services. The more complicated the technology an organization uses, the more difficult it is to regulate and control it. In contingency theory, the more complicated the technology, the greater is the need for a flexible structure to allow an organization to respond to unexpected situations and provide its employees with the freedom to work out new solutions to the problems they may encounter using it. In contrast, the more routine the technology, the more appropriate is a formal structure because tasks are simple and the steps needed to produce goods and services have been worked out in advance.

standardization

The development of routine responses to recurring problems or opportunities. 489-491

tall and flat hierarchies

The larger and more complex an organization is, the taller is its hierarchy. Tall organizations have many hierarchical levels relative to their size; flat organizations have few. disadvantages; just as it becomes more difficult to coordinate the activities of different functions as their number increases, it becomes more difficult to achieve coordination between hierarchical levels when an organization's hierarchy becomes too tall. Communication and DECISION MAKING PROBLEMS START TO OCCUR. As the number of managerial levels increases, the time it takes to send messages up and down the chain increases. The result is SLOWER DECISION MAKING. In addition, info passed from person to person is more likely to get distorted or filtered as messages become garbled and managers interpret them according to their own interest.

Characteristics of the human resources and the employment relationship

The more highly skilled an organization's work force, or the more a company relies on empowered work teams to find ways to improve performance, the more likely are employees to work together in groups or teams o perform their tasks. An organization is more likely to adopt a flexible, decentralized kind of structure to organize and control its activities. The longer and more harmonious the employment relationship a company has with its employees, the more likely it is to choose a structure that allows them the freedom to make important decisions. High-skilled employees usually desire freedom and autonomy and dislike close supervision. For example: No one needs to tell a scientist to report his or her results accurately and impartially or doctors and nurses to give patients the best care possible.

Organization's environment

The more quickly forces in the environment are changing, the greater the uncertainty within it, and the greater are the problems of accessing the resources an organization needs to perform at a high level, such as additional computers, machinery, and skilled employees. To speed up the decision making and communication process to make it easier to obtain resources, managers often choose to organize functional activities and design an organizational structure that allows its members to behave more quickly and flexibility. *An organization is more likely to decentralize authority and empower lower-level employees to make important operating decisions.* *If the environment is stable, resources are readily available, and uncertainty is low, then less coordination and communication among people and functions is needed to obtain resources.*

Span of control

The number of employees who report to a specific manager.

Authority

The power that enables one person to hold another person accountable for his or her actions. Key design elements of authority: span of control, tall and flat hierarchies, the minimum chain of command, centralization versus decentralization

Chain of command

an organization should operate with the fewest hierarchical levels necessary to organize and control its activities effectively. advantage:

formalization

The use of rules and standard operating procedures to control an organization's activities. advantage: Every problem-solving procedure employees develop and use is written down. disadvantage: excessive formalization or too many rules can "straitjacket" employees and prevent them from responding creatively and flexibly to new situations. Employees use to following rules eventually do this without thinking about their consequences and in some situations this can reduce the quality of organizational decision making. Too much emphasis on following existing rules and procedures can make it especially difficult for an organization to change when contingencies change and develop new rules, or adopt new ways of organizing (such as empowering employees), to improve performance. 490-491

Contingencies affecting organizational design

organization's environment, its technology, and characteristics of an organization's human resources

Organizational design

the process of making the specific choices about how to arrange the tasks and job relationships that comprise the organizational structure The organization's environment, the organization's technology, and the human resources and the employment relationship