Mngt. 301 Exam 2 (Ch. 10)

chain of command referred to as "two in a box."

(Cognizant Technologies) assign two managers to each project—one in India and one at the client's site. Each is equally responsible for the project's success. The model works because it enhances the company's customer responsiveness, even though it violates the principle of unity of command.

matrix boss

A functional or product supervisor responsible for one side of the matrix

permanent teams

A group of employees from all functional areas permanently assigned to focus on a specific task or activity

matrix approach

A structural approach that uses both functional and divisional chains of command simultaneously, in the same part of the organization

team-based structure

A structure in which an entire organization is made up of horizontal teams that coordinate their activities and work directly with customers to accomplish organizational goals

task force

A temporary team or committee designed to solve a problem involving several departments

Small-batch production

A type of manufacturing technology that involves the production of goods in batches of one or a few products designed to customer specification

Divisional Advantages and Disadvantages

A: By dividing employees and resources along divisional lines, the organization will be flexible and responsive to change because each unit is small and tuned in to its environment. Because employees work on a single product line, their concern for customers' needs is high. D: coordination across divisions is often poor. Problems can occur when autonomous divisions go in opposite directions. Another major disadvantage is duplication of resources and the high cost of running separate divisions

Recall our example of how BP has centralized its exploration, development, and production operations so that a single executive is in charge of the upstream operations.

After a rash of food-borne illnesses was linked to Chipotle Mexican Grill, managers have shifted to centralized purchase and production of some food items to maintain stronger control and show a commitment to new safety goals

Factors Shaping Structure

External strategic needs, such as environmental conditions, strategic direction, and organizational goals, create top-down pressure for designing the organization in such a way as to fit the environment and accomplish strategic goals Structural decisions also take into consideration pressures from the bottom up—that is, from the technology and work processes that are performed to produce the organization's products and services.

Centralization

Means that decision authority is located near top organization levels.

technical complexity

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

Division of labor

The degree to which organizational tasks are subdivided into separate jobs Also called work specialization.

Responsibility

The duty to perform the task or activity that one has been assigned

Re-engineering

The radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed

Staff authority

The right to advise, counsel, and recommend in the manager's area of expertise

The primary difference between divisional and functional structures is that

divisional structure encourages decentralization. Decision making is pushed down at least one level in the hierarchy, freeing the president and other top managers for strategic planning. Only if the divisions can't agree, fail to coordinate, or start making decisions that hurt the organization are some decisions pulled back up to the top

One unique feature of the matrix is that it has

dual lines of authority

The matrix structure evolved as a way to improve...

horizontal coordination and information sharing

The difference among the three manufacturing technologies is called

technical complexity

project manager

A manager who is responsible for a specific work project that involves people from various functions and levels of the organization

Whole Foods has thrived for years with a decentralized approach that allowed store managers to go in their own direction and run their stores as they saw fit.

Decentralization fit with the strategy of allowing stores to provide the local flavor, specialty items, and customer service that are a cornerstone of the company's success. However, as stiffer competition has eroded profits, Whole Foods has recently centralized some functions to increase efficiency.

Joan Woodward found that manufacturing firms could be categorized according to three basic types of production technology:

Small-batch production Mass production continuous process production

functional structure

Vertical ; U-shaped activities are grouped together by common function from the bottom to the top of the organization

Delegation

When managers transfer authority and responsibility to positions below them in the hierarchy

Having too many hierarchical levels and narrow spans of control is a common structural problem for organizations.

72% of managers surveyed said that they believed their organizations had too many levels of management

relational coordination

Frequent horizontal coordination and communication carried out through ongoing relationships of shared goals, shared knowledge, and mutual respect

Factors that typically influence centralization versus decentralization

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

decentralization

Means that decision authority is pushed down to lower organization levels

Accountability

Means that people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command

A good example of how decentralization can help cope with rapid change and uncertainty occurred following Hurricane Katrina in 2005

Mississippi Power restored power in just 12 days, thanks largely to a decentralized management system that empowered people at the electrical substations to make rapid, on-the-spot decisions

Southwest Airlines

Southwest Airlines has the shortest turnaround time in the business, partly because managers promote relational coordination to achieve superior on-time performance and a high level of customer satisfaction. In any airline, there can be serious disagreements among employees about who is to blame when a flight is delayed, so Southwest managers created what they call team delay. Rather than searching for who is to blame when something goes wrong, the team delay is used to point out problems in coordination among various groups.

Authority

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

The functional structure is a strong...

vertical design. Information flows up and down the vertical hierarchy, and the chain of command converges at the top of the organization. In a functional structure, people within a department communicate primarily with others in the same department

organization chart

vertical, visual representation of an organization's structure.

factors that are associated with less supervisor involvement and thus larger spans of control

-Work performed by subordinates is stable and routine. -Subordinates perform similar work tasks. -Subordinates are concentrated in a single location. -Subordinates are highly trained and need little direction in performing tasks. -Rules and procedures defining task activities are available. -Support systems and personnel are available for the manager. -Little time is required in nonsupervisory activities, such as coordination with other departments or planning. -Managers' personal preferences and styles favor a large span.

Authority is distinguished by three characteristics...

1. Authority is vested in organizational positions, not people. Managers have authority because of the positions they hold, and other people in the same positions would have the same authority. 2. Authority flows down the vertical hierarchy. Positions at the top of the hierarchy are vested with more formal authority than are positions at the bottom. 3. Authority is accepted by subordinates. Although authority flows from the top down, subordinates comply because they believe managers have a legitimate right to issue orders. The acceptance theory of authority argues that a manager has authority only if subordinates choose to accept his or her commands. If subordinates refuse to obey because the order is outside their zone of acceptance, a manager's authority disappear

cross-functional teams

A group of employees from various functional departments that meet as a team to resolve mutual problems

Collaboration

A joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose

Geographic- or Customer-Based Divisions

An alternative for assigning divisional responsibility is to group company activities by geographic region or customer group.

flat structure

An organizational structure characterized by an overall broad span of management and relatively few hierarchical levels

tall structure

An organizational structure characterized by an overall narrow span of management and a relatively large number of hierarchical levels

virtual network structure

An organizational structure in which the organization subcontracts most of its major functions to separate companies and coordinates their activities from a small headquarters organization

chain of command

An unbroken line of authority that links all individuals in the organization and specifies who reports to whom

Mass production

Characterized by long production runs to manufacture a large volume of products with the same specifications.

Remember This

Contingency factors of strategic goals, environment, and technology influence the correct structural approach. A mechanistic, vertical structure is appropriate for a cost leadership strategy, which typically occurs in a stable environment. An organic, horizontal approach is needed for a differentiation strategy and when the organization needs flexibility to cope with an uncertain environment.

Two-boss employees

In a matrix structure, a person who reports to two supervisors simultaneously

top leader

In a matrix structure, the person who oversees both the product and the functional chains of command and is responsible for the entire matrix

Service technology

Intangible output: The output of a service firm is intangible. Services are perishable and, unlike physical products, cannot be stored in inventory. The service is either consumed immediately or lost forever. Direct contact with customers: Employees and customers interact directly to provide and purchase the service. Production and consumption are simultaneous. Service firm employees have direct contact with customers.

continuous process production

Involves mechanization of the entire workflow and nonstop production, such as in chemical plants or petroleum refineries

The most influential research into the relationship between manufacturing technology and organization structure was conducted by:

Joan Woodward, a British industrial sociologist. She gathered data from 100 British firms to determine whether basic structural characteristics, such as administrative overhead, span of control, and centralization, were different across firms. She found that manufacturing firms could be categorized according to three basic types of production technology:

divisional structure

M-form (multidivisional) or a decentralized form An organizational structure that groups employees and departments based on similar organizational outputs (products or services), such that each division has a mix of functional skills and tasks

The Internal Revenue Service (IRS) is the U.S. government agency we all love to hate. When managers set out to improve service to the nation's taxpayers, they undertook a massive reorganization into a customer-focused divisional structure.

The IRS structure is strategically designed to provide better information and assistance to different taxpayer groups, such as large corporations, small businesses and the self-employed, and tax-exempt organizations

departmentalization

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

Line authority

The formal power to direct and control immediate subordinates

Organization structure

The framework in which an organization defines how tasks are divided, resources are deployed, and departments are coordinated. 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.

Coordination

The managerial task of adjusting and synchronizing the diverse activities among different individuals and departments

Matrix Advantages and Disadvantages

The matrix can be highly effective in a complex, rapidly changing environment in which the organization needs to be flexible, innovative, and adaptable. The conflict and frequent meetings generated by the matrix allow new issues to be raised and resolved. The matrix structure makes efficient use of HR because specialists can be transferred from one division to another. A major problem with the matrix is the confusion and frustration caused by the dual chain of command.

span of management

The number of employees reporting to a supervisor; sometimes called span of control Generally, when supervisors must be closely involved with subordinates, the span should be small, and when supervisors need little involvement with subordinates, it can be large.

The success of the matrix structure depends on the

abilities of people in key matrix roles

The 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

Five approaches to structural design reflect different uses of the chain of command in departmentalization

functional structure divisional structure matrix approach

Probably the most widespread trend in departmentalization in recent years has been the

implementation of team concepts

Unity of command

means that each employee is held accountable to only one supervisor

scalar principle

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

Organizing

refers to the deployment of organizational resources to achieve strategic goals

The functional structure groups positions into departments based on

similar skills, expertise, work activities, and resource use. A functional structure can be thought of as departmentalization by organizational resources each type of functional activity (accounting, HR, engineering, and manufacturing) represents specific resources for performing the organization's task