OB- Chapter 15
line and staff organization
an organization that has managers with decision making authority and specialists who provide technical advice and recommendations STAFF PERSONNEL -do background research and provide technical advice and recommendations to their line managers LINE MANAGERS -generally have the authority to make decisions for their units
Organization
"a system of consciously coordinated activities or forces of two or more persons"
organizational design
"the structures of accountability and responsibility used to develop and implement strategies, and the human resource practices and information and business processes that activate those structures. " -organizations are more effective or successful when their structure supports the execution of corporate strategies
VIRTUAL
-Exploring new markets by partnering with other firms or rapidly deploying a new business model -one whose members are geographically apart, usually with e-mail and other forms of information technology, yet which generally appears to customers as a single, unified organization with a real physical location PROS -ability to respond nimbly to market opportunity -provide product extension or one-stop-shop service -low exit costs CONS -requires high level of communication to avoid redundancy -wide distribution of employees can undermine trust and coordination -likely fails to promote strong employee loyalty or organizational identification
considerations when making decisions about organizational design- getting the right fit
-Strategy and goals -technology -size -human resources
considerations leading to a divisional structure as the contingency design
-a need to respond more quickly to customer need -managers can make decision that affect several functions at once -the firm can afford to duplicate functions -need to increase employee focus on customer and product
considerations leading to a matrix structure as the contingency design
-balanced demands from functional and product managers is acceptable -excellent commitment and collaboration among managers is present -superior communication exists -a need for both functional and divisional capabilities
conclusions about organic an mechanistic organizations
-bureaucracies beget greater bureaucracy -each is appropriate depending on environment -communication patterns follow structure -one is not superior to the other
the benefits of functional design
-can save money by grouping people together -pride in the specialty for employees -maintaining quality standards
MATRIX
-firms looking to escape silos through horizontal integration -increasingly used by international organizations -combines a vertical structure with an equally strong horizontal overlay PROS -lines of formal authority along two dimensions such as: functional/product or product/region, can allow organization to work more cohesively CONS -management can sometimes fail to provide adequate processes to ensure it success -because some employees report to two bosses simultaneously, there is the potential for conflict if the managers fail to coordinate
HORIZONTAL
-firms seeking to improve internal coordination to create better value -teams or workgroups, either temporary or permanent, are created to improve collaboration and work on common projects -focus on work processes PROS -rapid communication and reduction in cycle time of work done -greater flexibility -faster organizational learning -improved responsiveness to customers CONS -potential conflicts between processes and non-process functions -non-process parts of the organization could suffer neglect -fewer opportunities for functional specialization
generic effectiveness criteria
-goal accomplishment -internal processes -strategic constituencies satisfaction -resource acquisition
HOLLOW
-heavy price competition and pressure to cut costs -network structure. is designed around a central core of key functions and outsources other functions to other companies or individuals who can do them cheaper or faster. PROS -lower cost of entry and overhead -access to best sources of specialization and technology -market discipline that leads to supplier competition and innovation -potential for further cost reduction and quality improvement CONS -loss or decrease of in-house skills, internal capacity to innovate, control oversupply -costs of transitioning to hollow state -higher monitoring to align incentives -competitive threat of being supplanted by suppliers
considerations leading to a horizontal structure as the contingency design
-intent to foster knowledge sharing -cross functional teams planned to be implemented -specialization is less important than ability to respond to changing customer needs -a need to improve coordination and communiation
DIVISIONAL
-large firms with separate divisions built on different technologies, geographies, or different bases of customers -manager is responsible for the performance of each of these functions -employees are segregated into organizational groups based on similar products or services, customers or clients, or geographic regions PROS -clear roles and responsibilities -workers in each division an have more product focus, accountability, and flexibility than in a functional structure CONS -coordination and communication across divisional silos can be an issue
what factors determine span of control
-skill level -organizational culture -managerial responsibilities -organizational size
FUNCTIONAL
-small firms, large governmental firms and divisions of large firms. -groups people according to the business functions they perform, for example, manufacturing, marketing, and finance PROS -clear roles and responsibilities CONS -coordination and communication across functional silos can be an issue -most companies use dotted line or other informal mes=ans to combat this potential limitation
considerations leading to open boundary structures (hollow, modular, virtual) as the contingency design
-suitable partners they trust -efficiency is very important -organization can identify functions, processes, or product components to outsource profitability -trusted business partners are available -expertise does not need to be in house -a need to focus on a core business only -no need for direct or formal authority over others
MODULAR
-when it is feasible for multiple vendors to join up and function -the company assembles product parts, components, or modules provided by external contractors (outsourcing) PROS -potential for cost savings -faster responsiveness -competence beyond one's boundary -ability to switch vendors for best fit and product improvement CONS -not all products amenable to chunking into modules -poorly specified interfaces can hinder modules and hamper assembly -laggards can hold up innovations that occurs concurrently across a chain of collaborators
resources needed to support innovation
1. the necessary human capital 2. the right organizational culture and climate 3. the appropriate resources 4. the required structure and processes
supporting forces for innovation
1. the necessary human capitial 2. the right organizational culture and climate 3. the appropriate resources 4. the required structure and processes.
Different approaches to decision making
CENTRALIZED DECISION MAKING -occurs when key decisions are made by top management DECENTRALIZED DECISION MAKING -occurs when important decisions are made by middle and lower-level managers -generally, centralized organizations are more tightly controlled while decentralized organizations are more adaptive to changing situations
Conscious coordination Aspect
COORDINATION OF EFFORT -achieved through formulation and enforcement of policies, rules, and regulations ALIGNED GOALS -start from the development of a companywide strategic plan. DIVISION OF LABOR -occurs when the common goal is pursued by individuals performing separate but related tasks -at each successively lower level of the organization jobs become more specialized- basic premise of division of labor HIERARCHY OF AUTHORITY -the chain of command, is a control mechanism dedicated to making sure the right people do the right things at the right time. -unity of command principle -shows chain of command and official communication network
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Historically, management theorists downplayed the environment in exchange for the closed system approach characterized by highly disciplined military units
Types of Innovation
PRODUCT INNOVATION -a change in the appearance or the performance of a product or a service or the creation of a new one PROCESS INNOVATION -a change in the way a product or a service is conceived, manufactured, or distributed CORE INNOVATIONS -targeted at existing customers and rely on optimizing existing products/services for existing customers TRANSFORMATION INNOVATIONS -targeted at creating new markets and customers and rely on developing breakthroughs and inventing things that don't currently exist
effectiveness criteria guidelines
THE GOAL ACCOMPLISHMENT APPROACH -is appropriate when goals are clear, consensual, time-bounded, measurable THE INTERNAL PROCESSES APPROACH -is appropriate when organizational performance is strongly influences by specific processes (ex. cross-functional teamwork) THE STRATEGIC CONSTITUENCIES APPROACH -is appropriate when powerful stakeholders can significantly benefit or harm the organization THE RESOURCE ACQUISITION APPROACH -is appropriate when inputs have a traceable effect on results or output
Era of business development to the resulting organizational form
TRADITIONAL -mid 1800s through 1970s -self contained within organization's boundaries -Functional, Divisional, Matrix -vertical hierarchy -attempts to define clear departmental boundaries and reporting relationships -standardized functions HORIZONTAL -1980s -Team- and process-oriented -Horizontal -work hard to flatten hierarchy and organize people around specific segments of the workflow -attempts to dissolve departmental boundaries and reporting relationships as much as possible OPEN -since mid-1990s -opened beyond organization's boundaries -Hollow, Modular, Virtual -relies on leveraging technology and structural flexibility to maximize potential value through outsourcing and external collaboration
goal accomplishment
The organization achieves its stated goals
resource acquisition
The organization acquires the resources it needs -a firm is considered effective if it can gain the necessary factors of production. This effectiveness measure is called the resource acquisition
internal processes
The organization functions smoothly with a minimum of internal strain -what the organization must excel at to effectively meet its financial objectives and customers' expectations 1. innovation 2. customer service and satisfaction 3. operational excellence 4. being a good corporate citizen
Organization Chart
a graphic representation of formal authority and division of labor relationships -family tree-like pattern of boxes and lines posted on workplace walls. FOUR BASIC DIMENSIONS OF ORGANIZATIONAL STRUCTURE -hierarchy of authority (who reports to whom) -division of labor -spans of control -line and staff positions
mechanistic organizations
are rigid bureaucracies with strict rules, narrowly defined tasks, and top-down communication -would have hierarchical culture -orderliness expected to produce reliability and consistency in internal processes-- resulting in higher efficiency, quality, and timeliness.
transformational innovations
are targeted at creating new markets and customers and rely on developing breakthroughs and inventing things that don't currently exisit
the key to successful innovations is
connecting to the customer
open system
depends on constant interaction with the environment for survival.
organic organizations
flexible networks of multi-talented individuals who perform a variety of tasks -use horizontal designs or those that open boundaries between organizations
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if mangers want innovation, they must dedicate resources to its development
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innovation can not be systemized
failure
occurs when an activity fails to deliver its expected results or outcomes
learning organization
on e that proactively creates, acquires, and transfers knowledge and that changes its behavior on the basis of new knowledge and insights STEP 1- INFORMATION ACQUISITION -scanning- the process through which an organization obtains information from internal and external sources STEP 2: INFORMATION DISTRIBUTION -the processes or systems that people, groups, or organizational units use to share information among themselves. STEP 3: INFORMATION INTERPRETATION -making sense of the information that organizations have acquired and distributed. STEP 4: KNOWLEDGE INTEGRATION -when information is integrated across different sources -leads to shared understanding STEP 5:ORGANIZATIONAL MEMORY -represents the combined process of "encoding, storing, and retrieving the lessons learned from an organization's history, despite the turnover of personnel."
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organizational structure and processes play an important role and are a prime contributor to innovation
contingency approach to the organization design
organizations tend to be more effective when they are structured to fit the demands of the situation -one of the first design considerations is whether the organization would flourish with centralized or decentralized decision making
Span of control
refers to the number of people reporting directly to a given manager -----Managers should consider 4 factors when determining spans of control---- -organizational style -skill level -organizational culture -managerial responsibilities
Seeds of innovation
represent the staring points for organizational innovation 1 . Hard work in a specific direction 2. Hard work with direction change 3. curiosity and experimentation 4. wealth and money 5. necessity 6. combination of seeds
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research revels that innovation is positively associated with adhocracy and clan cultures
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routine tasks in an organization do not require direct supervision and so wide spans of controls are more likely to be founds
closed system
said to be self-sufficient entity "closed" to surrounding environment
Unity of Command principle
specifies that each employee should report to only one manager
strategic constituencies satisfaction
the demands and expectations of key interest groups are at least minimally satisfied strategic constituency- any group of individuals who have some stake int he organization
effectiveness Criteria
when mangers identify and seek the input of stakeholders, the information enable managers to develop the appropriate combination of effectiveness criteria.
boundaryless organization
where managers have largely succeeded in braking down barriers between internal levels, job functions and departments, as well as reducing external barriers between the association (organization) and those with whom it does business -primarily communicate with email, phone, and other virtual methods