BIS 275 Chapter 6

Virtual Organization (Organizational Design for the Twenty-First Century)

- has little or no formal structure - has only a handful of permanent employees, a very small staff, and a modest administrative facility. - closely related to team organization - As the needs of the organization change, its managers bring in temporary workers, lease facilities, and outsource basic support services to meet the demands of each unique situation - As the situation changes, the temporary workforce changes in parallel, with some people leaving the organization and others entering. Facilities and the subcontracted services also change - exists only in response to its own needs

Delegation Process

1. Assigning responsibility, the duty to perform an assigned task. 2. Granting authority, or the power to make the decisions necessary to complete the task. 3. Creating accountability, the obligation employees have for the successful completion of the task.

Determinants of Organizational Structure

Mission Strategy Size Internal Environment External Environment

Span of Control

The distribution of authority in an organization also affects the number of people who work for any individual manager. - number of people supervised by one manager - the distribution of authority in an organization also affects the number of people who work for any individual manager

Staff Members (Forms of Authority)

advisers and counselors who help line departments in making decisions but who do not have the authority to make final decisions

International Organizational Structures (Basic Forms of Organizational Structure)

approaches to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets - Several different international organizational structures have emerged in response to the need to manufacture, purchase, and sell in global markets

Staff Authority (Forms of Authority)

authority based on expertise that usually involves counseling and advising line managers - A corporate attorney, for example, may advise the marketing department as it prepares a new contract with the firm's advertising agency, but will not typically make decisions that affect how the marketing department does its job

Committee and Team Authority (Forms of Authority)

authority granted to committees or teams involved in a firm's daily operations - Recently, more organizations have started to grant committee and team authority to groups that play central roles in daily operations - A committee, for example, may consist of top managers from several major areas. If the work of the committee is especially important and if the committee members will be working together for an extended time, the organization may grant it committee and team authority

Tall Organizational Structure

characteristic of centralized companies with multiple layers of management

Flat Organizational Structure

characteristic of decentralized companies with relatively few layers of management

Establishment of a Decision-Making Hierarchy

deciding who will be empowered to make which decisions and who will have authority over others - The third major building block of organizational structure - usually done by formalizing reporting relationships

Departmentalization (The Building Blocks of Organizational Structure)

determining how people performing certain tasks can best be grouped together - After jobs are specialized, they must be grouped into logical units - Departmentalized companies benefit from this division of activities; control and coordination are narrowed and made easier, and top managers can see more easily how various units are performing - Departmentalization allows the firm to treat each department as a profit center, a separate company unit responsible for its own costs and profits. - product, process, functional, customer, geographic

Specialization (The Building Blocks of Organizational Structure)

determining who will do what - The process of identifying the specific jobs that need to be done and designating the people who will perform them leads to job specialization

Organization Chart

diagram depicting a company's structure and showing employees where they fit into its operations

Functional Departmentalization

dividing an organization according to groups' functions or activities - Many service and manufacturing companies, especially smaller ones just getting started, use functional departmentalization to create departments - Most new startup firms, for instance, use functional departmentalization - typically have production, marketing and sales, human resources, and accounting and finance departments

Process Departmentalization

dividing an organization according to production processes used to create a good or service - Other manufacturers favor process departmentalization - This principle is logical for Vlasic, which has three separate departments to transform cucumbers into either fresh-packed pickles, pickles cured in brine, or relishes

Product Departmentalization

dividing an organization according to specific products or services being created - Both manufacturers and service providers often opt for product departmentalization - This becomes especially true when a firm grows and starts to offer multiple products or services

Geographic Departmentalization

dividing an organization according to the areas of the country or the world served by a business - Levi Strauss, for instance, has one division for North and South America; one for Europe, the Middle East, and North Africa; and one for the Asia Pacific region

Customer Departmentalization

dividing an organization to offer products and meet needs for identifiable customer groups - Retail stores actually derive their generic name, department stores, from the manner in which they are structured—a men's department, a women's department, a luggage department, a lawn and garden department, and so on. Each department targets a specific customer category (men, women, people who want to buy luggage, people who want to buy a lawn mower) by using customer departmentalization

Work Team (Forms of Authority)

goup of operating employees who are empowered to plan and organize their own work and to perform that work with a minimum of supervision - At the operating level, many firms today use work teams - Most U.S. companies today use teams in at least some areas; some make widespread use of teams throughout every area of their operations

Informal Groups

groups of people who decide to interact among themselves - They may be people who work together in a formal sense or who just get together for lunch, during breaks, or after work. They may talk about business, the boss, or non-work related topics such as families, movies, or sports - Impact on the organization may be positive (if they work together to support the organization), negative (if they work together in ways that run counter to the organization's interests), or irrelevant (if what they do is unrelated to the organization) relationships, effectively alters a company's formal structure

Grapevine

informal communication network that runs through an organization - By maintaining open channels of communication and responding vigorously to inaccurate information, managers can minimize the damage the grapevine can cause. - Can be found in all organizations but the smallest, they don't always follow the same patterns as, or necessarily coincide with, formal channels of authority and communication - two kinds of grapevines

Informal Organization

network, unrelated to the firm's formal authority structure, of everyday social interactions among company employees - The structure of a company, however, is by no means limited to the formal organization - effectively alters a company's formal structure

Decentralized Organization

organization in which a great deal of decision-making authority is delegated to levels of management at points below the top - As a company gets larger and more decisions must be made, the company tends to adopt decentralized organization

Centralized Organization

organization in which most decision-making authority is held by upper-level management

Functional Structure (Basic Forms of Organizational Structure)

organization structure in which authority is determined by the relationships between group functions and activities - Functional structure is used by most small to medium-sized firms, which are usually structured around basic business functions: a marketing department, an operations department, and a finance department - The benefits of this approach include specialization within functional areas and smoother coordination among them

Matrix Structure (Basic Forms of Organizational Structure)

organizational structure created by superimposing one form of structure onto another - In some companies, the matrix organization is a temporary measure installed to complete a specific project and affecting only one part of the firm - works better than either simpler structure alone - matrix-like appearance, when shown in a diagram, by using one underlying "permanent" organizational structure (say, the divisional structure flowing up-and-down in the diagram), and then super-imposing a different organizing framework on top of it (e.g., the functional form flowing side-to-side in the diagram) - highly flexible and readily adaptable structure was pioneered by NASA for use in developing specific space programs

Line Authority (Forms of Authority)

organizational structure in which authority flows in a direct chain of command from the top of the company to the bottom - Most companies rely heavily on line departments linked directly to the production and sales of specific products

Divisional Structure (Basic Forms of Organizational Structure)

organizational structure in which corporate divisions operate as autonomous businesses under the larger corporate umbrella - relies on product departmentalization - Organizations using this approach are typically structured around several product-based divisions that resemble separate businesses in that they produce and market their own products; The head of each division may be a corporate vice-president or, if the organization is large enough, a divisional president

Intrapreneuring

process of creating and maintaining the innovation and flexibility of a small-business environment within the confines of a large organization - Many firms, including Rubbermaid, Dreamworks, 3M, and Xerox, support

Delegation

process through which a manager allocates work to subordinates

Team Organization (Organizational Design for the Twenty-First Century)

relies almost exclusively on project-type teams, with little or no underlying functional hierarchy - People float from project to project as dictated by their skills and the demands of those projects - team authority is the underlying foundation of organizations that adopt this organizational structure

Chain of command

reporting relationships within a company - In theory, such reporting relationships follow a "chain" from the highest level in the organization to the lowest.

Profit Center (Departmentalization)

separate company unit responsible for its own costs and profits

tall organizational structure's span of control

span of control tends to be narrower

Organizational Structure

specification of the jobs to be done within an organization and the ways in which they relate to one another - Perhaps the easiest way to understand structure is in terms of an organization chart

flat organizational structure's span of control

the number of people directly managed by one supervisor, the manager's span of control, is usually wide

Job Specialization (Specialization)

the process of identifying the specific jobs that need to be done and designating the people who will perform them

Learning Organization (Organizational Design for the Twenty-First Century)

works to facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs - works to integrate continuous improvement with continuous employee learning and development