CH. 10
The U.S. Internal Revenue Service groups taxpayers into four divisions: wage and investment, small businesses, large businesses, and non-profit and government agencies. What type of organizational structure does this represent?
A customer-based division
Accountability
Accountability is the mechanism through which authority and responsibility are brought into alignment. the people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command.
The CEO of a company has decided to increase collaboration among employees to increase efficiency and quality. Besides removing physical barriers between employees, which of the following will help the CEO in promoting employee coordination?
Providing training to develop interaction and conflict resolution skills
technical complexity.
The difference among the three manufacturing technologies the degree to which machinery is involved in the production to the exclusion of people. With a complex technology, employees are barely needed except to monitor the machines.
Law firms can be found in several places within a city. What is a distinct feature of this type of service provider?
Their output is intangible.
geographic-based structure
all functions in a specific country or region report to the same division manager
relational coordination
"frequent, timely, problem-solving communication carried out through [employee] relationships of shared goals, shared knowledge, and mutual respect." Relational coordination isn't a structural device or mechanism such as a project manager, but rather is part of the very fabric and culture of the organization.
Organization structure
(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; and (3) the design of systems to ensure effective coordination of employees across departments.The set of formal tasks and formal reporting relationships provides a framework for vertical control of the organization.
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.
Factors that typically influence centralization versus decentralization are as follows:
Greater change and uncertainty in the environment are usually associated with decentralization. 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. The amount of centralization or decentralization should fit the firm's strategy. risk of company failure, authority may be centralized at the top.
Rosa was promoted to a management position from her specialist role. During her previous role, she gained firsthand experience of the pros and cons of division of labor. Which action could Rosa take as a manager to overcome the biggest disadvantage of specialization for those reporting to her?
Implement teams to provide greater challenges for employees Too much specialization creates separation and hinders the coordination that is essential for organizations to be effective.
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. Manufactured products are produced at one point in time and can be stored until sold at another time. 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. In a manufacturing firm, technical employees are separated from customers, and hence no direct interactions occur.
Which of the following is an example of a line department in an organization?
The production team
Relationship of Structural Approach to Strategy and the Environment
The pure functional structure is appropriate for achieving internal efficiency goals in a stable environment. The vertical functional structure uses task specialization and a strict chain of command to gain efficient use of scarce resources, but it does not enable the organization to be flexible or innovative. In contrast, horizontal teams are appropriate when the primary goal is innovation and the organization needs flexibility to cope with an uncertain environment.
vertical function
U-form(unitary structure), activities are grouped together by common function from the bottom to the top of the organization. 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 because each type of functional activity—accounting, HR, engineering, and manufacturing—represents specific resources for performing the organization's task. 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 to coordinate work and accomplish tasks or implement decisions that are passed down the hierarchy
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.
Collaboration
a joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose and that are typically greater than what any of the individuals or departments could achieve working alone
Deepwater Horizon
advises managers in line departments regarding risk management, agreements with contractors, and other safety-related issues. Unlike many staff departments, BP's safety unit has broad power to challenge line managers' decisions if it considers them too risky
matrix approach
aspects of both functional and divisional structures simultaneously, in the same part of the organization. The matrix structure evolved as a way to improve horizontal coordination and information sharing dual lines of authority. upports a formal chain of command for both functional (vertical) and divisional (horizontal) relationships. As a result of this dual structure, some employees report to two supervisors simultaneously. The two lines of authority are geographic and product
departmentalization
basis for grouping positions into departments and departments into the total organization. Managers make choices about how to use the chain of command to group people together to perform their work
scalar principle
clearly defined line of authority in the organization that includes all employees. Authority and responsibility for different tasks should be distinct.
Centralization
decision authority is located near the top of the organization. ex. school systems
decentralization
decision authority is pushed downward to lower organization levels. (principals and teachers more control over staffing, scheduling, and teaching methods. Decentralization is believed to relieve the burden on top managers, make greater use of employees' skills and abilities, ensure that decisions are made close to the action by well-informed people, and permit more rapid response to external changes.
divisional structure
departments are grouped together based on similar organizational outputs. With a divisional structure, also called an M-form(multidivisional) or a decentralized form, separate divisions can be organized with responsibility for individual products, services, product groups, major projects or programs, divisions, businesses, or profit centers. also sometimes called a product structure, program structure, or self-contained unit structure. divisions are created as self-contained units, with separate functional departments for each division. Each department is smaller and focuses on a single product line or customer segment. Departments are duplicated across product lines. differences of opinion among R&D, marketing, manufacturing, and finance would be resolved at the divisional level rather than by the top executive duplication of resources and the high cost of running separate divisions. they are smaller than units that serve the entire organization and can respond more flexibly to changes in their particular business environment.
Which of the following describes a differentiation strategy?
develop innovative products unique to the market.
Mass production
distinguished by standardized production runs. A large volume of products is produced, and all customers receive the same product. Standard products go into inventory for sale as customers need them. This technology makes greater use of machines than does small-batch production.
continuous process production
entire workflow is mechanized in a sophisticated and complex form of production technology. Because the process runs continuously, it has no starting and stopping. Human operators are not part of actual production because machinery does all the work. Human operators simply read dials, fix machines that break down, and manage the production process. Examples of continuous process technologies are chemical plants, distilleries, petroleum refineries, and nuclear power plants.
virtual network approach
firm subcontracts most of its major functions to separate companies and coordinates their activities from a small organization at headquarters. Networked computer systems, collaborative software, and the Internet enable organizations to exchange data and information so rapidly flexibility and competitiveness on a global scale. lack of hands-on control.
Small-batch production
firms produce goods in batches of one or a few products designed to customer specification. This technology also is used to make large, one-of-a-kind products, such as computer-controlled machines. Small-batch manufacturing is close to traditional skilled-craft work, because human beings are a large part of the process.
Responsibility
flip side of authority. duty to perform the task or activity as assigned. Typically, managers are assigned authority commensurate with their responsibilities. When managers have responsibility for task outcomes but little authority, the job is possible but difficult. In this situation, managers rely on persuasion and luck. When managers have authority that exceeds responsibility, they may become tyrants and use authority to achieve frivolous outcomes
Two-boss employees,
hose who report to two supervisors simultaneously, must resolve conflicting demands from the matrix bosses. They must work with senior managers to reach joint decisions.
Staff departments
include all those that provide specialized skills in support of line departments. Staff departments have an advisory relationship with line departments and typically include marketing, labor relations, research, accounting, and HR.
Coordination
managerial task of adjusting and synchronizing the diverse activities among different individuals and departments
Staff authority
narrower and includes the right to advise, recommend, and counsel in the staff specialists' area of expertise. Staff authority is a communication relationship; staff specialists advise managers in technical areas.
span of management
number of employees reporting to a supervisor. Sometimes called the span of control, this characteristic of structure determines how closely a supervisor can monitor subordinates.
tall structure
overall narrow span and more hierarchical levels.
top leader
oversees both the product and functional chains of command. His or her responsibility is to maintain a power balance between the two sides of the matrix. If disputes arise between them, the problem will be kicked upstairs to the top leader.
Line authority
people in management positions have the formal authority to direct and control immediate subordinates.
Line departments
perform tasks that reflect the organization's primary goal and mission. In a software company, line departments make and sell the product.
project manager
person who is responsible for coordinating the activities of several departments for the completion of a specific project.
matrix boss
product or functional boss, who is responsible for one side of the matrix. The top leader is responsible for the entire matrix.
Re-engineering
radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed. Because the focus of re-engineering is on horizontal workflows rather than functions, re-engineering generally leads to a shift away from a strong vertical structure to one emphasizing stronger horizontal coordination.
Delegation
related to authority. the process that managers use to transfer authority and responsibility to positions below them in the hierarchy. Most organizations today encourage managers to delegate authority to the lowest possible level to provide maximum flexibility to meet customer needs and adapt to shifts in the environment.
task force
temporary team or committee designed to solve a problem involving several departments.
team approach
the entire organization is made up of horizontal teams that coordinate their work and work directly with customers to accomplish the organization's goals. One approach to using teams in organizations is through cross-functional teams, which consist of employees from various functional departments who are responsible to meet as a team and resolve mutual problems. Cross-functional teams can provide needed horizontal coordination to complement an existing divisional or functional structure. A frequent use of cross-functional teams is for change projects, such as new product or service innovation.The second approach is to use permanent teams, groups of employees who are organized in a way similar to a formal department. Each team brings together employees from all functional areas focused on a specific task or project, such as parts supply and logistics for an automobile plant. Emphasis is on horizontal communication and information sharing because representatives from all functions are coordinating their work and skills to complete a specific organizational task.
Authority
the formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes. Authority is distinguished by three characteristics: Authority is vested in organizational positions, not people. Authority flows down the vertical hierarchy. Authority is accepted by subordinates.
Which concept of good organization does the dual authority structure of a matrix violate?
the unity-of-command concept
chain of command
unbroken line of authority that links all employees in an organization and shows who reports to whom. It is associated with two underlying principles. Unity of command means that each employee is held accountable to only one supervisor.
organization chart
visual representation of an organization's structure. vertical
flat structure
wide span, is horizontally dispersed, and has fewer hierarchical levels.
Division of labor
work specialization, is the degree to which organizational tasks are subdivided into separate jobs. Division of labor in Exhibit 10.1is illustrated by the separation of production tasks into bottling, quality control, and maintenance. Employees within each department perform only the tasks relevant to their specialized function. When division of labor is extensive, employees specialize in a single task. Jobs tend to be small, but they can be performed efficiently.