Chapter 10 - Designing Organization Structure

Team Advantages

-Team approach breaks down barriers across departments and improves coordination and cooperation -Team members know one another's problems and compromise rather than blindly pursuing their own goals -Team concept enables the organization to adapt more quickly to customer requests and environmental changes and speeds decision making because decisions need not go to the top of the hierarchy for approval

Tyler was recently looking at his company's organization chart in an attempt to discover who reports to whom. Tyler is studying his organization's:

Chain of command

What type of team is composed of workers from different functional departments of the organization who meet together in an attempt to solve an important organizational problem?

Cross-functional teams

Chain of Command

An unbroken line of authority that links all employees in an organization and shows who reports to whom

Pure Functional Structure

Appropriate for achieving internal efficiency goals in a stable environment

Horizontal Teams

Appropriate when the primary goal is innovation and the organization needs flexibility to cope with an uncertain environment

What is strongly influenced by how well the company's structure is aligned with it's strategic intent and the needs of the environment?

Business Performance

Divisional Advantages & Disadvantages

By dividing employees & resources along divisional lines, the organization will be flexible and responsive to change because each unit is small and tuned in to its environment

What means that decision authority is located near the top of the organization?

Centralization

A small Internet start-up in California has contracted with a web designer in the U.K., a manufacturing company in China, a customer-service provider in India, and a legal team in New York. What is the largest benefit of this organizational structure?

Concentrating on what the core employees do best

The making of Jack Daniels whiskey is an example of which type of production?

Continuous process production

The U.S. Internal Revenue Service is organized to focus on these four groups of taxpayers: individuals, small businesses, corporations, and non-profit and government agencies. What type of organizational structure does this represent?

Customer-based division

Centralization

Decision authority is located near the top of the organization

Decentralization

Decision authority is pushed downward to lower organization levels

Unity of Command

Each employee is held accountable to only one supervisor

Cross-Functional Teams

Employees from various functional departments who are responsible to meet as a team and resolve mutual problems

Coordination is 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.

False

Small Batch Production

Firms produce goods in batches of one or a few products designed to customer specification

Grouping people with similar skills, tasks, and use of resources is an example which structure?

Functional

The new CEO is a strong believer in relational coordination. He achieved that in his own career as he moved from department to department, up the ladder, but always keeping his networking active. Which major contribution could he make to ensure that his new company moves from emphasizing departmental goals to shared goals?

Give employees freedom from strict work rules, for increased flexibility

What is not true about the matrix approach?

Goals are met more quickly as a result of the dual structure.

Permanent Teams

Groups of employees who are organized in a way similar to a formal department

Flat Structure

Has a wide span, is horizontally dispersed, and has fewer hierarchical levels

Tall Structure

Has an overall narrow span and more hierarchical levels

Rosa was promoted into a management position from her specialist role. Her previous job let her experience firsthand the pros and cons of specialization. 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.

Staff Departments

Include all those that provide specialized skills in support of line departments (Have an advisory relationship with line departments and typically include marketing, labor relations, research, accounting, & HR)

Which is not an advantage of the team-based approach?

Increased production efficiency

Staff Authority

Is narrower & includes the right to advise, recommend, and counsel in the staff specialists' area of expertise (Communication relationship; staff specialists advise managers in technical areas)

What is not an advantage of a virtual network?

It places less demand on managers.

What type of departments within an organization performs tasks that reflect the organization's primary goal and mission?

Line departments

How to build relational coordination into the fabric of the organization?

Managers invest in training people in the skills needed to interact with one another and resolve cross-departmental conflicts based on shared goals rather than emphasizing goals of their separate departments

Organizing for Horizontal Coordination

Many managers recognize the limits of traditional vertical organization structures in a fast-shifting environment

Line Authority

Means that people in management positions have the formal authority to direct & control immediate subordinates

Marcia is the top leader of the matrix structure for an international company manufacturing environmental compliance equipment. Which action could she take to resolve conflicts between people in charge of product line goals and country goals?

Meet with matrix bosses and two-boss employees to work out differences

Where do strategic goals of cost efficiency occur?

More stable environments

Division Structure

Occurs when departments are grouped together based on similar organizational outputs

A visual drawing of the reporting relationships within an organization is called a(n):

Organization chart

Cost Leadership

Organization strives for internal efficiency

Top Leader

Oversees both the product and functional chains of command

Line Departments

Perform tasks that reflect the organization's primary goal & mission

Drugstore chains can be found located quite close to each other, serving a neighborhood of blocks, not miles. Which distinct feature of service technology does this distribution of facilities illustrate?

Placing employees close to their customers

Sheree oversees the creation of books at a publishing company. That means she has to coordinate the efforts of designers, editors, typesetters, proofreaders, marketing people, and several other members of other departments. Sheree is a:

Project Manager

The original start-up company, founded in a garage, grew at a amazing rate, with employees added in groups as the organization expanded to fulfill its potential. Now the Advisory Board wants to improve cost, quality, service, and speed. Which effect on the structure should the Advisory Board expect from reengineering the structure of the company?

Shift away from a strong vertical structure to emphasis on horizontal coordination.

Which type of production technology produces good in batches of one or a few products designed to customer specification?

Small-batch production

What is not used by an organization to increase coordination?

Span of control

Two sisters work at the headquarters of the Zappos.com online shoe store. Susan works in over-the-phone customer support. Judy is a member of the warehouse stock supply group. Which functional approaches to structure do these departments reflect?

Susan is part of a specialized department; Judy is part of an unspecialized department.

Mass Production

Technology is distinguished by standardized production runs

Departmentalization

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

Technical Complexity

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

Work Specialization

The degree to which organizational tasks are subdivided into separate jobs > many organizations are moving away from this principle

Organizing

The deployment of organizational resources to achieve strategic goals

What is the main difference between divisional and functional structure?

The divisional structure encourages decentralization.

Continuous Process Production

The entire workflow is mechanized in a sophisticated and complex form of production technology

Virtual Network Structure

The firm subcontracts most of its major functions to separate companies and coordinates their activities from a small organization at headquarters

Authority

The formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes

Span of Management

The number of employees reporting to a supervisor (This characteristic of structure determines how closely a supervisor can monitor subordinates)

Responsibility

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

Delegation

The process that managers use to transfer authority and responsibility to positions below them in authority

Matrix Boss

The product or functional boss, who is responsible for one side of the matrix

Organization Structure

The set of formal tasks assigned to individuals & departments

Contingency factors of strategic goals, environment, and technology influence the correct structural approach.

True

Which concept of good organization does the dual authority structure of a matrix violate?

Unity-of-command concept

Vertical Functional Structure

Uses task specialization and a strict chain of command to gain efficient use of scarce resources does not enable the organization to be flexible or innovative

Organization Chart

Visual representation of an organization's structure

Goals of efficiency and a stable environment associated with a mechanistic system generally do not have...

a flexible structure.

In a geographic based structure...

all functions in a specific country or region report to the same division manager

Dual Lines of Authority

can be confusing, but after managers learn to use this structure, the matrix provides excellent coordination simultaneously for each geographic region and each product line

Virtual Network Approach

extends the idea of horizontal coordination and collaboration beyond the boundaries of the organization

Dual Authority Structure

violates the unity-of-command concept described earlier in this chapter, but that is necessary to give equal emphasis to both functional and divisional lines of authority

Coordination

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

Differentiation Strategy

The organization attempts to develop innovative products unique to the market

Who resolves conflicts when issues arise between the two sides of the matrix?

The top leader

New managers are...

typically more comfortable and more effective working in an organization system that is compatible with their leadership beliefs

Relational Coordination

"frequent, timely, problem-solving communication carried out through [employee] relationships of shared goals, shared knowledge, and mutual respect"

Matrix Approach

-Combines aspects of both functional and divisional structures simultaneously, in the same part of the organization -Dual lines of authority -Functional hierarchy of authority runs vertically -Divisional hierarchy of authority runs horizontally -Vertical structure provides traditional control within functional departments, and the horizontal structure provides coordination across departments

Matrix Disadvantages

-Confusion & frustration caused by the dual chain of command -Can generate a high level of conflict because it pits divisional against functional goals in a domestic structure, or product line versus country goals in a global structure -Time lost to meetings and discussions devoted to resolving this conflict -Leads to more discussion than action because different goals and points of view are being addressed

Team Disadvantages

-Employees may be enthusiastic about team participation, but they may also experience conflicts and dual loyalties -Cross-functional team may make different work demands on members than do their department managers, and members who participate in more than one team must resolve these conflicts -Large amount of time is devoted to meetings, thus increasing coordination time -Unless the organization truly needs teams to coordinate complex project and adapt to the environment, it will lose production efficiency with them -May cause too much decentralization

Team-Based Structure

-Entire organization is made up of horizontal teams that coordinate their work and work directly with customers to accomplish the organization's goals -Teams are responsible for all key operating decisions, such as product selection, pricing, ordering, hiring, and in-store promotions, and they are accountable for their performance

Virtual Network Advantages

-Flexibility -Competitiveness on a global scale -Today's business org's can benefit from a flexible network approach that lets them shift resources and respond quickly -A network organization can draw on resources and expertise worldwide to achieve the best quality and price and can sell its products and services worldwide -Network org. may have only two or three levels of hierarchy, compared with ten or more in traditional organizations

Vertical Functional Approach

-Functional structure (U-form (unitary structure)) activities are grouped together by common function from the bottom to the top of the organization -Functional structure groups positions into departments based on similar skills, expertise, work activities, and resource use

Factors that influence Centralization or 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

Matrix Advantages

-Matrix can be highly effective in a complex, rapidly changing environment in which the organization needs to be flexible, innovative, and adaptable -The conflict & frequent meetings generated by the matrix allow new issues to be raised and resolved

Team Approach

-Most widespread trend in departmentalization -Vertical chain of command powerful means of control, but passing all decisions up the hierarchy takes too long and keeps responsibility at the top

Virtual Network Disadvantages

-The weak & ambiguous boundaries create higher uncertainty and greater demands on managers for defining shared goals, managing relationships, keeping people focused and motivated, and coordinating activities so that everything functions as intended -Customer service and loyalty can also suffer if outsourcing partners fail to perform as expected -A cohesive corporate culture is less likely to develop, and turnover tends to be higher because emotional commitment between organization and employee is fragile

Two-Boss Employees

-Those who report to two supervisors simultaneously, must resolve conflicting demands from the matrix bosses -Must work with senior managers to make joint decisions

Factors associated with the less supervisor involevment

-Work performed by subordinates is stable & routine -Subordinates perform similar work tasks -Subordinates are concentrated in a single location -Subordinates are highly trained & need little direction in performing tasks -Rules & procedures defining task activities are available -Support systems and personnel 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

What are characteristics of service technologies?

-intangible outputs. -flexible. -direct contact between employees and customers. -horizontal structures.

Five Approaches to Structural Design

1. Vertical Functional 2. Divisional 3. Matrix 4. Team-Based 5. Virtual Network

3 Characteristics of Authority

1.Authority is vested in organizational positions, not people 2. Authority flows down the vertical hierarchy 3. Authority is accepted by subordinates

Scalar Principle

A clearly defined line of authority in the organization that includes all employees

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

Project Manager

A person who is responsible for coordinating the activities of several departments for the completion of a specific project

Task Force

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