Chapter 13 BSCI 468

Product organizations also have several drawbacks.

The most obvious of these is the loss of economies of scale stemming from the duplication of various departments within operating units.

organizational design

The process of coordinating these structural elements in the most effective fashion.

downsizing; sometimes, it's referred to as

"rightsizing," "delayering," or "retrenching,"

Chart diagrams reveal

The five dimensions of organizational structure.

conglomerate.

When an organization diversifies by adding an entirely unrelated business or product to its organizational design.

Intraorganizational designs

the arrangements of units within one organization

The functional organization can be considered.

the most basic approach to departmentalization.

Adhocracy

All members have authority to make decisions that fall within their areas of specialization Simple, informal, with decentralized authority (Software development firm.)

Strategic apex

Top-level executives responsible for running the entire organization

Third. key advantages offered by matrix designs

enhance communication among managers.

If the environment doesn't change

a highly mechanisticn organizational form can be very efficient.

People in line positions

have decision-making power.

Permanent overlay

project teams are kept going after a project is completed

Departmentalization

The way in which an organization is broken up into coherent units.

Organizational structure

The way individuals and groups are arranged with respect to the tasks they perform. Also, refers to the formal configuration between individuals and groups with respect to the allocation of tasks, responsibilities, and authority within organizations.

top leaders ( type of bosses.)

These are individuals who have authority over both lines (the one based on function and the one based on product or project). Top leaders are responsible for facilitating coordination between functional and product managers and for maintaining an appropriate balance of power between them.

Organizations are most likely to adopt matrix designs when they confront certain conditions.

These include a complex and uncertain environment (one with frequent changes) and the need for economies of scale in the use of internal resources. Specifically, a matrix approach is often adopted by medium-size organizations with several product lines that do not possess sufficient resources to establish fully self- contained operating units.

virtual organizations.

They form a partnership to capitalize on their existing talents, pursuing common objectives. In most cases, after these objectives have been met, the organizations disband. This arrangement allows each participating company to contribute only its core competencies (i.e., its areas of greatest strength), resulting in products that no one company could have created on its own.

entire organization is composed of people performing a collection of specialized jobs.

This is one of the most obvious feature that can be seen in an organization chart. As you might imagine, the degree to which employees perform specialized jobs is likely to depend on the size of the organization. The larger the organization, the more opportunities for specialization are likely to exist.

decentralization

This process of delegating power from higher to lower levels within organizations.

product organization

This type of creates self-contained divisions, each of which is responsible for everything to do with a certain product or group of products.

Span of Control

the number of people formally required to report to each individual manager is immediately clear.

The external environment

the sum of all the forces impinging on an organization with which it must deal effectively if it is to survive How stable the environment is (unchanging) How unstable (turbulent) the environment is. Banks represent a good example. Financial institutions operate within an environment that is highly influenced by the economy

Centralization

the tendency for just a few powerful individuals or groups to hold most of the decision-making power. flattening hierarchies has made it possible to streamline organizations by eliminating many middle-management jobs. This is in keeping with the tendency toward decentralization. After all, as people become empowered to make their own decisions, it's unnecessary for them to report to as many supervisors.

Tall Organizations

there are many levels in the hierarchy and that the span of control is relatively narrow

Flat Organization

there are only a few levels in the hierarchy, and the span of control is relatively wide.

functional organizations certainly are logical in nature and have proven useful in many contexts,

they are by no means the perfect way to departmentalize people.

box represents (organizational Chart.)

a specific job as prescribed formally by the organization—that is, the formal responsibilities associated with the particular post.

A strategic alliance is

a type of organizational design in which two or more separate firms join their competitive capabilities to operate a specific business.

Supervisors responsible for many individuals are said to have

a wide (or broad) span of control, whereas those responsible for fewer are said.

Functional organizations

departmentalize individuals according to the nature of the tasks they perform, with people who perform similar jobs assigned to the same department.

Hierarchy of authority

describes who reports to whom in an organization

Another problem associated with product organization is

designs involves the organization's ability to attract and retain talented employees. Since each department within operating units is necessarily smaller than a single, combined one would be, opportunities for advancement and career development are limited.

Divisional structure

division managers have control Large, formal organizations with several. (Multidivisional business such Geranal motors)

Departmentalize structure take advantage of

economies of scale (by allowing employees performing the same jobs to share facilities and not duplicating functions),

More effective ways of use Organic and mechanistic are

organic for research work and mechanistic for manufacturing work).

Most basic approach to departmentalization

-As organizations grow in complexity, more departments are added or deleted as the need arises. -Avoids duplication of effort and takes advantage of economies of scale. -Could cause narrow-mindedness and discourage innovation.

Three Characteristics Neoclassical Organizational Design

-Flat Hierarchy -Wipe span of control -Loose control over subordinates.

Organizations are composed of five basic elements

-Operating core -Strategic apex -Middle line -Technostructure -Support staff

Mintzberg's Framework Five specific organizational designs

-Simple structure -Machine bureaucracy -Divisional structure -Adhocracy

Three Characteristics of Classic Design

-Tall Hierarchy. -Narrow span of Control. -Close contro over subordinates.

Three Good Reasons Why You Should Care About . . . Organizational Design

1. To understand how organizations function, you must know about their structural elements - their basic building blocks. 2. The design of organizations has profound effects on how they function. 3. The way organizations are designed has been changing in recent years and promises to continue changing in the years ahead.

matrix organization is used

1. when complex and uncertain environments and when there is a need for economies of scale in the use of internal resources. 2. Employee is required to report to both a functional manager and a product manager (dual authority).

challenges associated with vertical integration.

1.the company's suppliers are internal, they don't face competition to keep their prices down, potentially resulting in higher costs for the company. 2. if the various parts of the organization are tightly interconnected, it is very difficult to respond to changes, such as developing new products. Because this would involve changes in supplies, manufacturing, and sales, the vertically integrated company faces more challenges than its non-vertically integrated counterpart when it comes to making such changes.

Reebok is a good example of

A modular organization. It focuses on designing and marketing athletic shoes and apparel but outsources all production to companies in Taiwan and South Korea that specialize in manufacturing. This allows the company to concentrate on what it does best—tapping the changing tastes of its customers.

that functional structures discourage innovation As a result

Because they channel individual efforts toward narrow, functional areas instead of encouraging coordination and cross-fertilization of ideas between areas.

Mature matrix

Both functional and product lines are permanent and equally strong in the organization

modular (or networked) organizations.

Businesses that outsource noncore functions to other companies while focusing on their own core business. Such organizations are organized around a central hub that is surrounded by networks of outside specialists that can be added or subtracted as needed.

The final problem with product organization problems is the

Coordination across product lines may arise. In fact, in extreme cases, actions taken by one operating division may have adverse effects on the outcomes of one or more others.

The Contingency Approach:

Design According to Environmental Conditions Design According to Environmental Conditions

Downsizing

Even before today's widespread practice of eliminating jobs as a cost-saving measure, organizations have, since the mid-1980s, been restructuring their workforces, seeking to eliminate waste by flattening them out.

Neoclassical organizational theory

Effective organizations are designed with flat hierarchical structures and a high degree of decentralization

Classical organizational theory

Effective organizations have a formal hierarchy, a clear set of rules, specialization of labor, highly routine tasks, and a highly impersonal working environment

Operating core

Employees who perform the basic work related to the product or service

key advantages offered by matrix designs

First, they permit flexible use of an organization's human resources. Individuals within functional departments can be assigned to work on specific products or projects as the need arises and then return to their regular duties when this task is completed.

Interorganizational designs

Interorganizational designs plans by which two or more organizations come together

Organic organization

Jobs tend to be very general, few rules, decisions made by low-level employees Effective when the environment is turbulent

Middle line

Managers who transfer information between the strategic apex and the operating core

Simple structure

Power resides at the strategic apex. Simple, informal, authority centralized in a single person (small, entrepreneurial business.)

Temporary overlay

Projects are crossed with functions on a short-term basis. such as in the case of a special project.

The underlying assumption is that fewer layers.

Reduce waste and enable people to make better decisions (by moving decision-making authority into the hands of the individuals who are closer to the problems at hand), thereby leading to greater profitability. "Doing more with less" is the mantra of proponents of delayering.

Organizational design

Refers to the process of coordinating the structural elements of organizations in the most appropriate manner.

Technostructure

Specialists responsible for standardizing various aspects of the organization's activities Support staff

Organization chart

The connections between various clusters of functions of which an organization is composed can be represented in the form of a diagram. In other words, an organization chart can be considered a representation of a company's internal structure. As you might imagine, organization charts are useful tools for avoiding confusion regarding how various tasks or functions are interrelated.

The pure organic form of organization may be characterized in several different ways

The degree of job specialization possible is very low; instead, a broad knowledge of many different jobs is required. Very little authority is exercised from the top. Rather, self-control is expected, and an emphasis is placed on coordination between peers. As a result, decisions tend to be made in a highly democratic, participative manner. Be aware that the mechanistic and organic types of organizational structure described here are ideal forms.

Division of labor ― tasks to be performed within an organization are divided into specialized jobs The more specialized are jobs, the narrower the range incumbents are required to perform

The more that tasks are divided into separate jobs, the more those jobs are specialized and the narrower the range of activities that job incumbents are required to perform. In theory, the fewer tasks a person performs, the better he or she may be expected to execute them, freeing others to do the tasks at which they excel.

Three kinds of bosses

Top leader Matrix bosses Two-boss managers

team-based organizations

are organizations in which autonomous work teams are organized in parallel fashion such that each performs many different steps in the work process. Instead of organizing jobs in the traditional, hierarchical fashion by having a long chain of groups or individuals perform parts of a task team-based organizations have flattened hierarchies. Essentially, this approach calls for designing organizations around processes instead of tasks.

neoclassical theorist, Rensis Likert, shared

arguing that organizational performance is enhanced not by rigidly controlling people's actions, but by actively promoting their feelings of self-worth and their importance to the organization.

People in staff positions

cannot make decisions, but provide advice and recommendations to be used by the line managers. restrictions. However, it's the occupants of line positions who make the actual decisions. In many of today's organizations, human resource managers occupy staff positions, providing specialized services regarding testing and interviewing procedures as well as information about the latest laws on personnel discrimination. Various assistants also fall into this category, holding staff positions.

A matrix organization

combines the function and product forms of departmentalization

Vertically integrated organization

companies that own their own suppliers and/or their own customers who purchase their products. Difficult to balance their resources in the most effective manner

product organization Each unit

contains all the resources needed to develop, manufacture, and sell its particular goods. The organization is composed of separate divisions operating independently, the heads of which report to top management. Although some functions might be centralized within the parent company

disadvantages of a matrix design

create frustration and stress as a result of the dual reporting system. By reporting to two different supervisors, there's a danger that one of the two authority systems (functional or project) will overwhelm the other, along with the consistently high levels of cooperation required from the people involved for the organization to succeed.

organization charts flatten out as

decision making authority is pushed farther down the hierarchy.

An effective organization, Likert proposed, is one in which individuals would

have a great opportunity to participate in making organizational decisions—what he called a System 4 organization.

Organizational scholars such as McGregor, Argyris, and Likert attempted to

improve upon the classical model which is why their approach is labeled neoclassical organizational theory.

System 2 and 3 are

intermediate forms between the System 1 and System 4 extremes.

a product organization might be created.

it is a type of departmentalization

neoclassical theorist, Chris Argyris, expressed

managerial domination of organizations blocks basic human needs to express oneself and to accomplish tasks successfully. This results in feelings of dissatisfaction, he argued, that encourage turnover and lead to poor performance.

We see this today as many companies are moving toward decentralization to promote

managerial efficiency and to improve employee satisfaction (the result of giving people greater opportunities to take responsibility for their own actions).

Douglas McGregor was an organizational theorist who

objected to the rigid hierarchy imposed by Weber's bureaucratic form because it was based on negative assumptions about people—primarily that they lacked ambition and wouldn't work unless coerced (the Theory X approach) In contrast, McGregor argued that people desire to achieve success by working and that they seek satisfaction by behaving responsibly (the Theory Y approach)

Second key advantages offered by matrix designs

offer an efficient means of responding quickly to a changing, unstable environment.

A line connecting boxes reveals. (organizational Chart.)

the formally prescribed reporting relationships between the individuals performing those jobs. In other words, it reveals "who answers to whom."

Mechanistic organization

people perform specialized jobs, many rigid rules, authority vested in a few top ranking officials Effective when environment is stable ( Macdonalds.)

Professional bureaucracy

power is at the operating core. Complex, decision-making authority is vested in professionals. (University)

organization System 1, the traditional form in which

power is distributed in the hands of a few top managers who tell lower-ranking people what to do.

Machine bureaucracy

power resides with the technostructure Highly complex, formal environment with clear lines of authority. (Goverment office.)

Support staff

provide indirect support services to the organization

As certain functions become centralized ( in the departmentalize process), Not only does this type of structure

resources can be saved by avoiding duplication of effort, resulting in a higher level of efficiency.

Wide span of control

responsablity form many individuals reports; organization has a flat hierarchy

Narrow span of Cotrol

responsibility for few individual reports; organization has a tall hierarchy.

The most important of these stems from the fact that functional organizational structures encourage.

separate units to develop their own narrow perspectives and to lose sight of overall organizational goals.

functional structures are

slow to respond to the challenges and opportunities they face from the environment (such as the need for new products and services).

Another advantage of departmentalize structure is

that allows individuals to specialize, thereby performing only those tasks at which they are most expert. The result is a highly skilled workforce, a direct benefit to the organization.

Typically, when jobs are lost through restructuring

they are positions found in the middle layers of organizational hierarchies. To a great extent, this follows from the trend toward getting work done through teams. As this occurs, tall organizational hierarchies become unnecessary.

Supervisors responsible for fewer individuals are said

to have a narrow span of control.

The goal of a strategic alliance is

to provide benefits to each individual organization that could not be attained if they operated separately. They are low-risk ways of diversifying (adding new business operations) and entering new markets. Some companies, such as GE and Ford, have strategic alliances with many others.

Employees in matrix organizations have

two bosses (or, more technically, they are under dual authority).

boundaryless organization.

type of organization in which chains of command are eliminated, spans of control are unlimited, and rigid departments give way to empowered teams. The idea is that replacing rigid distinctions between people with roles that are fluid, intentionally ambiguous, and ill defined, makes it much easier to be flexible.