CHAPTER 8. Structuring Organizations for Today's Challenges
hierarchy
A system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person.
virtual corporation
A temporary networked organization made up of replaceable firms that join and leave as needed.
bureaucracy
An organization with many layers of managers who set rules and regulations and oversee all decisions.
benchmarking
Comparing an organization's practices, processes, and products against the world's best.
line personnel
Employees who are part of the chain of command that is responsible for achieving organizational goals.
cross-functional self-managed teams
Groups of employees from different departments who work together on a long-term basis.
What are the key alternatives to the major organizational models?
Matrix organizations assign people to projects temporarily and encourage interorganizational cooperation and teamwork. Cross-functional self-managed teams have all the benefits of the matrix style and are long term.
departmentalization
The dividing of organizational functions into separate units.
digital natives
Young people who have grown up using the Internet and social networking.
staff personnel
Employees who advise and assist line personnel in meeting their goals.
restructuring
Redesigning an organization so that it can more effectively and efficiently serve its customers.
What are the principles of organization management?
Structuring an organization means devising a division of labor (sometimes resulting in specialization), setting up teams or departments, and assigning responsibility and authority. It includes allocating resources (such as funds), assigning specific tasks, and establishing procedures for accomplishing the organizational objectives. Managers also have to make ethical decisions about how to treat workers.
What principles did Weber add?
Weber added principles of bureaucracy such as job descriptions, written rules and decision guidelines, consistent procedures, and staffing and promotions based on qualifications.
organization (or corporate) culture
Widely shared values within an organization that provide unity and cooperation to achieve common goals.
What is an inverted organization?
An inverted organization places employees at the top of the hierarchy; managers are at the bottom to train and assist employees.
organizational chart
An organization chart is a visual device that shows relationships among people and divides the organization's work; it shows who reports to whom.
matrix organization
An organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line-and-staff structure.
decentralized authority
An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be.
centralized authority
An organization structure in which decision-making authority is maintained at the top level of management at the company's headquarters.
flat organization structure
An organization structure that has few layers of management and a broad span of control.
inverted organization
An organization that has contact people at the top and the chief executive officer at the bottom of the organization chart.
line organization
An organization that has direct two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with all people reporting to only one supervisor.
tall organization structure
An organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management.
What are the four major choices in structuring organizations?
Choices to make in structuring and restructuring organizations cover (1) centralization versus decentralization, (2) breadth of span of control, (3) tall versus flat organization structures, and (4) type of departmentalization.
What are the latest trends in structuring?
Departments are often replaced or supplemented by matrix organizations and cross-functional teams that decentralize authority. The span of control becomes larger as employees become self-directed. Another trend is to eliminate managers and flatten organizations.
What were Fayol's basic principles?
Fayol introduced principles such as unity of command, hierarchy of authority, division of labor, subordination of individual interests to the general interest, authority, clear communication channels, order, and equity.
What are the major concepts involved in interfirm communications?
Networking uses communications technology and other means to link organizations and allow them to work together on common objectives. A virtual corporation is a networked organization of replaceable firms that join and leave as needed. Benchmarking tells firms how their performance measures up to that of their competitors in specific functions. The company may then outsource to companies that perform its weaker functions more effectively and efficiently. The functions that are left are the firm's core competencies.
What is organizational culture?
Organizational (or corporate) culture consists of the widely shared values within an organization that foster unity and cooperation to achieve common goals.
What is the difference between the formal and informal organization of a firm?
The formal organization details lines of responsibility, authority, and position. It's the structure shown on organization charts. The informal organization is the system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization. It's the human side of the organization. The informal organization is an invaluable managerial asset that often promotes harmony among workers and establishes the corporate culture. As effective as the informal organization may be in creating group cooperation, it can still be equally powerful in resisting management directives.
chain of command
The line of authority that moves from the top of a hierarchy to the lowest level.
span of control
The optimum number of subordinates a manager supervises or should supervise.
real time
The present moment or the actual time in which something takes place.
networking
The process of establishing and maintaining contacts with key managers in one's own organization and other organizations and using those contacts to weave strong relationships that serve as informal development systems.
economies of scale
The situation in which companies can reduce their production costs if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase.
formal organization
The structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts.
informal organization
The system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization; that is, the human side of the organization that does not appear on any organization chart.
What is happening today to American businesses?
They are adjusting to changing markets. That is a normal function in a capitalist economy. There will be big winners, like Google and Facebook, and big losers as well. The key to success is remaining flexible and adapting to the changing times.
core competencies
Those functions that the organization can do as well as or better than any other organization in the world.
What are the two major organizational models?
Two traditional forms of organization are (1) line organizations and (2) line-and-staff organizations. A line organization has clearly defined responsibility and authority, is easy to understand, and provides each worker with only one supervisor. The expert advice of staff assistants in a line-and-staff organization helps in areas such as safety, quality control, computer technology, human resource management, and investing.
