MNGT 301 ch 10 - Designing Organization Structure
team approach
-Probably the most widespread trend in departmentalization in recent years
three distinguishable characteristics of authority
1. authority vested in organizational positions, not people 2. authority flows down the vertical hierarchy 3. authority is accepted by subordinates
matrix boss
A functional or product supervisor responsible for one side of the matrix.
virtual network structure advantages
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. Flexibility comes from the ability to hire whatever services are needed and to change a few months later without constraints from owning plants, equipment, and facilities. The organization can redefine itself continually to fit new product and market opportunities.
matrix (structure) approach
A structural approach that uses both functional and divisional chains of command simultaneously, in the same part of the organization.
team-based structure
A structure in which an entire organization is made up of horizontal teams that coordinate their activities and work directly with customers to accomplish organizational goals.
small-batch production
A type of manufacturing technology that involves the production of goods in batches of one or a few products designed to customer specification.
service technology
Characterized by intangible outputs and direct contact between employees and customers.
continuous process production
Involves mechanization of the entire workflow and nonstop production, such as in chemical plants or petroleum refineries.
centralization
Means that decision authority is located near top organization levels.
decentralization
Means that decision authority is pushed down to lower organization levels.
departmentalization
The basis for grouping individual positions into departments and departments into the total organization.
responsibility
The duty to perform the task or activity that one has been assigned.
True
Trump>Hillary
geographic-based global organization structure
all functions in a specific country or region report to the same division manager. The structure focuses company activities on local market conditions. Competitive advantage may come from the production or sale of a product or service adapted to a given country or region.
virtual network structure disadvantages
lack of hands-on control. Managers do not have all operations under one roof and must rely on contracts, coordination, negotiation, and electronic linkages to hold things together.
accountability
the mechanism through which authority and responsibility are brought into alignment
matrix structure disadvantages
time lost to meetings and discussions devoted to resolving this conflict. Often the matrix structure leads to more discussion than action because different goals and points of view are being addressed. Managers may spend a great deal of time coordinating meetings and assignments, which takes time away from core work activities.
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. In an organization with a high level of "___________", people share information freely across departmental boundaries, and people interact on a continuous basis to share knowledge and solve problems. Coordination is carried out through a web of ongoing positive relationships rather than because of formal coordination roles or mechanisms.
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.
staff authority
"_____________" is a communication relationship; staff specialists advise managers in technical areas. For example, the finance department of a manufacturing firm would have "___________" to coordinate with line departments about which accounting forms to use to facilitate equipment purchases and standardize payroll services.
Joan Woodward
-British industrial sociologist. -the most influential research into the relationship between manufacturing technology and organizational structure was done by this person -gathered data from 100 British firms to determine whether basic structural characteristics, such as administrative overhead, span of control, and centralization, were different across firms. They found that manufacturing firms could be categorized according to three basic types of production technology: --small-batch and unit production --large-batch and mass production --continuous process production
factors that typically influence centralization vs 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.
team approach
-The vertical chain of command is a powerful means of control, but passing all decisions up the hierarchy takes too long and keeps responsibility at the top. The "______________" gives managers a way to delegate authority, push responsibility to lower levels, and be more flexible and responsive in a complex and competitive global environment.
permanent teams
A group of employees from all functional areas permanently assigned to focus on a specific task or activity.
cross-functional teams
A group of employees from various functional departments that meet as a team to resolve mutual problems.
collaboration
A joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose.
team-based structure disadvantages
A large amount of time is devoted to meetings, thus increasing coordination time. Unless the organization truly needs teams to coordinate complex projects and adapt to the environment, it will lose production efficiency with them.
matrix structure disadvantages
A major problem with the "_______________" is the confusion and frustration caused by the dual chain of command. Matrix bosses and two-boss employees have difficulty with the dual reporting relationships.
project manager
A manager who is responsible for a specific work project that involves people from various functions and levels of the organization.
task force
A temporary team or committee designed to solve a problem involving several departments.
flat structure
An organizational structure characterized by an overall broad span of management and relatively few hierarchical levels.
tall structure
An organizational structure characterized by an overall narrow span of management and a relatively large number of hierarchical levels.
functional structure (U-form - unitary structure)
An organizational structure in which activities are grouped together by common function from the bottom to the top of the organization.
virtual network structure
An organizational structure in which the organization subcontracts most of its major functions to separate companies and coordinates their activities from a small headquarters organization.
divisional structure
An organizational structure that groups employees and departments based on similar organizational outputs (products or services), such that each division has a mix of functional skills and tasks.
chain of command
An unbroken line of authority that links all individuals in the organization and specifies who reports to whom.
divisional structure disadvantages
Another major disadvantage is duplication of resources and the high cost of running separate divisions. Instead of a single research department in which all research people use a single facility, each division may have its own research facility. The organization loses efficiency and economies of scale. In addition, the small size of departments within each division may result in a lack of technical specialization, expertise, and training.
functional structure disadvantages
Another problem is that decisions involving more than one department may pile up at the top of the organization and be delayed. For example, the problems at Blue Bell Creamery described earlier may be partly due to poor coordination among departments and slow decision making regarding how to address the issue.
functional structure advantages
Because the chain of command converges at the top, the "____________" also offers a way to centralize decision making and provide unified direction from top managers.
re-engineering
Because the focus of "____________" is on horizontal workflows rather than functions, "______________" generally leads to a shift away from a strong vertical structure to one emphasizing stronger horizontal coordination.
divisional structure advantages
By dividing employees and resources along divisional lines, the organization will be flexible and responsive to change because each unit is small and tuned in to its environment. Because employees work on a single product line, their concern for customers' needs is high. Coordination across functional departments is better because employees are grouped together in a single location and committed to one product line.
mass production
Characterized by long production runs to manufacture a large volume of products with the same specifications.
virtual network structure disadvantages
Each partner in the network necessarily acts in its own self-interest. The weak and 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.
team-based structure disadvantages
Employees may be enthusiastic about team participation, but they may also experience conflicts and dual loyalties. A 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.
responsibility/authority
For organizations to function well, everyone needs to know what they are accountable for and accept the "___________" and "_________" for performing it.
relational coordination
Frequent horizontal coordination and communication carried out through ongoing relationships of shared goals, shared knowledge, and mutual respect.
vertical organization structure
Fundamental characteristics of "________________" include division of labor, chain of command, span of management, and centralization and decentralization.
divisional structure disadvantages
Great coordination exists within divisions; however, coordination across divisions is often poor. Problems can occur when autonomous divisions go in opposite directions.
functional structure advantages
Grouping employees by common task permits economies of scale and efficient resource use. For example, at AustralianSuper, a large superannuation (pension) firm, all employees who deal with legal, compliance, and financial matters work in the same Corporate Services department.
divisional structure
In a "_______________", divisions are created as self-contained units, with separate functional departments for each division. For example, in Exhibit 10.4, each functional department resource needed to produce the product is assigned to each division.
two-boss employees
In a matrix structure, a person who reports to two supervisors simultaneously. They must work with senior managers to reach joint decisions. They need excellent human relations skills with which to confront managers and resolve conflicts.
top leader
In a matrix structure, the person who oversees both the product and the functional chains of command and is responsible for the entire matrix.
accountability
Means that people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command.
matrix (structure) approach
One unique feature of the "_________" is that it has dual lines of authority. In Exhibit 10.6, the functional hierarchy of authority runs vertically, and the divisional hierarchy of authority runs horizontally. The vertical structure provides traditional control within functional departments, and the horizontal structure provides coordination across departments.
specialize
Organizations perform a wide variety of tasks. A fundamental principle is that work can be performed more efficiently if employees are allowed to "__________"
organizing
Strategy defines what to do; "_______" defines how to do it.
matrix (structure) approach
The "_______________", therefore, supports 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.
organization chart
The characteristics of vertical structure are portrayed in the "_______________", which is the visual representation of an organization's structure.
technical complexity
The degree to which complex machinery is involved in the production process to the exclusion of people.
division of labor
The degree to which organizational tasks are subdivided into separate jobs. Also called work specialization.
organizing
The deployment of organizational resources to achieve strategic goals; involves assigning tasks, grouping tasks into departments, and allocating resources.
project manager
The distinctive feature of the "______________" position is that the person is not a member of one of the departments being coordinated. "______________" are located outside the departments and are responsible for coordinating several departments to achieve desired project outcomes.
authority
The formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve outcomes desired by the organization.
line authority
The formal power to direct and control immediate subordinates.
organization structure
The framework in which an organization defines how tasks are divided, resources are deployed, and departments are coordinated.
coordination
The managerial task of adjusting and synchronizing the diverse activities among different individuals and departments.
span of management
The number of employees reporting to a supervisor; sometimes called span of control.
virtual network structure
The organization may be viewed as a central hub surrounded by a network of outside specialists, sometimes spread all over the world, as illustrated in Exhibit 10.9. Rather than being housed under one roof, services such as accounting, design, manufacturing, and distribution are outsourced to separate organizations that are connected electronically to a central office.
functional structure disadvantages
The primary disadvantages reflect barriers that exist across departments. Because people are separated into distinct departments, communication and coordination across functions are often poor, causing a slow response to environmental changes. Innovation and change require involvement of several departments.
re-engineering
The radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed.
staff authority
The right to advise, counsel, and recommend in the manager's area of expertise.
organic system
The structure is more horizontal, and decision-making authority is decentralized. People at lower levels have more responsibility and authority for solving problems, which enables the organization to be more fluid and adaptable to changes.
virtual network structure advantages
This structure is perhaps the leanest of all organization forms because little supervision is required. Large teams of staff specialists and administrators are not needed. The organization may have only two or three levels of hierarchy, compared with ten or more in traditional organizations.
mechanistic system
This type of organization typically has a rigid, vertical, centralized structure, with most decisions made at the top. The organization is highly specialized and characterized by rules, procedures, and a clear hierarchy of authority.
responsibility
When managers have authority that exceeds "___________", they may become tyrants and use authority to achieve frivolous outcomes.
authority
When managers have responsibility for task outcomes but little "______", the job is possible but difficult. In this situation, managers rely on persuasion and luck.
delegation
When managers transfer authority and responsibility to positions below them in the hierarchy.
functional structure (U-form - unitary structure)
Whereas in a "____________", all R&D engineers are grouped together and work on all products, in a divisional structure, separate R&D departments are created within each division. Each department is smaller and focuses on a single product line or customer segment. Departments are duplicated across product lines.
organic system
With goals of innovation and a rapidly changing environment, however, the organization tends to be much looser, free-flowing, and adaptive, using an "_________".
large span of control: factors
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.
divisional structure
also called an M-form (multidivisional) or a decentralized form
matrix structure disadvantages
also 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. Rivalry between the two sides of the "________" can be exceedingly difficult for two-boss employees to manage.
team-based structure advantages
also 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.
acceptance theory of authority
argues that a manager has authority only if subordinates choose to accept his or her commands. If subordinates refuse to obey because the order is outside their zone of acceptance, a manager's authority disappears.
team-based structure advantages
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.
matrix structure advantages
can be highly effective in a complex, rapidly changing environment in which the organization needs to be flexible, innovative, and adaptable. The conflict and frequent meetings generated by the "______" allow new issues to be raised and resolved.
cross-functional teams
can provide needed horizontal coordination to complement an existing divisional or functional structure. A frequent use of "____________" is for change projects, such as new product or service innovation. Team members typically still report to their functional departments, but they also report to the team, one member of whom may be the leader.
matrix (structure) approach
combines aspects of both functional and divisional structures simultaneously, in the same part of the organization. The "___________" evolved as a way to improve horizontal coordination and information sharing.
strategic needs
environment, strategy, goals
outsourcing
farming out certain activities, such as manufacturing or credit processing, has become a significant trend.
virtual network structure advantages
flexibility and competitiveness on a global scale. The "________" provides extreme flexibility, enabling organizations to shift resources and respond quickly to changes in the environment and customer needs.
mechanistic system
goals of efficiency and a stable environment are associated with a "___________"
functional structure (U-form - unitary structure)
groups positions into departments based on similar skills, expertise, work activities, and resource use. A "________________" 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.
staff departments
have an advisory relationship with line departments and typically include marketing, labor relations, research, accounting, and HR.
virtual network structure disadvantages
in this type of organization, employee loyalty can weaken. Employees might feel that they can be replaced by contract services. A cohesive corporate culture is less likely to develop, and turnover tends to be higher because emotional commitment between organization and employee is fragile.
staff departments
include all those that provide specialized skills in support of line departments.
technology
includes the knowledge, tools, techniques, and activities used to transform organizational inputs into outputs. "___________" includes machinery, employee skills, and work procedures. A useful way to think about "__________" is as "production activities."
organization structure
is defined as (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.
matrix structure advantages
makes efficient use of HR because specialists can be transferred from one division to another.
team-based structure disadvantages
may cause too much decentralization. Senior department managers who traditionally made decisions might feel left out when a team moves ahead on its own. Team members often do not see the big picture of the corporation and may make decisions that are good for their group but bad for the organization as a whole.
unity of command
means that each employee is held accountable to only one supervisor.
team-based structure advantages
morale boost. Employees are typically enthusiastic about their involvement in bigger projects rather than in narrow departmental tasks.
line departments
perform tasks that reflect the organization's primary goal and mission.
scalar principle
refers to a clearly defined line of authority in the organization that includes all employees. Authority and responsibility for different tasks should be distinct. All individuals in the organization should know to whom they report, as well as the successive management levels all the way to the top.
divisional structure
separate divisions can be organized with responsibility for individual products, services, product groups, major projects or programs, divisions, businesses, or profit centers.
divisional structure
sometimes called a product structure, program structure, or self-contained unit structure. Each of these terms means essentially the same thing: Diverse departments are brought together to produce a single organizational output, whether it is a product, a program, or service to a single customer.
operational needs
technology, work processes