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Management, 9/e John R. Schermerhorn, Jr .
C h a p t e r 1 0 : Chapter 10: Organizing Structures and Designs
Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc.
Planning Ahead \u2014 Chapter 10 Study Ques
What is organizing as a management function?
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What are the traditional types of
o r g a n i z a t i o n
s t r u c t u r e s ?
What are the newer types of organization structures?
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How are organizational designs changing the workplace?
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Study Question 1: What is organizing as a management function? \ue000
Organizing and organization structure
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Organizing
\ue002The
process of arranging people and other resources to work to g ether to accom p lish a goal.
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Organization structure
The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups.
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Figure 10.1 Organizing viewed in relationship with the other management functions.
Study Question 1: What is organizing as a management function?
Formal structures
…
The structure of the organization in its official state. An organization chart is a diagram describing reporting relationships and the formal arrangemen t o f work pos i t i ons w i t h i n an organization. An organization chart identifies the following aspects of formal structure: The division of work. Supervisory relationships. Communication channels. Major subunits. Levels of management.
Study Question 1: What is organizing as a management function?
Informal structures
…
A “shadow” organization made up of the
unofficial, but often critical, working
. Potential advantages of informal structures: Helping people accomplish their work. Overcoming limits of formal structure. Gaining access to interpersonal networks. Informal learning.
Study Question 1: What is organizing as a management function?
Informal structures (cont.) Potential disadvantages of informal structures: May work against best interests of entire o r g a n i z a t i o n .. Susceptibility to rumor. May carry inaccurate information. May breed resistance to change. Diversion of work efforts from important objectives.
Feeling of alienation by outsiders.
Study Question 2: What are the traditional types of organization structures?
Functional structures
People with similar skills and performing similar tasks are grouped together into formal work units.
Members work in their functional areas of expertise. Are not limited to businesses. Work well for small organizations producing few products or services.
Figure 10.2 Functional structures in a business, branch bank, and community hospital.
Study Question 2: What are the traditional types of organization structures?
Potential advantages of functional structures: Economies of scale. T as k ass i gnmen t s cons i st en t wi t h expertise and training. High-quality technical problem solving, In-depth training and skill development. Clear career paths within functions.
Study Question 2: What are the traditional types of organization structures?
Potential disadvantages of functional structures: Difficulties in pinpointing r e s p o n s i b i l i t i e s .. Functional chimneys problem. Sense of cooperation and common purpose break down. Narrow view of performance objectives. Excessive upward referral of decisions.
Study Question 2: What are the traditional types of organization structures?
Divisional structures
Group together people who work on the same product or process, serve
in the same area or geographical region. Common in complex organizations. Avoid problems associated with functional structures.
Figure 10.3 Divisional structures based on product, geography, customer, and process.
Study Question 2: What are the traditional types of organization structures?
Potential advantages of divisional structures: More flexibility in responding to e n v i r o n m e n t a l c h a n g e s . environmental changes. Improved coordination. Clear points of responsibility. Expertise focused on specific customers, products, and regions. Greater ease in restructuring.
Study Question 2: What are the traditional types of organization structures?
Potential disadvantages of divisional structures: Duplication of resources and efforts a c r o s s d i v i s i o n s .. Competition and poor coordination across divisions. Emphasis on divisional goals at expense of organizational goals.
Study Question 2: What are the traditional types of organization structures?
Types of divisional structures and how they group job and activities: Product structures focus on a single product or s e r v ic e . service. Geographical structures focus on the same location or geographical region. Customer structures focus on the same customers or clients. Process structures focus on the same processes.
Study Question 2: What are the traditional types of organization structures?
Matrix structure
Combines functional and divisional structures to gain advantages and minimize disadvantages of each. Used in: Manufacturing Service industries Professional fields Non-profit sector Multi-national corporations
Figure 10.4 Matrix structure in a small multi-project business firm.
Study Question 2: What are the traditional types of organization structures?
Potential advantages of matrix structures: Better coo p eration across functions. Improved decision making.
Increased flexibility in restructuring. Better customer service. Better performance accountability. Improved strategic management.
Study Question 2: What are the traditional types of organization structures?
Potential disadvantages of matrix structures: Two-boss system is susceptible to power struggles. Two-boss system can create task confusion and conflict in work priorities. Team meetings are time consuming. Team may develop “groupitis.” Increased costs due to adding team leers to
structure.
Study Question 3: What are the newer types of organization structures?
Guidelines for horizontal structures:
Focus the organization around processes, not functions. Put people in charge of core processes. Decrease hierarchy and increase the use of teams. Empower people to make decisions critical to performance. Utilize information technology. Emphasize multiskilling and multiple competencies. Teach people how to work in partnership with others. Build a culture of openness, collaboration, and
performance commitment.
Study Question 3: What are the newer types of organization structures?
Team structures Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks. Often use cross-functional teams.
Figure 10.5 How a team structure uses cross-functional teams for improved lateral relations.
Study Question 3: What are the newer types of organization structures?
Potential advantages of team structures:
Eliminates difficulties with communication and decision making.
departments. Improved morale. Greater sense of involvement and identification. Increased enthusiasm for work. Improved quality and speed of decision making.
Study Question 3: What are the newer types of organization structures?
Potential disadvantages of team
structures: . Excessive time spent in meetings. Effective use of time depends on
quality of interpersonal relations, group dynamics, and team management.
Study Question 3: What are the newer types of organization structures?
Network structures
A central core that is linked through networks of relationships with outside c o n t r a c t o r s and a n d s suppliers u p p l i e r s oof f eessential s s e n t i a l contractors services. Own only core components and use strategic alliances or outsourcing to provide other components.
Figure 10.6 A network structure for a Web-based retail business.
Study Question 3: What are the newer types of organization structures?
Potential advantages of network structures: Firms can operate with fewer full-time employees and less complex internal
systems. Reduced overhead costs and increased operating efficiency. Permits operations across great distances.
Study Question 3: What are the newer types of organization structures?
Potential disadvantages of network structures: Control and coordination problems may a r i s e f r o m . Potential loss of control over outsourced activities. Potential lack of loyalty among infrequently used contractors. Excessively aggressive outsourcing can be dangerous.
Study Question 3: What are the newer types of organization structures?
Boundaryless organizations
Eliminate internal boundaries among subsystems and external boundaries with the external environment. A combination of team and network structures, with the addition of “temporariness.” Key requirements: Absence of hierarchy. Empowerment of team members. Technology utilization. Acceptance of impermanence.
Study Question 3: What are the newer types of organization structures?
Boundaryless organizations (cont.) Encourage creativity, quality, timeliness, flexibility, and efficiency.
nowl ed ge s h ari ng i s component. K
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o
a goa l an d essen a l
Virtual organization. A special form of boundaryless organization. Operates in a shifting network of external alliances that are engaged as needed, using IT and the Internet.
Figure 10.7 The boundaryless organization eliminates internal and external barriers.
Study Question 4: How are organizational designs changing the workplace?
Organizational design Choosing and implementing structures the organization’s mission and objectives.
A problem-solving activity that should be approached from a contingency perspective.
Study Question 4: How are organizational designs changing the workplace?
Bureaucracy A form of organization based on logic, order, and the legitimate use of formal authority. Bureaucratic designs feature … Clear-cut division of labor.
Strict hierarchy of authority. Formal rules and procedures. Promotion based on competency.
Study Question 4: How are organizational designs changing the workplace?
Contingency perspective on bureaucracy asks the questions:
When is a bureaucratic form a good choice for an organization? at al t erna ves ex i s t wh en i t i s no t a goo d choice?
Environment determines the answers to these questions.
A mechanistic design works in a stable environment
An organic design works in a rapidly changing and uncertain environment.
Study Question 4: How are organizational designs changing the workplace?
Mechanistic Designs
Predictable goals Centralized authority Many rules and procedures Narrow spans of control Specialized tasks Few teams and task forces Formal and impersonal means of coordination
Organic Designs
Adaptable goals Decentralized authority Few rules and proced ures Wide spans of control Shared tasks Many teams and task forces Informal and personal means of coordination
Figure 10.8 A continuum of organizational design alternatives: from bureaucratic to adaptive organizations.
Study Question 4: How are organizational designs changing the workplace?
Basics of subsystem design Subsystem
A department or work unit headed by a m a n a g ee rr . . Operates as a smaller part of the larger organization.
Ideally, each subsystem supports other subsystems, working toward interests of entire organization.
Study Question 4: How are organizational designs changing the workplace?
Lawrence and Lorsch’s findings on subsystems design … The total system structures of s u c c e s s f u l firms f i r m s match m a t c h tthe h e cchallenges h a l l e n g e s successful o f ttheir h e i r eenvironments. n v i r o n m e n t s . of The subsystems structures of successful firms match the challenges of their respective subenvironments.
Subsystems in successful firms worked well with each other.
Study Question 4: How are organizational designs changing the workplace?
Managing subsystem differentiation: Differentiation is the degree of difference that exists among the internal components of an organization. C o m m o n ssources o u r c e s o of f s usubsystems b s y s t e m s Common differentiation:
Time orientation Objectives Interpersonal orientation Formal structure
Figure 10.9: Subsystems differentiation among research and
development, manufacturing, and sales
Study Question 4: How are organizational designs changing the workplace?
Managing subsystem integration:
Integration is the level of coordination achieved among an organization’s i n t e r n a l c o m p o n e n n tt ss . . Organization design paradox —
Increased differentiation creates the need for greater integration. Integration is more difficult to achieve as differentiation increases.
Study Question 4: How are organizational designs changing the workplace?
Mechanisms for achieving subsystem integration: Rules and procedures Hierarchical referral Planning P la n n in g Direct contact Liaison role Task forces Teams Matrix organizations
Study Question 4: How are organizational designs changing the workplace?
Contemporary organizing trends include: Fewer levels of management S h oor r t er e r c c h h a a i ns n s o o f f comman c o m m a n dd . . Less unity of command. Wider spans of control.
More delegation and empowerment. Decentralization with centralization. Reduced use of staff.
Study Question 4: How are organizational designs changing the workplace?
Shorter chains of command
The line of authority that vertically links all persons with successively higher Organizing trend:
Organizations are being “streamlined” by cutting unnecessary levels of management. Flatter structures are viewed as a competitive advantage.
Study Question 4: How are organizational designs changing the workplace?
Less unity of command
Each person in an organization should report to one and only one supervisor. Or g anizing trend: Organizations are using more crossfunctional teams, task forces, and horizontal structures. Organizations are becoming more customer conscious. Employees often find themselves working for more than one boss.
Study Question 4: How are organizational designs changing the workplace?
Wider spans of control
The number of persons directly reporting to a manager. Or g anizing trend:
Many organizations are shifting to wider spans of control as levels of management are eliminated. Managers have responsibility for a larger number of subordinates who operate with less direct supervision.
Study Question 4: How are organizational designs changing the workplace?
More delegation and empowerment
Delegation is the process of entrusting work to others by giving them the right The manager assigns responsibility, grants authority to act, and creates accountability. Authority should be commensurate with responsibility.
Study Question 4: How are organizational designs changing the workplace?
Guidelines for effective delegation:
Carefully choose the person to whom you delegate. Define the responsibility; make the assignment clear. Agree on performance objectives and standards. Agree on a performance timetable. ve au ori t y; a l l ow e o er person t o ac t independently. Show trust in the other person. Provide performance support. Give performance feedback Recognize and reinforce progress. Help when things go wrong. Don’t forget your accountability for performance results.
Study Question 4: How are organizational designs changing the workplace?
More delegation and empowerment A common management failure is unwillingness to delegate. De l egation l ea d s to empowerment. Organizing trend:
Managers are delegating more and finding more ways to empower people at all levels.
Study Question 4: How are organizational designs changing the workplace?
Decentralization with centralization Centralization is the concentration of authority for making most decisions at the top levels of the organization.
Decentralization is the dispersion of authority to make decisions throughout all levels of the organization.
Study Question 4: How are organizational designs changing the workplace?
Decentralization with centralization
Centralization and decentralization not an “either/or” choice. Or g anizing trend:
Delegation, empowerment, and horizontal structures contribute to more decentralization in organizations.
Advances in information technology allow for the retention of centralized control.
Study Question 4: How are organizational designs changing the workplace?
Reduced use of staff Specialized staff
People who perform a technical service or to other parts of the organization.
Personal staff
People working in “assistant-to” positions that provide special support to higherlevel managers.
Study Question 4: How are organizational designs changing the workplace?
Reduced use of staff (cont.)
Line and staff managers may disagree over staff authority.
Advisory Authority. F u n c t i o n a l a u t h o r i t y .
.
No one best solution for dividing line-staff responsibilities. Organizing trend:
Organizations are reducing staff size. Organizations are seeking increased operating efficiency by employing fewer staff personnel and smaller staff units.
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