PowerPoint Presentation

to Accompany
Management, 9/e
John R. Schermerhorn, Jr.

Chapter 10:
Organizing Structures and Designs

Prepared by: Jim LoPresti

University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Planning Ahead — Chapter 10 Study Questions

What is organizing as a
management function?

What are the traditional types of
organization structures?

What are the newer types of
organization structures?

How are organizational designs
changing the workplace?

Management 9/e - Chapter 10 2

Study Question 1: What is organizing as a
management function?

Organizing and organization structure

 Organizing
The process of arranging people and other
resources to work together to accomplish a
goal.
 Organization structure
 The system of tasks, workflows, reporting
relationships, and communication channels
that link together diverse individuals and
groups.

Management 9/e - Chapter 10 3

Figure 10.1 Organizing viewed in relationship with
the other management functions.

Management 9/e - Chapter 10 4

 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
arrangement of work positions within 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.

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Study Question 1: What is organizing as a
management function?

Informal structures …
 A “shadow” organization made up of the
unofficial, but often critical, working
relationships between organization members.
 Potential advantages of informal structures:
 Helping people accomplish their work.
 Overcoming limits of formal structure.
 Gaining access to interpersonal networks.
 Informal learning.

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 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
organization.
 Susceptibility to rumor.
 May carry inaccurate information.
 May breed resistance to change.
 Diversion of work efforts from important
objectives.
 Feeling of alienation by outsiders.
Management 9/e - Chapter 10 7
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.

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Figure 10.2 Functional structures in a business, branch bank,
and community hospital.

Management 9/e - Chapter 10 9

Study Question 2: What are the traditional types of
organization structures?

Potential advantages of functional

structures:
 Economies of scale.
 Task assignments consistent with
expertise and training.
 High-quality technical problem solving,
 In-depth training and skill
development.
 Clear career paths within functions.

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Study Question 2: What are the traditional types of
organization structures?

Potential disadvantages of
functional structures:
 Difficulties in pinpointing
responsibilities.
 Functional chimneys problem.
 Sense of cooperation and common
purpose break down.
 Narrow view of performance objectives.
 Excessive upward referral of decisions.

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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
similar customers, and/or are located
in the same area or geographical
region.
 Common in complex organizations.
 Avoid problems associated with
functional structures.

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Figure 10.3 Divisional structures based on product,
geography, customer, and process.

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Study Question 2: What are the traditional types of
organization structures?

Potential advantages of divisional

structures:
 More flexibility in responding to
environmental changes.
 Improved coordination.
 Clear points of responsibility.
 Expertise focused on specific
customers, products, and regions.
 Greater ease in restructuring.

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Study Question 2: What are the traditional types of
organization structures?

Potential disadvantages of divisional

structures:
 Duplication of resources and efforts
across divisions.
 Competition and poor coordination
across divisions.
 Emphasis on divisional goals at
expense of organizational goals.

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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
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.
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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

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Figure 10.4 Matrix structure in a small multi-project
business firm.

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Study Question 2: What are the traditional types of
organization structures?

Potential advantages of matrix

structures:
 Better cooperation across functions.
 Improved decision making.
 Increased flexibility in restructuring.
 Better customer service.
 Better performance accountability.
 Improved strategic management.

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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.
Management 9/e - Chapter 10 20
 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.

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 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.

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Figure 10.5 How a team structure uses cross-functional
teams for improved lateral relations.

Management 9/e - Chapter 10 23

Study Question 3: What are the newer types of
organization structures?

Potential advantages of team

structures:
 Eliminates difficulties with
communication and decision making.
 Eliminates barriers between operating
departments.
 Improved morale.
 Greater sense of involvement and
identification.
 Increased enthusiasm for work.
 Improved quality and speed of decision
making.
Management 9/e - Chapter 10 24
Study Question 3: What are the newer types of
organization structures?

Potential disadvantages of team

structures:
 Conflicting loyalties among members.
 Excessive time spent in meetings.
 Effective use of time depends on
quality of interpersonal relations, group
dynamics, and team management.

Management 9/e - Chapter 10 25

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
contractors and suppliers of essential
services.
 Own only core components and use
strategic alliances or outsourcing to
provide other components.

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Figure 10.6 A network structure for a Web-based
retail business.

Management 9/e - Chapter 10 27

 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.

Management 9/e - Chapter 10 28

Study Question 3: What are the newer types of
organization structures?

Potential disadvantages of network

structures:
 Control and coordination problems may
arise from network complexity.
 Potential loss of control over
outsourced activities.
 Potential lack of loyalty among
infrequently used contractors.
 Excessively aggressive outsourcing can
be dangerous.
Management 9/e - Chapter 10 29
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.

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Study Question 3: What are the newer types of
organization structures?

Boundaryless organizations (cont.)

 Encourage creativity, quality, timeliness,
flexibility, and efficiency.
 Knowledge sharing is both a goal and essential
component.
 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.

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Figure 10.7 The boundaryless organization
eliminates internal and external barriers.

Management 9/e - Chapter 10 32

Study Question 4: How are organizational designs
changing the workplace?

Organizational design
 Choosing and implementing structures
that best arrange resources to serve
the organization’s mission and
objectives.
 A problem-solving activity that should
be approached from a contingency
perspective.
Management 9/e - Chapter 10 33
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.

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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?
 What alternatives exist when it is not a good
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.

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Study Question 4: How are organizational designs
changing the workplace?

Mechanistic
Organic Designs

Designs  Adaptable goals
 Predictable goals  Decentralized
 Centralized authority
authority  Few rules and
 Many rules and procedures
procedures  Wide spans of
 Narrow spans of control
control  Shared tasks
 Specialized tasks  Many teams and
 Few teams and task forces
task forces  Informal and
 Formal and personal means of
impersonal means coordination
of coordination
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Figure 10.8 A continuum of organizational design
alternatives: from bureaucratic to adaptive
organizations.

Management 9/e - Chapter 11 37

Study Question 4: How are organizational designs
changing the workplace?

Basics of subsystem design

 Subsystem
 A department or work unit headed by a
manager.
 Operates as a smaller part of the larger
organization.
 Ideally, each subsystem supports other
subsystems, working toward interests
of entire organization.

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Study Question 4: How are organizational designs
changing the workplace?

Lawrence and Lorsch’s findings on

subsystems design …
 The total system structures of
successful firms match the challenges
of their environments.
 The subsystems structures of
successful firms match the challenges
of their respective subenvironments.
 Subsystems in successful firms worked
well with each other.

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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.
 Common sources of subsystems
differentiation:
 Time orientation
 Objectives

 Interpersonal orientation

 Formal structure

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Figure 10.9: Subsystems differentiation among research and
development, manufacturing, and sales

Management 9/e - Chapter 10 41

Study Question 4: How are organizational designs
changing the workplace?

Managing subsystem integration:

 Integration is the level of coordination
achieved among an organization’s
internal components.
 Organization design paradox —
 Increased differentiation creates the need
for greater integration.
 Integration is more difficult to achieve as
differentiation increases.

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Study Question 4: How are organizational designs
changing the workplace?

Mechanisms for achieving

subsystem integration:
 Rules and procedures
 Hierarchical referral
 Planning
 Direct contact
 Liaison role
 Task forces
 Teams
 Matrix organizations

Management 9/e - Chapter 10 43

Study Question 4: How are organizational designs
changing the workplace?

Contemporary organizing trends

include:
 Fewer levels of management
 Shorter chains of command.
 Less unity of command.
 Wider spans of control.
 More delegation and empowerment.
 Decentralization with centralization.
 Reduced use of staff.

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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
levels of management.
 Organizing trend:
 Organizations are being “streamlined” by
cutting unnecessary levels of
management.
 Flatter structures are viewed as a
competitive advantage.

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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.
 Organizing trend:
 Organizations are using more cross-
functional teams, task forces, and
horizontal structures.
 Organizations are becoming more
customer conscious.
 Employees often find themselves working
for more than one boss.

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Study Question 4: How are organizational designs
changing the workplace?

Wider spans of control

 The number of persons directly
reporting to a manager.
 Organizing 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.

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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
to make decisions and take action.
 The manager assigns responsibility,
grants authority to act, and creates
accountability.
 Authority should be commensurate
with responsibility.

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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.
 Give authority; allow the other person to act
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.

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Study Question 4: How are organizational designs
changing the workplace?

More delegation and empowerment

 A common management failure is
unwillingness to delegate.
 Delegation leads to empowerment.
 Organizing trend:
 Managers are delegating more and finding
more ways to empower people at all
levels.

Management 9/e - Chapter 10 50

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.

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Study Question 4: How are organizational designs
changing the workplace?

Decentralization with centralization

 Centralization and decentralization not
an “either/or” choice.
 Organizing trend:
 Delegation, empowerment, and
horizontal structures contribute to
more decentralization in
organizations.
 Advances in information technology
allow for the retention of
centralized control.
Management 9/e - Chapter 10 52
Study Question 4: How are organizational designs
changing the workplace?

Reduced use of staff

 Specialized staff
 People who perform a technical service or
provide special problem-solving expertise
to other parts of the organization.
 Personal staff
 People working in “assistant-to” positions
that provide special support to higher-
level managers.

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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.

 Functional authority.
 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.
Management 9/e - Chapter 10 54
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