Fundamental of Management Chap 9

PowerPoint Presentation
to Accompany
Management, 10/e
John R. Schermerhorn, Jr.
Chapter 9:
Fundamentals of Organizing
Prepared by: Jim LoPresti

University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Planning Ahead Chapter 9 Study Questions
What is organizing as a management

function?
What are the traditional organization
structures?
What are the newer types of
organization structures?
How are organizational designs
changing the workplace?
Management 10/e - Chapter 9
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.
Figure 9.1 Organizing viewed in relationship with the

other management functions.

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.

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.

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.

Study Question 2: What are the traditional types of

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 9.2 Functional structures in a business, branch bank,

and community hospital.

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.
10

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.
11

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.
12
Figure 9.3 Divisional structures based on product,

geography, customer, and process.
13

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.
14

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.
15

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.
16

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
17
Figure 9.4 Matrix structure in a small multi-project

business firm.
18

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.
19

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.
20
Study Question 3: What are the newer types of

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 composed of

members from different functional departments.
Project teams are convened for a specific task or

project and disbanded once completed.
21
Figure 9.5 How a team structure uses cross-functional teams

for improved lateral relations.
22

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.
23

Potential disadvantages of team

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

dynamics, and team management.
24

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.
25
Figure 9.6 A network structure for a Web-based

retail business.
26

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.

27

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.
28

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.
29

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.
30
Figure 9.7 The boundaryless organization eliminates

internal and external barriers.
31
Study Question 4: How are organizational designs

Organizational design
Choosing
and implementing structures
that best arrange resources to serve the

organizations mission and objectives.
A
problem-solving activity that should be
approached from a contingency

perspective.
32

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.
33

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.
34

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
procedures
Wide spans of control
Shared tasks
Many teams and task
forces
Informal and
personal means of
coordination
35
Figure 9.8 A continuum of organizational design

alternatives: from bureaucratic to adaptive
organizations.
36

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.
37

Lawrence and Lorschs 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.
38

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
39
Figure 9.9: Subsystems differentiation among research and

development, manufacturing, and sales
40

Managing subsystem integration:

Integration
is the level of coordination

achieved among an organizations
internal components.
Organization
design paradox
Increased differentiation creates the need

for greater integration.
Integration is more difficult to achieve as

differentiation increases.
41

Mechanisms for achieving

subsystem integration:
Rules and procedures

Hierarchical referral
Planning
Direct contact
Liaison role
Task forces
Teams
Matrix organizations
42

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.
43

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.
44

Less unity of command

Each
person in an organization should

report to one and only one supervisor.
Organizing 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.
45

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.
46

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.
47

Three Steps in Delegation:
Assign responsibility explain task

and expectations
Grant authority allow others to

make decisions and act
Create accountability require

others to report back on results
48

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.
49

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.
50

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.
51

Reduced use of staff

Specialized
People who perform a technical service or

provide special problem-solving expertise
to other parts of the organization.
Personal
staff
staff
People working in assistant-to positions

that provide special support to higherlevel managers.
52

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.
53
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PowerPoint Presentation

Prepared by: Jim LoPresti

Planning Ahead Chapter 9 Study Questions

What is organizing as a management

Management 10/e - Chapter 9

Study Question 1: What is organizing as a

Organizing and organization structure

The process of arranging people and other

The system of tasks, workflows, reporting

Figure 9.1 Organizing viewed in relationship with the

Management 10/e - Chapter 9

Study Question 1: What is organizing as a

The structure of the organization in its official

Study Question 1: What is organizing as a

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.

Management 10/e - Chapter 9

Study Question 1: What is organizing as a

Informal structures (cont.)

Potential disadvantages of informal structures:

May work against best interests of entire

May carry inaccurate information.

May breed resistance to change.

Diversion of work efforts from important

Feeling of alienation by outsiders.

Study Question 2: What are the traditional types of

with similar skills and

Management 10/e - Chapter 9

Figure 9.2 Functional structures in a business, branch bank,

Management 10/e - Chapter 9

Study Question 2: What are the traditional types of

Potential advantages of functional

Study Question 2: What are the traditional types of

Study Question 2: What are the traditional types of

together people who work on the

Management 10/e - Chapter 9

Figure 9.3 Divisional structures based on product,

Management 10/e - Chapter 9

Study Question 2: What are the traditional types of

Potential advantages of divisional

Management 10/e - Chapter 9

Study Question 2: What are the traditional types of

Potential disadvantages of divisional

of resources and efforts

Management 10/e - Chapter 9

Study Question 2: What are the traditional types of

Types of divisional structures and

Product structures focus on a single product or

Geographical structures focus on the same

Customer structures focus on the same

Process structures focus on the same processes.

Management 10/e - Chapter 9

Study Question 2: What are the traditional types of

Combines functional and divisional structures

Figure 9.4 Matrix structure in a small multi-project

Management 10/e - Chapter 9

Study Question 2: What are the traditional types of

Potential advantages of matrix

Better cooperation across functions.

Improved decision making.