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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.
Management 10/e - Chapter 9

Figure 9.1 Organizing viewed in relationship with the


other management functions.

Management 10/e - Chapter 9

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.
Management 10/e - Chapter 9

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.

Management 10/e - Chapter 9

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 10/e - Chapter 9

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.

Management 10/e - Chapter 9

Figure 9.2 Functional structures in a business, branch bank,


and community hospital.

Management 10/e - Chapter 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 9.3 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 9.4 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.

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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 composed of


members from different functional departments.

Project teams are convened for a specific task or


project and disbanded once completed.

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Figure 9.5 How a team structure uses cross-functional teams


for improved lateral relations.

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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.
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Study Question 3: What are the newer types of


organization structures?

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.
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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 9.6 A network structure for a Web-based


retail business.

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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.


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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.

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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 9.7 The boundaryless organization eliminates


internal and external barriers.

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Study Question 4: How are organizational designs


changing the workplace?

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.

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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
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

Management 10/e - Chapter 9

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

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Figure 9.8 A continuum of organizational design


alternatives: from bureaucratic to adaptive
organizations.

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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 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.
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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 9.9: Subsystems differentiation among research and


development, manufacturing, and sales

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Study Question 4: How are organizational designs


changing the workplace?

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.
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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

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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 crossfunctional 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?

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

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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.

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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.

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Study Question 4: How are organizational designs


changing the workplace?

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.

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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.

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