Professional Documents
Culture Documents
tenth edition
Stephen P. Robbins
Mary Coulter
Chapter
Learning Outcomes
Follow this Learning Outline as you read and study this chapter. 9.1 Defining Organizational Structure
Discuss the traditional and contemporary views of work specialization, chain of command, and span of control.
Learning Outcomes
9.2 Mechanistic and Organic Structures
Contrast mechanistic and organic organizations.
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Summary
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Compensation Policies
Implementing Strategy Through Organizational Structure, Control, and Culture Organizational structure
Assigns employees to specific value creation tasks and roles and specifies how those are linked to increase efficiency, quality, innovation, and responsiveness to customers To coordinate and integrate the efforts of all employees
12 - 5
Organizational culture
The collection of values, norms, beliefs, and attitudes shared within an organizations and that control interactions within and outside the organization
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Ford Case
1960-International growth USA/Europe.
Geographical division to take care of significant
differences between US (large cars) and European customers (small / fuel efficient). 1970 entry of Japanese low cost fuel efficient cars. Geographical structure led to duplication of efforts. US and Europe became silo units no co-ordination. 1990-Product oriented small, mid size, luxury, sports, commercial trucks global product teams. Common vehicle platforms, CAD/Cam, Computer integrated manufacturing supported by regional management teams
11-7 McGraw-Hill/Irwin 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Organizational Structure
The formal arrangement of jobs within an organization.
Organizational Design
A process involving decisions about six key elements:
Work specialization Departmentalization Chain of command Span of control Centralization and decentralization Formalization
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Exhibit 91 Purposes of Organizing Divides work to be done into specific jobs and departments.
Organizational Structure
Work Specialization
The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person. Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.
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Departmentalization by Type
Functional
Grouping jobs by functions performed
Process
Grouping jobs on the basis of product or customer flow
Product
Grouping jobs by product line
Customer
Grouping jobs by type of customer and needs
Geographical
Grouping jobs on the basis of territory or geography
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Functional Structure
Strengths Small- to medium-sized firms with limited product diversification Specialization of functional knowledge Less duplication of functional resources Facilitates coordination within functional areas Weaknesses
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Geographical/Regional Structure
Strengths: Facilitates local responsiveness Develops in-depth knowledge of specific regions/countries Creates accountability by region Facilitates cross-functional coordination within regions Weaknesses:
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Product Structure
Strengths More focus on products and customers Easier to evaluate performance of the product Weaknesses
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+ More efficient flow of work activities Can only be used with certain types of products
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Responsibility
The obligation or expectation to perform.
Unity of Command
The concept that a person should have one boss and should report only to that person.
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Skills and abilities of the manager Employee characteristics Characteristics of the work being done Similarity of tasks Complexity of tasks Physical proximity of subordinates Standardization of tasks Sophistication of the organizations information system Strength of the organizations culture Preferred style of the manager
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Organizations in which top managers make all the decisions and lower-level employees simply carry out those orders.
Decentralization
Organizations in which decision making is pushed down to the managers who are closest to the action.
Employee Empowerment
Increasing the decision-making authority (power) of employees.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 924
More Centralization
Environment is stable. Lower-level managers are not as capable or experienced at making decisions as upper-level managers. Lower-level managers do not want to have a say in decisions. Decisions are relatively minor. Organization is facing a crisis or the risk of company failure. Company is large. Effective implementation of company strategies depends on managers retaining say over what happens.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 925
Exhibit 94 (contd) Factors that Influence the Amount of Centralization and Decentralization
More Decentralization
Environment is complex, uncertain.
Lower-level managers are capable and experienced at making decisions. Lower-level managers want a voice in decisions. Decisions are significant. Corporate culture is open to allowing managers to have a say in what happens. Company is geographically dispersed. Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 926
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High specialization Rigid departmentalization Clear chain of command Narrow spans of control Centralization High formalization
Cross-functional teams Cross-hierarchical teams Free flow of information Wide spans of control Decentralization Low formalization
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Contingency Factors
Structural decisions are influenced by:
Overall strategy of the organization
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Pursuing competitive advantage through meaningful and unique innovations favors an organic structuring.
Cost minimization
Focusing on tightly controlling costs requires a mechanistic structure for the organization.
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Unit production of single units or small batches Mass production of large batches of output Process production in continuous process of outputs
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Functional structure
Departmentalization by function Operations, finance, marketing, human resources, and product research and development Composed of separate business units or divisions with limited autonomy under the coordination and control the parent corporation.
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Divisional structure
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The entire organization is made up of work groups or selfmanaged teams of empowered employees.
Specialists from different functional departments are assigned to work on projects led by project managers. Matrix and project participants have two managers. In project structures, employees work continuously on projects; moving on to another project as each project is completed.
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Disadvantages:
Matrix-Project Structure
What it is: A structure that assigns specialists from different functional areas to work on projects but who return to their areas when the project is completed. Project is a structure in which employees continuously work on projects. As one project is completed, employees move on to the next project. Fluid and flexible design that can respond to environmental changes. Faster decision making. Complexity of assigning people to projects. Task and personality conflicts.
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Advantages: Disadvantages:
Advantages: Disadvantages:
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BOUNDARYLESS ORGANIZATION
An open, anti-parochial environment (not close minded or narrow), friendly towards the seeking and sharing of new ideas, regardless of their origin.
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Matrix Organization
Matrix Organization is the combining of functional and project or product patterns of departmentation in the same organization structure. Pg 169
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Matrix Organization
Matrix Structure
CEO
Health NA
Beauty
Cleaning
Food
AP EMEA LA
Adapted from Exhibit 7.11
Adapted from Exhibit 7.11: Matrix Structure 2008 Prentice-Hall Business Publishing
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Matrix Structure
Strengths Information flow Decision quality Suited to a changing and complicated business environment Flexible use of human resources Weaknesses
Diffused accountability
Conflicts between differing perspectives and objectives
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4.
5. 6. 7. 8.
Define the objectives of the project or task Clarify the roles, authority, and responsibilities of managers and team members Ensure that influence is based on knowledge and information, rather than on rank Balance the power of functional and project managers Select an experienced manager for the project who can provide leadership Undertake organization and team development Install appropriate cost, time, and quality controls that report deviations from standards in a timely manner Reward project managers and team members fairly
An flexible and unstructured organizational design that is intended to break down external barriers between the organization and its customers and suppliers.
Removes internal (horizontal) boundaries:
Eliminates external boundaries: Uses virtual, network, and modular organizational structures to get closer to stakeholders.
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Network Organization
A small core organization that outsources its major business functions (e.g., manufacturing) in order to concentrate on what it does best.
Modular Organization
A manufacturing organization that uses outside suppliers to provide product components for its final assembly operations.
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An open team-based organization design that empowers employees Extensive and open information sharing Leadership that provides a shared vision of the organizations future.
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Multidivisional Structure
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Terms to Know
organizing organizational structure organizational chart organizational design work specialization departmentalization cross-functional teams chain of command authority responsibility unity of command span of control centralization decentralization employee empowerment formalization mechanistic organization organic organization unit production mass production process production simple structure functional structure divisional structure team structure matrix structure project structure boundaryless organization virtual organization network organization learning organization
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