Contemprorary Management

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Managing OrganizationalStructure and Culture

McGraw-Hill/IrwinContemporary Management, 5/e Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

chapter ten


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Learning Objectives

Identify the factors that influencemanagers choice of an organizationalstructure.

Explain how managers group tasks into jobs that are motivating and satisfying foremployees.

Describe the types of organizationalstructures managers can design, andexplain why they choose one structureover another.


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Organizational Structure

Organizational Architecture The organizational structure, control

systems, culture, and human resourcemanagement systems that togetherdetermine howefficiently andeffectivelyorganizationalresources are used.


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Designing Organizational Structure

Organizational design The process by which managers create a

specific type of organizational structure andculture so that a company can operate inthe most efficient and effective way


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Factors Affecting Organizational Structure

Figure 10.1


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The Organizational Environment

The Organizational Environment The quicker the environment changes, the

more problems face managers. Structure must be more flexible (i.e.,

decentralized authority) when environmentalchange is rapid.


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Strategy Different strategies require the use of

different structures. A differentiation strategy needs a flexible

structure, low cost may need a moreformal structure.

Increased vertical integration ordiversification also requires a moreflexible structure.


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Technology The combination of skills, knowledge, tools,

equipment, computers and machines usedin the organization.

More complex technology makes it harderfor managers to

regulate theorganization.


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Human Resources Highly skilled workers whose jobs require

working in teams usually need a moreflexible structure.

Higher skilled workers (e.g., CPAs anddoctors) often have internalized professional

norms and values.


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Human Resources Managers must take into account all four

factors (environment, strategy, technologyand human resources) when designing thestructure of the organization.


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Job Design

Job Design The process by which managers decide

how to divide tasks into specific jobs. The appropriate division of labor results in

an effective and efficient workforce.


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Question?

What is the process of reducing the taskseach worker performs?

A. Job simplificationB. Job enlargementC. Job enrichment

D. Job enhancement


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Job Design

Job Simplification The process of reducing the tasks each

worker performs. Too much simplification and boredom

results.


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Job Design

Job Enlargement Increasing the number of different tasks in a

given job by changing the division of labor

Job Enrichment Increasing the degree of responsibility a

worker has over a job


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Job Enrichment

1. Empowering workers to experiment tofind new or better ways of doing the job

2. Encouraging workers to develop newskills

3. Allowing workers to decide how to dothe work

4. Allowing workers to monitor andmeasure their own performance


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The Job Characteristics Model

Figure 10.2

Source: Adapted from J. R. Hackman and G. R. Oldham,Work Redesign (Reading, MA: Addison-Wesley, 1980).


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Job Characteristics Model

Job Characteristic

Skill variety Employee uses a wide range of skills.

Task identity Worker is involved in all tasks of the jobfrom beginning to end of the productionprocess

Task significance Worker feels the task is meaningful toorganization.

Autonomy Employee has freedom to schedule tasks

and carry them out.Feedback Worker gets direct information about how

well the job is done.


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Grouping Jobs into Functions

Function Group of people, working together, who

possess similar skills or use the same kindof knowledge, tools, or techniques toperform their jobs


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Functional Structure

Advantages Encourages learning from others doing

similar jobs. Easy for managers to monitor and evaluate

workers. Allows managers to create the set of

functions they need in order to scan andmonitor the competitive environment


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Functional Structure

Disadvantages Difficult for departments to communicate

with others. Preoccupation with own department and

losing sight of organizational goals.


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10-27Figure10.3

TheFunctional

Structure ofPier 1

Imports


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Divisional Structures

Divisional Structure Managers create a series of business units

to produce a specific kind of product for aspecific kind of customer


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10-29Figure 10.4

Product,

Market, andGeographicStructures


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Types of Divisional Structures

Product Structure Managers place each distinct product line or

business in its own self-contained division Divisional managers have the responsibility

for devising an appropriate business-levelstrategy to allow the division to competeeffectively in its industry


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Product Structure

Allows functional managers to specializein one product area

Division managers become experts intheir area

Removes need for direct supervision ofdivision by corporate managers

Divisional management improves theuse of resources


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Geographic Structure Divisions are broken down by geographic

location

Global geographic structure Managers locate different divisions in each of

the world regions where the organization

operates. Generally, occurs when managers are

pursuing a multi-domestic strategy


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Global Product Structure Each product division takes responsibility

for deciding where to manufacture its

products and how to market them in foreigncountries worldwide


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Matrix Design Structure

Matrix Structure An organizational structure that

simultaneously groups people and

resources by function and product. Results in a complex network of superior-subordinate reporting relationships.

The structure is very flexible and can respondrapidly to the need for change.

Each employee has two bosses (functionalmanager and product manager) and possiblycannot satisfy both.


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Matrix Structure

Figure 10.6


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Discussion Question?

Which is the most effective and efficientorganizational structure?

A. Matrix structureB. Divisional structureC. Market structure

D. Geographic structure


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Product Team Design Structure

Product Team Structure Does away with dual reporting relationships

and two-boss managers Functional employees are permanently

assigned to a cross-functional team that isempowered to bring a new or redesigned

product to work


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Product Team Design Structure

Product Team Structure Cross-functional team is composed of a

group of managers from differentdepartments working together to performorganizational tasks.


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Product Team Structure

Figure 10.6


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Hybrid Structures

Hybrid Structure The structure of a large organization that

has many divisions and simultaneously

uses many different organizationalstructures


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Federateds Hybrid Structure

Figure 10.7


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Question?

What is the power vested in a manager tomake decisions?

A. PowerB. InfluenceC. Authority

D. Control

C di ti F ti


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Coordinating Functions:Allocating Authority

Authority The power vested in a manager to make

decisions and use resources to achieve

organizational goals by virtue of his positionin an organization


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Allocating Authority

Line Manager Someone in the direct line or chain of

command who has formal authority overpeople and resources

Staff Manager Managers who are functional-area

specialists that give advice to linemanagers.


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10-48Figure 10.8

TheHierarchyof Authorityand Spanof ControlatMcDonalds

Corporation


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Tall Organizations

Figure 10.9


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Tall and Flat Organizations

Flat structures have fewer levels andwide spans of control. Structure results in quick communications

but can lead to overworked managers.


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Flat Organizations

Figure 10.9


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Integrating Mechanisms

Figure 10.10


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Organizational Culture

Organizational culture shared set of beliefs, expectations, values,

and norms that influence how members of

an organization relate to one another andcooperate to achieve organizational goals


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Sources of an Organizations Culture

Figure 10.11

Characteristics of Organizational


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Characteristics of OrganizationalMembers

Ultimate source of organizational cultureis the people that make up theorganization

Members become similar over timewhich may hinder their ability to adaptand respond to changes in the

environment


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Organizational Ethics

Organizational Ethics moral values, beliefs, and rules that

establish the appropriate way for an

organization and its members to deal witheach other and people outside theorganization


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Employment Relationship

Human resource policies: Can influence how hard employees will

work to achieve the organizations goals,

How attached they will be to it Whether or not they will buy into its values

and norms


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Organizational Structure

In a flat, decentralized structure: people have more freedom to choose and

control their own activities

norms that focus on being creative andcourageous and taking risks appear

gives rise to a culture in which innovation

and flexibility are desired goals.

Strong, Adaptive Cultures Versus


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Strong, Adaptive Cultures VersusWeak, Inert Cultures

Adaptive cultures values and norms help an organization to

build momentum and to grow and change

as needed to achieveits goals and beeffective


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