1. Managing Organizational Structure and Culture
chapter ten

2. Learning Objectives
Identify the factors that influence managers’ choice of an organizational structure.
Explain how managers group tasks into jobs that are motivating and satisfying for employees.
Describe the types of organizational structures managers can design, and explain why they choose one structure over another.
Explain why managers must coordinate jobs, functions, and divisions using the hierarchy of authority and integrating mechanisms
List the four sources of organizational culture, and explain why and how a company’s culture can lead to competitive advantage.

3. Organizational Structure
Organizational Architecture
The organizational structure, control systems, culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used. 3

4. Designing Organizational Structure
Organizing
The process by which managers establish working relationships among employees to achieve goals.
Organizational design
The process by which managers create a specific type of organizational structure and culture so that a company can operate in the most efficient and effective way 4

5. Designing Organizational Structure
formal system of task and reporting relationships that coordinates and motivates organizational members so they work together to achieve organizational goals.

6. Factors Affecting Organizational Structure
The Organizational Environment
The quicker the environment changes, the more problems face managers.
Structure must be more flexible (i.e., decentralized authority) when environmental change is rapid.
Strategy
Different strategies require the use of different structures.
A differentiation strategy needs a flexible structure, low cost may need a more formal structure.
Increased vertical integration or diversification also requires a more flexible structure.
Technology
The combination of skills, knowledge, tools, equipment, computers and machines used in the organization.
More complex technology makes it harder for managers to regulate the organization.
Technology can be measured by:
Task variety: the number of new problems a manager encounters.
Task analyzability: the availability of programmed solutions to a manager to solve problems.
Human Resources
Highly skilled workers whose jobs require working in teams usually need a more flexible structure.
Higher skilled workers (e.g., CPA’s and doctors) often have internalized professional norms and values.
Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization.
Figure 10.1 6

7. Designing Organizational Structure
Organizational design
The process by which managers create a specific type of organizational structure and culture so that a company can operate in the most efficient and effective way

8. Designing Organizational Structure
The way an organization’s structure works depends on the choices managers make about:
How to group tasks into individual jobs
How to group jobs into functions and divisions
How to allocate authority and coordinate functions and divisions

9. Grouping Tasks into Jobs: 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. 9

10. Job Design Job Simplification Job Enlargement Job Enrichment
The process of reducing the tasks each worker performs.
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
Job Simplification
The process of reducing the tasks each worker performs.
Too much simplification and boredom results. 10

11. Job Enrichment
Empowering workers to experiment to find new or better ways of doing the job
Encouraging workers to develop new skills
Allowing workers to decide how to do the work
Allowing workers to monitor and measure their own performance

12. The Job Characteristics Model
Skill variety
Employee uses a wide range of skills.
Task identity
Worker is involved in all tasks of the job from beginning to end of the production process
Task significance
Worker feels the task is meaningful to organization.
Autonomy
Employee has freedom to schedule tasks and carry them out.
Feedback
Worker gets direct information about how well the job is done.
Figure 10.2 12

13. Grouping Jobs into Functions
Functional Structure
An organizational structure composed of all the departments that an organization requires to produce its goods or services.
Function - Group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs 13

14. 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 and monitor the competitive environment

15. Example – A.C. Moore Arts & Crafts
A.C. Moore is organized with a functional structure
Examples of divisions are Marketing & Merchandising, Stores & Loss Prevention, Store Operations, Merchandise Administration, Real Estate, and Legal 15

16. Functional Structure Disadvantages
Difficult for departments to communicate with others.
Preoccupation with own department and losing sight of organizational goals.

17. Divisional Structures
An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer.
Product, market, geographic 17

18. Product, Market, and Geographic Structures
Figure 10.4

19. 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-level strategy to allow the division to compete effectively in its industry
Product structure
Allows functional managers to specialize in one product area
Division managers become experts in their area
Removes need for direct supervision of division by corporate managers
Divisional management improves the use of resources
Global Product Structure
Each product division takes responsibility for deciding where to manufacture its products and how to market them in foreign countries worldwide 19

20. Product Structure
Allows functional managers to specialize in one product area
Division managers become experts in their area
Removes need for direct supervision of division by corporate managers
Divisional management improves the use of resources

21. Types of Divisional Structures
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 21

22. Types of Divisional Structures
Market Structure
Groups divisions according to the particular kinds of customers they serve
Allows managers to be responsive to the needs of their customers and act flexibly in making decisions in response to customers’ changing needs 22

23. Matrix Design Structure
Matrix Structure
An organizational structure that simultaneously groups people and resources by function and product.
The structure is very flexible and can respond rapidly to the need for change.
Each employee has two bosses
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 respond rapidly to the need for change.
Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy both. 23

24. Matrix Structure
Figure 10.6

25. 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 is empowered to bring a new or redesigned product to work
Product Team Structure
Cross-functional team is composed of a group of managers from different departments working together to perform organizational tasks. 25

26. Product Team Structure
Cross-functional team
A group of managers brought together from different departments to perform organizational tasks.

27. Product Team Structure
Figure 10.6

28. Allocating Authority Authority
power to hold people accountable for their actions and to make decisions concerning the use of organizational resources.
Hierarchy of Authority
An organization’s chain of command, specifying the relative authority of each manager.
Span of Control: the number of subordinates who report directly to a manager 28

29. Allocating Authority Line Manager Staff Manager
Someone in the direct line or chain of command who has formal authority over people and resources
Staff Manager
Managers who are functional-area specialists that give advice to line managers.
Minimum Chain of Command
Top managers should always construct a hierarchy with the fewest levels of authority necessary to efficiently and effectively use organizational resources 29

30. Tall and Flat Organizations
Tall structures have many levels of authority and narrow spans of control.
As hierarchy levels increase, communication gets difficult creating delays in the time being taken to implement decisions.
Communications can also become distorted as it is repeated through the firm.
Can become expensive 30

31. Tall Organizations
Figure 10.9

32. Tall and Flat Organizations
Flat structures have fewer levels and wide spans of control.
Structure results in quick communications but can lead to overworked managers.
Figure 10.9

33. Centralization and Decentralization of Authority
Decentralizing authority
giving lower-level managers and non-managerial employees the right to make important decisions about how to use organizational resources
Disadvantages
Teams may begin to pursue their own goals at the expense of organizational goals
Can result in a lack of communication among divisions 33

34. Integrating Mechanisms
Organizing tools that managers can use to increase communication and
coordination among functions and divisions.
Figure 10.10

35. Sources of an Organization’s Culture
Organizational culture
shared set of beliefs, expectations, values, and norms that influence how members of an organization relate to one another and cooperate to achieve organizational goals
Ultimate source of organizational culture is the people that make up the organization
Members become similar over time which may hinder their ability to adapt and respond to changes in the environment
Organizational Ethics
moral values, beliefs, and rules that establish the appropriate way for an organization and its members to deal with each other and people outside the organization
Figure 10.11 35

36. Employment Relationship
Human resource policies:
Can influence how hard employees will work to achieve the organization’s goals,
How attached they will be to it
Whether or not they will buy into its values and norms

37. Organizational Structure
In a centralized organization:
people have little autonomy
norms that focus on being cautious, obeying authority, and respecting traditions emerge
predictability and stability are desired goals

38. Organizational Structure
In a flat, decentralized structure:
people have more freedom to choose and control their own activities
norms that focus on being creative and courageous and taking risks appear
gives rise to a culture in which innovation and flexibility are desired goals.

39. Strong, Adaptive Cultures Versus Weak, Inert Cultures
values and norms help an organization to build momentum and to grow and change as needed to achieve its goals and be effective
Inert cultures
Those that lead to values and norms that fail to motivate or inspire employees
Lead to stagnation and often failure over time

40. Video Case: Making Changes in New Orleans’ Most Troubled Schools
How would you rate teaching according to the five characteristics that determine how motivating a job is?
Does establishing organizational culture in a school present any different challenges than establishing culture in other types of organizations?
Making Changes in New Orleans’ Most Troubled Schools
Teaching Objective: To look at job motivation, organizational structure, and culture at a special type of organization, the public school
Summary: New Orleans public schools had a history of subpar performance when they were devastated by the hurricane and its aftermath. The destruction of the city’s educational infrastructure brought a chance for rebuilding. Superintendent Paul Vallas is trying to seize that chance with ambitious plans for the district’s high schools. To build a culture of excellence, plans include changes in leadership, personnel performance evaluations, a longer school day, increased discipline, rigorous academic standards, and even specialty schools for at-risk students.
Questions:
How would you rate teaching according to the five characteristics that determine how motivating a job is? What does the Rabouin High School situation show about the effect those in authority have on motivation and morale?
Teaching would rate high in all five characteristics: skill variety, task identity, task significance, autonomy, and feedback. A principal who does not enforce rules or policies, support teachers, and solve problems like scheduling of classes has devastating effects on teacher morale. As the first-year science teacher at Rabouin High School says, teachers there suffered for months. It was a refreshing change and a moral boost when the new principal proved that she meant what she said.
What types of organizational structures does the New Orleans Recovery School District illustrate? How do these structures impact the schools?
Like most school districts, the Recovery School District uses geographic structure and market structure. Besides old problems of poor performance and inefficient management, the schools face unique, severe problems because of their location—an area devastated by the hurricane and subsequent flooding. Establishing Booker T. Washington as a school serving only “over-age, underachieving” students is an example of market structure. That population presents many instructional and disciplinary challenges.
Does establishing organizational culture in a school present any different challenges than establishing culture in other types of organizations?
Besides management, faculty, and other staff members, schools have an additional group to share in the organizational culture—students. Unlike customers or clients of other organizations, students directly affect a high school’s culture, since their performance--measured in tests, graduation rates, and extracurricular activities—is used to measure teacher and administration performance. 40