1. Chapter 17 Organizational Goals and Structures The key is to match structures to goals

2. Copyright © 2008 John Wiley & Sons, Inc.17-2 Chapter 17 Study Questions What are the different types of organizational goals? What are the hierarchical attributes of organizations? How is work organized and coordinated? What are bureaucracies and what are the common forms?

3. Copyright © 2008 John Wiley & Sons, Inc.17-3 What are the different types of organizational goals? Societal goals –Reflect an organization’s intended contributions to the broader society –Enable organizations to make legitimate claims over resources, individuals, markets, and products

4. Copyright © 2008 John Wiley & Sons, Inc.17-4 What are the different types of organizational goals? Mission statement –A written statement of organizational purpose –A good mission statement identifies whom the firm will serve and how it will go about accomplishing its societal purpose

5. Copyright © 2008 John Wiley & Sons, Inc.17-5 What are the different types of organizational goals? Output goals –Define the type of business the organization is pursuing –Provide some substance to the more general aspects of mission statements

6. Copyright © 2008 John Wiley & Sons, Inc.17-6 What are the different types of organizational goals? Systems goals –Concerned with the conditions within the organization that are expected to increase the organization’s survival potential –Typical systems goals include growth, productivity, stability, harmony, flexibility, prestige, and human resource maintenance

7. Copyright © 2008 John Wiley & Sons, Inc.17-7 What are the different types of organizational goals? Well-defined systems goals can: –Focus managers’ attention on what needs to be done –Provide flexibility in devising ways to meet important targets –Be used to balance the demands, constraints, and opportunities facing the firm –Form a basis for dividing the work of the firm

8. Copyright © 2008 John Wiley & Sons, Inc.17-8 What are the hierarchical attributes of organizations? Successful organizations develop a structure consistent with the pattern of goals established by senior management The formal structure shows the planned configuration of positions, job duties, and the lines of authority among different parts of the organization

9. Copyright © 2008 John Wiley & Sons, Inc.17-9 What are the hierarchical attributes of organizations? Vertical specialization –A hierarchical division of labor that distributes formal authority and establishes where and how critical decisions are to be made –Creates a hierarchy of authority An arrangement of work positions in order of increasing authority.

10. Copyright © 2008 John Wiley & Sons, Inc.17-10 What are the hierarchical attributes of organizations? Organization charts –diagrams that depict the formal structures of organizations –Typically show the various positions, the position holders, and the lines of authority

11. Copyright © 2008 John Wiley & Sons, Inc.17-11 Figure 17.1

12. Copyright © 2008 John Wiley & Sons, Inc.17-12 What are the hierarchical attributes of organizations? Chain of command –A listing of who reports to whom up and down the organization Unity of command –Each person has only one boss and each unit one leader Span of control –The number individuals reporting to a supervisor

13. Copyright © 2008 John Wiley & Sons, Inc.17-13 What are the hierarchical attributes of organizations? Line units –Work groups that conduct the major business of the organization Staff units –Work groups that assist the line units by providing specialized expertise and services to the organization

14. Copyright © 2008 John Wiley & Sons, Inc.17-14 What are the hierarchical attributes of organizations? Control –The set of mechanisms used to keep actions or outputs within predetermined limits –Deals with: Setting standards Measuring results against standards Instituting corrective action

15. Copyright © 2008 John Wiley & Sons, Inc.17-15 What are the hierarchical attributes of organizations? Output controls –Focus on desired targets and allow managers to use their own methods to reach defined targets –Part of overall method of managing by exception

16. Copyright © 2008 John Wiley & Sons, Inc.17-16 What are the hierarchical attributes of organizations? Process controls –Attempt to specify the manner in which tasks are accomplished Types of process controls –Policies, procedures, and rules –Formalization and standardization –Total quality management controls

17. Copyright © 2008 John Wiley & Sons, Inc.17-17 What are the hierarchical attributes of organizations? Policy –Guideline for action that outlines important objectives and broadly indicates how activities are to be carried out Procedures –Indicate the best method for performing a task, show which aspects of a task are most important, or outline how an individual is to be rewarded

18. Copyright © 2008 John Wiley & Sons, Inc.17-18 What are the hierarchical attributes of organizations? Rules –Describe in detail how a task or a series of tasks is to be performed, or indicate what cannot be done

19. Copyright © 2008 John Wiley & Sons, Inc.17-19 What are the hierarchical attributes of organizations? Formalization –The written documentation of policies, procedures, and rules to guide behavior and decision making Standardization –The degree to which the range of allowable actions in a job or series of jobs is limited so that actions are performed in a uniform manner

20. Copyright © 2008 John Wiley & Sons, Inc.17-20 What are the hierarchical attributes of organizations? Total Quality Management –process approach to continual improvement based on statistical analyses of the firm’s operations –Deming’s 14 points

21. Copyright © 2008 John Wiley & Sons, Inc.17-21 What are the hierarchical attributes of organizations? Centralization –Degree to which the authority to make decisions is restricted to higher levels of management Decentralization –Degree to which the authority to make decisions is given to lower levels in an organization’s hierarchy

22. Copyright © 2008 John Wiley & Sons, Inc.17-22 What are the hierarchical attributes of organizations? Benefits of decentralization –Higher subordinate satisfaction –Quicker response to a series of unrelated problems –Assists in on-the-job training of subordinates for higher-level positions –Encourages participation in decision making

23. Copyright © 2008 John Wiley & Sons, Inc.17-23 How is work organized and coordinated? Horizontal specialization –A division of labor that establishes specific work units or groups within an organization –Often referred to as departmentation

24. Copyright © 2008 John Wiley & Sons, Inc.17-24 How is work organized and coordinated? Functional departmentation –grouping individuals by skill, knowledge, and action

25. Copyright © 2008 John Wiley & Sons, Inc.17-25 Figure 17.2

26. Copyright © 2008 John Wiley & Sons, Inc.17-26 How is work organized and coordinated? Divisional departments –individual and departments are grouped by products, territories, services, clients, or legal entities

27. Copyright © 2008 John Wiley & Sons, Inc.17-27 Figure 17.3

28. Copyright © 2008 John Wiley & Sons, Inc.17-28 How is work organized and coordinated? Matrix departmentation –uses both the functional and divisional forms simultaneously

29. Copyright © 2008 John Wiley & Sons, Inc.17-29 Figure 17.4

30. Copyright © 2008 John Wiley & Sons, Inc.17-30 How is work organized and coordinated? Coordination –The set of mechanisms that an organization uses to link the actions of its units into a consistent pattern

31. Copyright © 2008 John Wiley & Sons, Inc.17-31 How is work organized and coordinated? Personal methods of coordination –Produce synergy by promoting dialogue, discussion, innovation, creativity, and learning, both within and across units –Common personal methods of coordination are direct contact between and among organizational members and committee memberships

32. Copyright © 2008 John Wiley & Sons, Inc.17-32 How is work organized and coordinated? Impersonal methods of coordination –Produce synergy by stressing consistency and standardization so that individual pieces fit together –Contemporary use of matrix departmentation and management information systems for coordination

33. Copyright © 2008 John Wiley & Sons, Inc.17-33 What are bureaucracies and what are the common forms? Bureaucracy –Form of organization that emphasizes legal authority, logic, and order –Relies on a division of labor, hierarchical control, promotion by merit with career opportunities for employees, and administration by rule

34. Copyright © 2008 John Wiley & Sons, Inc.17-34 What are bureaucracies and what are the common forms? Mechanistic type –Emphasizes vertical specialization and control –Stresses rules, policies, and procedures; specifies techniques for decision making; and use well-documented control systems

35. Copyright © 2008 John Wiley & Sons, Inc.17-35 What are bureaucracies and what are the common forms? Benefits of the mechanistic type –Efficiency. Limitations of the mechanistic type –Employees dislike rigid designs, which makes work motivation problematic –Unions may further solidify rigid designs. –Key employees may leave –Hinders organization’s capacity to adjust to subtle environmental changes or new technologies

36. Copyright © 2008 John Wiley & Sons, Inc.17-36 What are bureaucracies and what are the common forms? Organic type –Emphasizes horizontal specialization –Procedures are minimal, and those that do exist are not highly formalized

37. Copyright © 2008 John Wiley & Sons, Inc.17-37 What are bureaucracies and what are the common forms? Benefits of the organic type –Good for problem solving and serving individual customer needs –Centralized direction by senior management is less intense –Good at detecting external changes and adjusting to new technologies

38. Copyright © 2008 John Wiley & Sons, Inc.17-38 What are bureaucracies and what are the common forms? Limitations of the organic type –Less efficient than mechanistic type –Restricted capacity to respond to central management direction

39. Copyright © 2008 John Wiley & Sons, Inc.17-39 What are bureaucracies and what are the common forms? Common types of hybrid structures –Divisional firm Composed of quasi-independent divisions so that different divisions can be more or less organic or mechanistic –Conglomerate A single corporation that contains a number of unrelated businesses