Chapter 10 Structuring Organizations

10- 2 Management 1e Management 1e Management 1e - 2 Management 1e Learning Objectives  Explain how differentiation and integration define performance cultures  Describe how managers vertically organize processes and teams to centralize decision making  Describe how mangers horizontally organize processes and teams to distribute decision making throughout the organization  Show how managers combine vertical and horizontal approaches to organizational design in order to be more adaptive  Identify additional resources that contemporary managers use to increase organizational adaptability

10- 3 Management 1e Management 1e Management 1e The Basics (p. 256)  Hierarchy Vertically organized structure of power relationships, where the top level holds the most power and resources Every organization needs some type of structure in place to be successful Unites the different units of a company Brings units in tune with the company’s underlying principles, core purposes, goals, and objectives

10- 4 Management 1e Management 1e The Basics (cont.)  Hierarchy comes in many states Figure 10.1

10- 5 Management 1e Management 1e The Basics (cont.)  Designing performance cultures (p. 256) Through the creation of an organizational culture, managers can, consciously or unconsciously, design a performance culture Differentiation – process through which managers divide labor based on tasks and functions (p. 257) Integration – horizontal coordination between functions, departments, and organizational activities  Organizations must strike a balance between differentiation and integration

10- 6 Management 1e Management 1e The Basics (cont.)  Structure must be modified to adapt to changes in the internal and external environments Organic organization – highly adaptive structure defined by horizontal integration, distributed decision making, and employees with a high degree of generalization (p. 257) Span of control – the optimum number of direct reports that a person can manage effectively

10- 7 Management 1e Management 1e The Basics (cont.)  Specialization (p. 258) Form of differentiation Focusing a group or individual’s activities based on strengths, aptitudes, or skills  Coordination Synchronization of an organization’s functions to ensure efficient use of resources in pursuit of goals and objectives

10- 8 Management 1e Management 1e The Basics (cont.)  To give clarity to the integration process, managers should rely on: Standardization – performance context where policies and procedures seek to create uniform results (p. 258) Formalization – degree to which policies and procedures determine specific jobs and functions Delegation – when a manager grants power and authority

10- 9 Management 1e Management 1e Vertical Approach (p. 259)  Vertical organization structure Characterized by hierarchical authority and communication channels Authority – implicit and explicit power that a manager or employee has to fulfill an organizational function or role Chain of command – predefined structural order of authority that determines how decisions are made and communicated

Management 1e Management 1e Vertical Approach (cont.) Figure 10.2

Management 1e Management 1e Vertical Approach (cont.)  Corporate governance (p. 261) Compendium of polices intended to ensure transparency and fulfillment of duties to stakeholders  Broker Trusted intermediary that facilitates mutually-agreed upon outcomes for two or more parties  Organization chart Visual document that communicates how a company is organized

Management 1e Management 1e Vertical Approach (cont.)  Vertical model at work (p. 261) Network organization – a group of independent companies that organize themselves to appear as a larger entity (p. 262)  Changing organizational structure Unity-of-command principle – each employee reports to and is accountable to only one manager (p. 263)

Management 1e Horizontal Approach (p. 264)  Decentralized structure Relies on all employees to collect and communicate information in order to make decisions and recommend changes  Researching organizational structures Departmentalization – groups together processes and jobs based on functions, products or customers

Management 1e Horizontal Approach (cont.)  Functional organization (p. 265) Hierarchical structure where employees are managed through clear levels of authority Autonomy – level of individual discretion that an employee has to make decisions  Divisional organization Processes and jobs are grouped based on clearly defined market segments or geography  Matrix organization Facilitates horizontal integration and collaboration

Management 1e Beyond the Organization: Free Agents and Virtual Teams (p. 268)  Flexible work arrangements Free agents - independent workers that supply organizations with talent for projects or time-bound objectives Telecommuting - employee given flexibility in terms of work location and, often, work hours too Virtual team – group of employees who work across barriers consisting of time, distance, and organizational boundaries (p. 269)  Linked together by information and communication technologies

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