1. Organization and Teamwork
Business in Action
Eighth Edition
Chapter 8
Organization and Teamwork
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2. Learning Objectives (1 of 2)
8.1 Explain the major decisions needed to design an organization structure. 8.2 Define four major types of organization structures. 8.3 Explain how a team differs from a group, and describe the six most common forms of teams.

3. Learning Objectives (2 of 2)
8.4 Highlight the advantages and disadvantages of working in teams, and list the characteristics of effective teams. 8.5 Review the five stages of team development, and explain why conflict can arise in team settings. 8.6 Explain the concept of an unstructured organization, and identify the major benefits and challenges of taking this approach.

4. Designing an Effective Organization Structure (1 of 2)
A framework that enables managers to divide responsibilities, ensure employee accountability, and distribute the decision-making authority
Organization chart
A diagram that shows how employees and tasks are grouped and where the lines of communication and authority flow
A company’s organization structure has a dramatic influence on the way employees and managers make decisions, communicate, and accomplish important tasks. This structure helps the company achieve its goals by providing a framework for managers to divide responsibilities, effectively distribute the authority to make decisions, coordinate and control the organization’s work, and hold employees accountable for their work.
When managers design an organization’s structure, they use an organization chart to provide a visual representation of how employees and tasks are grouped and how the lines of communication and authority flow (shown in Exhibit 8.1 on the next slide). An organization chart depicts the official design for accomplishing tasks that lead to achieving the organization’s goals, a framework known as the formal organization.

5. Exhibit 8.1 Simplified Organization Chart
An organization chart portrays the division of activities and responsibilities across a company.

6. Designing an Effective Organization Structure (2 of 2)
Agile organization
A company whose structure, policies, and capabilities allow employees to respond quickly to customer needs and changes in the business environment
In the past, organizations were usually designed around management’s desire to control workers, with everything set up in a hierarchy. Today, however, the goal of many companies is an agile organization that allows employees to respond quickly to customer needs and changes in the business environment and to bring the best mix of talents and resources to every challenge.

7. Identifying Core Competencies
Activities that a company considers central and vital to its business
Core competencies are activities at which a company excels and that give it the potential to create competitive advantages.

8. Identifying Job Responsibilities
Work specialization
Specialization in or responsibility for some portion of an organization’s overall work tasks
Also called division of labor
Once a company knows what it wants to focus on, it can design each job so as to deliver those competencies. A key decision here is finding the optimal level of work specialization, sometimes referred to as the division of labor—the degree to which organizational tasks are broken down into separate jobs. Work specialization can improve organizational efficiency by enabling each worker to perform tasks that are well defined and that require specific skills. When employees concentrate on the same specialized tasks, they can perfect their skills and perform those tasks quickly. In addition to aligning skills with job tasks, specialization prevents overlapping responsibilities and communication breakdowns.

9. Defining the Chain of Command (1 of 3)
A pathway for the flow of authority from one management level to the next
Line organization
A chain of command system that establishes a clear line of authority flowing from the top down
With the various jobs and their individual responsibilities identified, the next step is to define the chain of command. This can be defined as the lines of authority that connect the various groups and levels within the organization. The chain of command helps the organization function smoothly by making two things clear: who is responsible for each task and who has the authority to make decisions.
The simplest and most common chain of command system is known as line organization because it establishes a clear line of authority flowing from the top down, as Exhibit 8.1 depicted. Everyone knows who is accountable to whom, as well as which tasks and decisions each is responsible for.

10. Defining the Chain of Command (2 of 3)
Line-and-staff organization
An organization system that has a clear chain of command but that also includes functional groups of people who provide advice and specialized services
A more elaborate system, called line-and-staff organization, was developed to address the need to combine specialization with management control. In such an organization, managers in the chain of command are supplemented by functional groupings of people known as staff, who provide advice and specialized services but who are not in the line organization’s overall chain of command.

11. Defining the Chain of Command (3 of 3)
Span of management
The number of people under one manager’s control
Also known as span of control
The number of people a manager directly supervises is called the span of management, or span of control. When a large number of people report directly to one person, that person has a wide span of management. This situation is common in flat organizations with relatively few levels in the management hierarchy. In contrast, tall organizations have many hierarchical levels, typically with fewer people reporting to each manager than is the case in a flat organization. In these organizations, the span of management is narrow.

12. Exhibit 8.2 Simplified Line-and-Staff Structure
A line-and-staff organization divides employees into those who are in the direct line of command and those who provide staff (support) services to line managers at various levels. In this simplified example, the government affairs and legal departments report to the CEO but would provide support to any department in the company, as needed.

13. Centralization versus Decentralization
Concentration of decision-making authority at the top of an organization
Decentralization
Delegation of decision-making authority to employees in lower-level positions
Organizations that focus decision-making authority near the top of the chain of command are said to be centralized. Centralization can benefit a company by utilizing top management’s experience and broad view of organizational goals. In addition, it can help companies coordinate large undertakings more efficiently, accelerate decisions that might otherwise get bogged down in discussions and disagreements, and reduce the number of overlapping capabilities.
In contrast, decentralization pushes decision-making authority down to lower organizational levels—such as department heads—while control over essential companywide matters remains with top management. Implemented properly, decentralization can stimulate responsiveness because decisions don’t have to be referred up the hierarchy.

14. Exhibit 8.3 Flattening an Organization
In this simplified example, a layer of management (the business units) was removed to flatten the organization. In theory, this move reduces costs and speeds communication and decision making. Two obvious downsides are the increased span of management for the two group managers and the loss of knowledge and relationships that the business unit managers brought to the organization.

15. Organizing the Workforce (1 of 2)
Departmentalization
Grouping people within an organization according to function, division, matrix, or network
The decisions regarding job responsibilities, span of management, and centralization versus decentralization provide insights that managers need in order to choose the best organization structure. The arrangement of activities into logical groups that are then clustered into larger departments and units to form the total organization is known as departmentalization.

16. Organizing the Workforce (2 of 2)
Functional structure
Grouping workers according to the similarity in their skills, resource use, and expertise
Divisional structure
Grouping departments according to similarities in product, process, customers, or geography
The functional structure groups employees according to their skills, resource use, and job requirements. Common functional subgroups include research and development (R&D), production or manufacturing, marketing and sales, and human resources.
The divisional structure establishes self-contained sub organizations that encompass all the major functional resources required to achieve their goals—such as research and design, manufacturing, finance, and marketing.

17. Exhibit 8.4 Customer Division Structure
Focusing each division on a single type of customer can help a company market its products more efficiently and serve customers more responsively.

18. Matrix Structure Matrix structure
A structure in which employees are assigned to both a functional group and a project team (thus using functional and divisional patterns simultaneously)
A matrix structure is an organizational design in which employees from functional departments form teams to combine their specialized skills (shown in Exhibit 8.5 on the next slide). This structure allows the company to pool and share resources across divisions and functional groups. The matrix may be a permanent feature of the organization’s design, or it may be established to complete a specific project. The matrix structure can help big companies function like smaller ones by allowing teams to devote their attention to specific projects or customers without permanently reorganizing the company’s structure.

19. Exhibit 8.5 Matrix Structure
In a matrix structure, each employee is assigned to both a functional group (with a defined set of basic functions, such as production management) and a project team (which consists of members of various functional groups working together on a project, such as bringing out a new consumer product). Even in this simplified model, you can sense how complex matrix management can be when employees have multiple managers, and managers share employees with other projects and departments.

20. Network Structure Network structure
A structure in which individual companies are connected electronically to perform selected tasks for a small headquarters organization
Also called virtual organization
A network structure stretches beyond the boundaries of a company to connect a variety of partners and suppliers that perform selected tasks for a headquarters organization. Also called a virtual organization, a network organization can outsource engineering, marketing, research, accounting, production, distribution, or other functions. The design of a network structure stems from decisions about core competencies, with executives deciding which functions to focus on internally and which to outsource.

21. Organizing in Teams Team
A unit of two or more people who share a mission and collective responsibility as they work together to achieve a goal
A team is a unit of two or more people who work together to achieve a shared goal. Teams differ from work groups in that work groups interact primarily to share information and to make decisions to help one another perform within each member’s area of responsibility. In other words, the performance of a work group is merely the summation of all group members’ individual contributions.

22. Types of Teams (1 of 3) Problem-solving team
A team that meets to find ways of improving quality, efficiency, and the work environment
Self-managed team
A team in which members are responsible for an entire process or operation
A problem-solving team is assembled to find ways of improving quality, efficiency, or other performance measures. In some cases, a team attacks a single, specific problem and disbands after presenting or implementing the solution.
As the name implies, a self-managed team manages its own activities and requires minimal supervision. Typically, these teams control the pace of work and determination of work assignments. Fully self-managed teams select their own members. Self-managed teams represent a significant change for organizations and managers accustomed to rigid command-and-control structures.

23. Types of Teams (2 of 3) Functional team
A team whose members come from a single functional department which is based on the organization’s vertical structure
Cross-functional team
A team that draws together employees from different functional areas
A functional team, or command team, is organized along the lines of the organization’s vertical structure and thus may be referred to as a vertical team. Such teams are composed of managers and employees within a single functional department, and the structure of a vertical team typically follows the formal chain of command.
In contrast to functional teams, a cross-functional team, or horizontal team, draws together employees from various functional areas and expertise. Cross-functional teams can facilitate information exchange, help coordinate multiple organizational units, encourage new solutions for organizational problems, and aid the development of new organizational policies and procedures.

24. Cross-Functional Teams
Task force
A team of people from several departments who are temporarily brought together to address a specific issue
Committee
A team that may become a permanent part of the organization and is designed to deal with regularly recurring tasks
A cross-functional team can take on a number of formats. A task force is formed to work on a specific activity with a completion point. Several departments are usually involved so that all parties who have a stake in the outcome of the task are able to provide input. In contrast, a committee usually has a long life span and may become a permanent part of the organization structure. Committees typically deal with regularly recurring tasks, such as addressing employee grievances.

25. Types of Teams (3 of 3) Virtual team
A team that uses communication technology to bring together geographically distant employees to achieve goals
A virtual team is composed of members at two or more geographic locations. Research indicates that virtual teams can be as effective as face-to-face teams, as long as they take steps to overcome the disadvantages of not being able to communicate face to face. For instance, some virtual teams meet in person at least once to allow the members to get to know one another before diving into their work.

26. Exhibit 8.6 Business Uses of Social Networking Technology (1 of 2)
Business Challenge
Example of Social Networking in Action
Assembling teams
Identifying the best people, both inside the company and in other companies, to collaborate on projects
Fostering the growth of communities
Helping people with similar—or complementary—interests and skills find each other in order to provide
mutual assistance and development
Accelerating the evolution of teams
Accelerating the sometimes slow process of getting to know one another and identifying individual areas
of expertise
Maintaining business relationships
Giving people an easy way to stay in contact after meetings and conferences
Supporting customers
Allowing customers to develop close relationships with product experts within the company
Integrating new employees
Helping new employees navigate their way through the organization, finding experts, mentors, and other
important contacts
Easing the transition after reorganizations
and mergers
Helping employees connect and bond after internal staff reorganizations or mergers with other
organizations

27. Exhibit 8.6 Business Uses of Social Networking Technology (2 of 2)
Business Challenge
Example of Social Networking in Action
Overcoming structural barriers in
communication channels
Bypassing the formal communication system in order to deliver information where it is needed in a
timely fashion
Brainstorming new ideas, solving problems
Finding “pockets of knowledge” within the organization—the expertise and experience of individual
employees
Preparing for major meetings and events
Giving participants a way to meet before an event takes place, helping to ensure that the meeting or
event becomes more productive more quickly
Sharing and distributing information
Making it easy for employees to share information with people who may need it—and for people who
need information to find employees who might have it
Finding potential customers, business
partners, and employees
Identifying strong candidates by matching user profiles with current business needs and linking from
existing member profiles
Socializing brands and companies
Making companies more approachable and transparent; today’s customers want to interact with the
companies they buy from
Responding to crises
Gathering critical details from the field via social media and sharing updates with affected stakeholders
Social networking has emerged as a powerful technological tool for enabling teamwork and enhancing collaboration in a variety of ways.

28. Advantages of Working on Teams
Higher quality decisions
Increased diversity of views
Increased commitment to solutions and changes
Lower levels of stress and destructive internal competition
Improved flexibility and responsiveness
Managers must weigh the pros and cons of teams when deciding whether and how to use them. A well-run team can provide a number of advantages.

29. Disadvantages of Working on Teams
Inefficiency
Groupthink
Diminished individual motivation
Structural disruption
Excessive workloads
Although the advantages of teamwork help explain the widespread popularity of teams in today’s business environment, teams also present a number of potential disadvantages, particularly if they are poorly structured or poorly managed.

30. Characteristics of Effective Teams
Clear sense of purpose
Open and honest communication
Creative thinking
Accountability
Focus
Decision by consensus

31. Exhibit 8.7 Team Member Roles
Team members assume one of the four roles outlined here. Members who assume a dual role—emphasizing both task progress and people needs—often make the most effective team leaders.

32. Exhibit 8.8 Characteristics of Effective Teams (1 of 2)
Make Effective Teamwork A To p Management Priority
• Recognize and reward group performance where appropriate
• Provide ample training opportunities for employees to develop team skills
Select Team Members Wisely
• Involve key stakeholders and decision makers
• Limit team size to the minimum number of people needed to achieve team goals
• Select members with a diversity of views
• Select creative thinkers
Build A Sense Of Fairness In Decision Making
• Encourage debate and disagreement without fear of reprisal
• Allow members to communicate openly and honestly
• Consider all proposals
• Build consensus by allowing team members to examine, compare, and reconcile differences—but don’t let a desire for 100 percent consensus bog the team down
• Avoid quick votes
• Keep everyone informed
• Present all the facts
Effective teams practice these good habits.

33. Exhibit 8.8 Characteristics of Effective Teams (2 of 2)
Manage Conflict Constructively
• Share leadership
• Encourage equal participation
• Discuss disagreements openly and calmly
• Focus on the issues, not the people
• Don’t let minor disagreements boil over into major conflicts
Stay On Track
• Make sure everyone understands the team’s purpose
• Communicate what is expected of team members
• Stay focused on the core assignment
• Develop and adhere to a schedule
• Develop rules and follow norms
Effective teams practice these good habits.

34. Team Development (1 of 2) Forming Storming Norming Performing
Adjourning
The five stages of team development are:
Forming. The forming stage is a period of orientation and ice-breaking.
Storming. In the storming stage, members show more of their personalities and become more assertive in establishing their roles.
Norming. During the norming stage, conflicts are resolved and team harmony develops.
Performing. In the performing stage, members are really committed to the team’s goals.
Adjourning. Finally, if the team has a specific task to perform, it goes through the adjourning stage after the task has been completed.

35. Team Development (2 of 2) Cohesiveness
A measure of how committed team members are to their team’s goals
Norms
Informal standards of conduct that guide team behavior
As a team moves through these stages, two important developments occur. First, it develops a certain level of cohesiveness—a measure of how committed the members are to the team’s goals. Cohesiveness is reflected in meeting attendance, team interaction, work quality, and goal achievement. Cohesiveness is influenced by many factors, particularly competition and evaluation.
The second development is the emergence of norms—informal but often powerful standards of conduct that members share and use to guide their behavior. Norms define acceptable behavior by setting limits, identifying values, and clarifying expectations. By encouraging consistent behavior, norms boost efficiency and help ensure the group’s survival. Individuals who deviate from these norms can find themselves ridiculed, isolated, or even removed from the group entirely.

36. Team Conflict Constructive conflict
Brings important issues into the open, increases the involvement of team members, and generates creative ideas for solving a problem
Destructive conflict
Diverts energy from more important issues, destroys the morale of teams or individual team members, or polarizes or divides the team
As teams mature and go about their work, conflicts can arise. Although the term conflict sounds negative, conflict isn’t necessarily bad. It can be constructive if it brings important issues into the open, increases the involvement of team members, and generates creative ideas for solving a problem. Teamwork isn’t necessarily about happiness and harmony; even teams that have some interpersonal friction can excel if they have effective leadership and team players committed to strong results.
In contrast, conflict is destructive if it diverts energy from more important issues, destroys the morale of teams or individual team members, or polarizes or divides the team. Destructive conflict can lead to win-lose or lose-lose outcomes, in which one or both sides lose, to the detriment of the entire team. If you approach conflict with the idea that both sides can satisfy their goals to at least some extent (a win-win strategy), you can minimize losses for everyone.

37. Solutions to Team Conflict
Proactive attention
Communication
Openness
Research
Flexibility
Fair play
Alliance
Some keys to resolving team conflict are:
• Proactive attention. Deal with minor conflict before it becomes major conflict.
• Communication. Get those directly involved in a conflict to participate in resolving it.
• Openness. Get feelings out in the open before dealing with the main issues.
• Research. Seek factual reasons for a problem before seeking solutions.
• Flexibility. Don’t let anyone lock into a position before considering other solutions.
• Fair play. Insist on fair outcomes and don’t let anyone avoid a fair solution by hiding
behind the rules.
• Alliance. Get opponents to fight together against an “outside force” instead of against each other.

38. Managing an Unstructured Organization
An organization that doesn’t have a conventional structure but instead assembles talent as needed from the open market; the virtual and networked organizational concepts taken to the extreme
Much of the thinking in past decades about organization strategies in business centered on the best way to structure a company to compete effectively and operate efficiently. However, many companies are concluding that the best way to organize might be with little or no structure at all, at least in terms of the traditional forms. Such unstructured organizations are using digital technologies—and global socioeconomic changes enabled by these technologies—to rapidly form and re-form work patterns that bear almost no resemblance to the classic structures.

39. Exhibit 8.9 Benefits and Challenges of Unstructured Organizations (1 of 2)
Potential Benefits
For Companies
For Workers
Increased agility: Companies can responds to or create opportunities faster and then reorganize and move on when needed.
Performance-based evaluation: The only thing that matters is getting the jobs done.
Lower fixed costs: Fewer employees means fewer bills to pay every month.
Freedom and flexibility: Workers have more leeway in choosing which projects they want and how much they to work.
More flexible capacity management: Firms can ramp capacity up and down more quickly and with less trauma.
Access to more interesting and more fulfilling work: Workers can connect with opportunities that might be unreachable otherwise.
Benefiting from competition: Firms can “rent” top talent that is too expensive to work full time or unwilling to works full time.
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Benefiting from competitions: Firms can stage competitions in talents markets to see who can devise the best solutions to problems.

40. Exhibit 8.9 Benefits and Challenges of Unstructured Organizations (2 of 2)
Potential Benefits
For Companies
For Workers
Complexity and control issues: Workers often have competing demands on their time and attention, and managers lack many of the organizational control and incentive “levers” that a regular company has.
Uncertainty: Workers can’t be sure they’ll have work from one project to the next.
Uncertainty: Without staff at the ready, companies won’t always know if they’ll be able to get the talent they need.
Loss of meaning and connection: Independent workers don’t get the same of working together for a larger, shared purpose that employees get.
Diminished loyalty: Managers have to deal with a workforce that doesn’t have the same sense of loyalty to the organization that many full-time employees do.
Diminished loyalty: Workers don’t have the same sense employees often do that an organization is looking out for them and will reward sacrifices and effort above and beyond contractual obligations.
Management succession: Companies with fewer employees will find it harder to groom replacement managers and executives.
Career development: Without full-time employers to guide, support, and train them, workers are left to fend for themselves and to keep their skills current at their own expense.
Accountability and liability: Unstructured organizations lack the built-in accountability of conventional structures, and the distribution of work among multiple independent parties could create liability concerns.
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The unstructured organization is an extreme version of the virtual and networked models, in which a company assembles freelance talent as needed from the open market rather than hiring and organizing employees in a conventional organizational structure.

41. Potential Challenges of Unstructured Organizations
Complexity and control issues
Uncertainty
Loss of meaning and connection
Diminished loyalty
Career development
Management succession
Accountability and liability

42. Applying What You’ve Learned (1 of 2)
Explain the major decisions needed to design an organization structure.
Define four major types of organization structures.
Explain how a team differs from a group, and describe the six most common forms of teams.

43. Applying What You’ve Learned (2 of 2)
Highlight the advantages and disadvantages of working in teams, and list the characteristics of effective teams.
Review the five stages of team development, and explain why conflict can arise in team settings.
Explain the concept of an unstructured organization, and identify the major benefits and challenges of taking this approach.

44. Copyright