3 Learning ObjectivesIdentify 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.
4 Learning ObjectivesExplain why managers must coordinate jobs, functions, and divisions using the hierarchy of authority and integrating mechanismsList the four sources of organizational culture and differentiate between a strong, adaptive culture and a weak, inert culture
5 Organizational Structure Organizational ArchitectureThe organizational structure, control systems, culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used.
6 Designing Organizational Structure OrganizingThe process by which managers establish working relationships among employees to achieve goals.Organizational StructureFormal system of task and reporting relationships showing how workers use resources.
7 Designing Organizational Structure Organizational designThe 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
9 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.
10 The Organizational Environment StrategyDifferent 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.
11 The Organizational Environment TechnologyThe 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.
12 The Organizational Environment TechnologyTechnology 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.High task variety and low analyzability present many unique problems to managers.Flexible structure works best in these conditions.Low task variety and high analyzability allow managers to rely on established procedures.
13 The Organizational Environment Human ResourcesHighly 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.
14 The Organizational Environment Human ResourcesManagers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization.
15 The Organizational Environment The way an organization’s structure works depends on the choices managers make about:How to group tasks into individual jobsHow to group jobs into functions and divisionsHow to allocate authority and coordinate functions and divisions
16 Job DesignJob DesignThe process by which managers decide how to divide tasks into specific jobs.The appropriate division of labor results in an effective and efficient workforce.
17 Question?What is the process of reducing the tasks each worker performs?Job simplificationJob enlargementJob enrichmentJob enhancementThe correct answer is “A” – job simplification. See next slide.
18 Job Design Job Simplification The process of reducing the tasks each worker performs.Too much simplification and boredom results.
19 Job Design Job Enlargement Job Enrichment Increasing the number of different tasks in a given job by changing the division of laborJob EnrichmentIncreasing the degree of responsibility a worker has over a job
20 Job EnrichmentEmpowering workers to experiment to find new or better ways of doing the jobEncouraging workers to develop new skillsAllowing workers to decide how to do the workAllowing workers to monitor and measure their own performance
21 The Job Characteristics Model Source: Adapted from J. R. Hackman and G. R. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980).Figure 10.2
23 Grouping Jobs into Functions Group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs
24 Grouping Jobs into Functions Functional StructureAn organizational structure composed of all the departments that an organization requires to produce its goods or services.
25 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
26 Functional Structure Disadvantages Difficult for departments to communicate with others.Preoccupation with own department and losing sight of organizational goals.
27 The Functional Structure of Pier 1 Imports Figure10.3
28 Divisional Structures Managers create a series of business units to produce a specific kind of product for a specific kind of customer
29 Product, Market, and Geographic Structures Figure 10.4
30 Types of Divisional Structures Product StructureManagers place each distinct product line or business in its own self-contained divisionDivisional managers have the responsibility for devising an appropriate business-level strategy to allow the division to compete effectively in its industry
31 Product StructureAllows functional managers to specialize in one product areaDivision managers become experts in their areaRemoves need for direct supervision of division by corporate managersDivisional management improves the use of resources
32 Types of Divisional Structures Geographic StructureDivisions are broken down by geographic locationGlobal geographic structureManagers locate different divisions in each of the world regions where the organization operates.Generally, occurs when managers are pursuing a multi-domestic strategy
33 Types of Divisional Structures Global Product StructureEach product division takes responsibility for deciding where to manufacture its products and how to market them in foreign countries worldwide
34 Global Geographic and Global Product Structures Figure 10.5
35 Types of Divisional Structures Market StructureGroups divisions according to the particular kinds of customers they serveAllows managers to be responsive to the needs of their customers and act flexibly in making decisions in response to customers’ changing needs
36 Matrix Design Structure Matrix StructureAn 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.
38 Discussion Question?Which is the most effective and efficient organizational structure?Matrix structureDivisional structureMarket structureGeographic structureThere is no one best answer. It depends on a firm’s situation. Students should discuss the best situation for each type.
39 Product Team Design Structure Product Team StructureDoes away with dual reporting relationships and two-boss managersFunctional employees are permanently assigned to a cross-functional team that is empowered to bring a new or redesigned product to work
40 Product Team Design Structure Product Team StructureCross-functional team is composed of a group of managers from different departments working together to perform organizational tasks.
42 Hybrid Structures Hybrid Structure The structure of a large organization that has many divisions and simultaneously uses many different organizational structuresManagers can select the best structure for a particular division—one division may use a functional structure, another division may have a geographic structure.The ability to break a large organization into smaller units makes it easier to manage.
44 Question? What is the power vested in a manager to make decisions? InfluenceAuthorityControlThe correct answer is “C” – authority. See next slide.
45 Coordinating Functions: Allocating Authority The power vested in a manager to make decisions and use resources to achieve organizational goals by virtue of his position in an organization
46 Coordinating Functions: Allocating Authority Hierarchy of AuthorityAn 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
47 Allocating Authority Line Manager Someone in the direct line or chain of command who has formal authority over people and resourcesStaff ManagerManagers who are functional-area specialists that give advice to line managers.
48 The Hierarchy of Authority and Span of Control at McDonald’s Corporation Figure 10.8
49 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
53 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
54 Centralization and Decentralization of Authority Decentralizing authoritygiving lower-level managers and non-managerial employees the right to make important decisions about how to use organizational resources
55 Decentralizing Authority DisadvantagesTeams may begin to pursue their own goals at the expense of organizational goalsCan result in a lack of communication among divisions
57 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
58 Sources of an Organization’s Culture Figure 10.11
59 Characteristics of Organizational Members Ultimate source of organizational culture is the people that make up the organizationMembers become similar over time which may hinder their ability to adapt and respond to changes in the environment
60 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
61 Employment Relationship Human resource policies:Can influence how hard employees will work to achieve the organization’s goals,How attached they will be to itWhether or not they will buy into its values and norms
62 Organizational Structure In a centralized organization:people have little autonomynorms that focus on being cautious, obeying authority, and respecting traditions emergepredictability and stability are desired goals
63 Organizational Structure In a flat, decentralized structure:people have more freedom to choose and control their own activitiesnorms that focus on being creative and courageous and taking risks appeargives rise to a culture in which innovation and flexibility are desired goals.
64 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
65 Strong, Adaptive Cultures Versus Weak, Inert Cultures Those that lead to values and norms that fail to motivate or inspire employeesLead to stagnation and often failure over time
66 Movie Example: Apollo 13What organizational structure does NASA use to handle a moon launch?Described by Leonard Maltin as “exhilarating story of ill-fated Apollo 13 moon mission, and how the heroic work of Jim Lovell and his crew, combined with the dogged persistence of the NASA team in Houston, averted tragedy. In the launch sequence (Ch 12), the flight director asks the different areas (booster, retro, guidance, surgeon, control, capcom, etc.) for a go/no-go for launch. This shows one way an organization can structure itself to accomplish a mission. After the explosion on board the spacecraft, the different areas are asked for input to solve the problem.