1. Chapter 16 Organizational Goals and Structures
The key is to match
Goals and structures

2. Chapter 16 Study Questions
What are the different types of organizational goals? What are the hierarchical aspects of organizations? How is work organized and coordinated? What are bureaucracies and what are the common forms?
Copyright © 2012 John Wiley & Sons, Inc.

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.
Organizations normally serve a specific societal function or an enduring need of the society. Astute top level managers build on the professed societal contribution of the organization by relating specific organizational tasks and activities to higher purposes. By contributing to the larger society, organizations gain legitimacy, a social right to operate, and more discretion for their nonsocietal goals and operating practices.
Copyright © 2012 John Wiley & Sons, Inc.

4. What are the different types of organizational goals?
A written statement of organizational purpose.
A good mission statement states whom the firm will serve and how it will go about accomplishing its societal purpose.
Mission statement
Organizations that can more effectively translate the positive character of their societal contribution into a favorable image have an advantage over firms that neglect this sense of purpose. Executives who link their firm to a desirable mission can lay claim to important motivational tools that are based on a shared sense of noble purpose. Some executives and consultants talk of a “strategic vision” that links highly desirable and socially appealing goals to the contributions a firm intends to make. The first step is a clear and compelling mission statement.
Copyright © 2012 John Wiley & Sons, Inc.

5. Mission Statement Examples:
Aflac “To combine innovative strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers.” Harley-Davidson – “We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments.
Copyright © 2012 John Wiley & Sons, Inc.

6. What are the different types of organizational goals?
Output goals
Define the type of business the organization is in.
Provide some substance to the more general aspects of mission statements.
For some corporations, answering the question of which business they are in may yield a more detailed statement concerning their products and services. These product and service goals provide an important basis for judging the firm.
Copyright © 2012 John Wiley & Sons, Inc.

7. 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.
Systems goals represent short-term organizational characteristics that higher-level managers wish to promote. Systems goals often must be balanced against one another. For instance, a productivity and efficiency drive, if taken too far, may reduce the
flexibility of an organization even in a downturn.
Systems goals are important to firms because they provide a roadmap that helps them link together various units of their organization to assure survival. Well-defined systems goals are practical and easy to understand; they focus the manager’s attention on what needs to be done. Accurately stated systems goals also offer managers flexibility in devising ways to meet important targets. They can be used to balance the demands, constraints, and opportunities facing the firm. Recent research suggests incorporating integrity and ethics into the desired system goals characteristics.
Copyright © 2012 John Wiley & Sons, Inc.

8. 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.
Systems goals are important to firms because they provide a roadmap that helps them link together various units of their organization to assure survival.
Copyright © 2012 John Wiley & Sons, Inc.

9. What are the hierarchical aspects of organizations?
The formal structure is the foundation for managerial action
It shows the planned configuration of positions, job duties, and the lines of authority among different parts of the enterprise.
The pattern selected provides the organization with specific strengths to reach toward some goals more than others. Traditionally, the formal structure of the firm has also been called the division of labor. Some still use this terminology to isolate decisions concerning formal structure from choices regarding the division of markets and/or technology.
Copyright © 2012 John Wiley & Sons, Inc.

10. What are the hierarchical aspects of organizations?
Vertical specialization
An organization’s hierarchical division of labor that distributes formal authority and establishes where and how critical decisions are to be made.
Creates an arrangement of work positions in order of increasing authority.
Top managers or senior executives plan the overall strategy of the organization and plot its long-term future.
They also act as final judges for internal disputes and certify promotions, reorganizations, and the like. Middle managers guide the daily operations of the organization, help formulate policy, and translate top-management decisions into more specific guidelines for action.
Copyright © 2012 John Wiley & Sons, Inc.

11. What are the hierarchical aspects 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 that link them t o one another .
Although an organization chart may clearly indicate who reports to whom, it is also important to recognize that it does not show how work is completed, who exercises the most power over specific issues, or how the firm will respond to its environment. An organization chart is just the beginning to understanding how a firm organizes its work. In firms facing constant change, the formal chart may be quickly out of date. However, organization charts can be important to the extent that they accurately represent the “chain of command.”
Copyright © 2012 John Wiley & Sons, Inc.

12. Figure 16.1 A Partial Organizational Chart for a State University
The figure presents a partial organization chart for a large university. The total chart allows university employees to locate their positions in the structure and to identify the lines of authority linking them with others in the organization. For instance, in this figure, the treasurer reports to the vice president of administration, who, in turn, reports to the president of the university.
Copyright © 2012 John Wiley & Sons, Inc.

13. What are the hierarchical aspects of organizations?
Span of control
The number of individuals reporting directly to a supervisor.
New information technologies now allow organizations to broaden the span of control, flatten their formal structures, and still maintain control of complex operations.
Copyright © 2012 John Wiley & Sons, Inc.

14. What are the hierarchical aspects of organizations?
Line units
Work groups that conduct the major business of the organization (production and marketing departments).
Staff units
Work groups that assist the line units by providing specialized expertise and services to the organization (accounting and public relations).
Internal line units - Transform raw materials and information into products and services (production department).
External line units - Maintain outside linkages (marketing department).
Internal staff units - Assist the line units in performing their functions (accounting department).
External staff units - Assist the line units by linking the firm to its environment and in buffering internal operations (public relations).
In Figure 16.1, the Legislative Liaison unit is external staff, with a line relationship to the office of the VP for External Affairs.
Copyright © 2012 John Wiley & Sons, Inc.

15. What are the hierarchical aspects of organizations?
Control
The set of mechanisms used to keep actions and outputs within predetermined limits.
Deals with:
Setting standards
Measuring results versus standards
Instituting corrective action
Copyright © 2012 John Wiley & Sons, Inc.

16. What are the hierarchical aspects of organizations?
Output controls
Focus on desired targets and allow managers to use their own methods to reach defined targets.
Part of an overall method of managing by exception.
Output controls are popular because they promote flexibility and creativity as well as facilitate dialogue concerning corrective action. Reliance on outcome controls separates what is to be accomplished from how it is to be accomplished.
Copyright © 2012 John Wiley & Sons, Inc.

17. What are the hierarchical aspects 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.
Few organizations run on outcome controls alone. Once a solution to a problem is found and successfully implemented, managers do not want the problem to recur, so they institute process controls.
Copyright © 2012 John Wiley & Sons, Inc.

18. What are the hierarchical aspects of organizations?
Policy
Outlines important objectives and broadly indicates how an activity is to be performed.
Procedures
Describes the best method for performing a task; shows which aspects of a task are most important.
Copyright © 2012 John Wiley & Sons, Inc.

19. What are the hierarchical aspects of organizations?
Rules
Describe in detail how a task or a series of tasks is to be performed, or indicate what cannot be done.
Rules, procedures, and policies are often employed as substitutes for direct managerial supervision. Under the guidance of written rules and procedures, the organization can specifically direct the activities of many individuals. It can ensure virtually identical treatment across even distant work locations.
Copyright © 2012 John Wiley & Sons, Inc.

20. What are the hierarchical aspects of organizations?
Formalization
The written documentation of rules, procedures, and policies 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.
Beyond substituting for direct management supervision, formalization is often used to simplify jobs. Written instructions allow individuals with less training to perform comparatively sophisticated tasks. Written procedures may also be available to ensure that a proper sequence of tasks is executed, even if this sequence is performed only occasionally.
Standardization involves the creation of guidelines so that similar work activities are repeatedly performed in a similar fashion. Such standardized methods may come from years of experience in dealing with typical situations, or they may come from outside training.
Copyright © 2012 John Wiley & Sons, Inc.

21. What are the hierarchical aspects of organizations?
Total Quality Management
Process approach using control to improve general operations of the company.
Outlined by W. Edward Deming’s 14 points.
Copyright © 2012 John Wiley & Sons, Inc.

22. What are the hierarchical aspects 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.
Greater centralization is often adopted when the firm faces a single major threat to its survival.
Copyright © 2012 John Wiley & Sons, Inc.

23. What are the hierarchical aspects of organizations?
Benefits of decentralization
Higher subordinate satisfaction.
Quicker response to a diverse series of unrelated problems.
Assists in on-the-job training of subordinates for higher-level positions.
A popular approach in many industries.
Copyright © 2012 John Wiley & Sons, Inc.

24. How is work organized and coordinated?
Horizontal specialization
A division of labor that establishes specific work units or groups within an organization.
Functional departmentalization
Grouping individuals by skill, knowledge, and action.
Organizing work is formally known as horizontal departmentation. This aspect of the organization is also called
departmentation. Whatever is divided up horizontally in two or more departments must also be integrated.
Copyright © 2012 John Wiley & Sons, Inc.

25. How is work organized and coordinated?
Functional departmentalization
Grouping individuals by skill, knowledge, and action.
Examples include marketing, finance, production, and human resources.
Most popular form of horizontal specialization found in organizations.
Copyright © 2012 John Wiley & Sons, Inc.

26. Figure 16.3 Major Advantages and Disadvantages of Functional Specialization
The figure summarizes the advantages and disadvantages of the functional pattern.
Copyright © 2012 John Wiley & Sons, Inc.

27. How is work organized and coordinated?
Divisional departments
Individuals and resources are grouped by products, territories, services, clients, or legal entities.
A divisional pattern is often used to meet diverse external threats and opportunities.
Copyright © 2012 John Wiley & Sons, Inc.

28. Figure 16.4 A Divisional Pattern of Departmentalization
As shown in the figure, the major advantages of the divisional pattern are its flexibility in meeting external demands, spotting external changes, integrating specialized individuals deep within the organization, and focusing on the delivery of specific products to specific customers.
Copyright © 2012 John Wiley & Sons, Inc.

29. How is work organized and coordinated?
Matrix departmentalization
Uses both the functional and divisional forms simultaneously.
The key disadvantage of the matrix method is the loss of unity of command. Individuals can be unsure as to what their jobs are, whom they report to for specific activities, and how various managers are to administer the effort. It can also be a very expensive method because it relies on individual managers to coordinate efforts deep within the firm.
Despite these limitations, the matrix structure provides a balance between functional and divisional concerns. Many problems can be resolved at the working level, where the balance among technical, cost, customer, and organizational concerns can be dealt with.
Copyright © 2012 John Wiley & Sons, Inc.

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.
Coordination is needed at all levels of management, not just across a few scattered units. Much of the coordination
within a unit is handled by its manager. Smaller organizations may rely on their management hierarchy to provide the necessary consistency and integration. As the organization grows, however, managers become overloaded.
Copyright © 2012 John Wiley & Sons, Inc.

31. How is work organized and coordinated?
Personal methods of coordination
Produce synergy by promoting dialogue and discussion, innovation, creativity, and learning, both within and across units.
Personal methods allow the organization to address the particular needs of distinct users and individuals simultaneously.
There is a wide variety of personal methods of coordination. Perhaps the most popular is direct contact between and among organizational members. As new information technologies have moved into practice, the potential for developing and maintaining effective contact networks has expanded.
Copyright © 2012 John Wiley & Sons, Inc.

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 departmentalization and management information systems for coordination.
Impersonal coordination methods are often refinements and extensions of process controls with an emphasis on formalization and standardization. Larger organizations often have written policies and procedures, such as schedules, budgets, and plans that are designed to mesh the operations of several units into a whole by providing predictability and consistency.
Copyright © 2012 John Wiley & Sons, Inc.

33. What are bureaucracies and what are the common forms?
Bureaucracy
Form of organization that emphasizes legal authority, logic, clear division of labor, promotion by merit, and administrative rule.
Mechanistic - emphasizes vertical specialization and control.
Organic – emphasizes horizontal specialization.
Weber argued that the rational and logical idea of bureaucracy, like a ‘well oiled machine’, was superior to building a firm based on charisma or cultural tradition.
Copyright © 2012 John Wiley & Sons, Inc.

34. What are bureaucracies and what are the common forms?
Mechanistic bureaucracy
Emphasizes vertical specialization and control.
Organizations of this type stress rules, policies, and procedures; specify techniques or decision making; and emphasize developing well-documented control systems.
The mechanistic design results in a management emphasis on routine for efficiency. Firms often used this design in pursuing a strategy of becoming a low cost leader.
Copyright © 2012 John Wiley & Sons, Inc.

35. What are bureaucracies and what are the common forms?
Benefits of the organic type
Better for problem solving and for serving individual customer needs.
Centralized direction by senior management is less intense.
Good at detecting external changes and adjusting to new technologies.
Copyright © 2012 John Wiley & Sons, Inc.

36. What are bureaucracies and what are the common forms?
Common types of hybrid bureaucracies
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.
While the divisions may be treated as separate businesses, they often share a similar mission and systems goals.
The conglomerate type also simultaneously illustrates three important points: (1) All structures are combinations of the basic elements; (2) there is no one best structure—it all depends on a number of factors such as the size of the firm, its environment,
its technology, and, of course, its strategy; and (3) The firm does not stand alone but is part of a larger network of firms that competes against other networks.
Copyright © 2012 John Wiley & Sons, Inc.