1. Structuring Organizations for Today’s Challenges
CHAPTER 8
Structuring Organizations for Today’s Challenges
McGraw-Hill/Irwin
Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.

2. LEARNING OBJECTIVES
Outline the basic principles of organization management.
Compare the organizational theories of Fayol and Weber.
Evaluate the choices managers make in structuring organizations.
Contrast the various organizational models.
Identify the benefits of inter-firm cooperation and coordination.
Explain how organizational culture can help businesses adapt to change.
8-2

3. JENNA LYONS J. Crew Joined J. Crew in 1990 as a junior designer.
Worked her way up the ladder by emphasizing her commitment to quality.
Her management style is compassionate and understanding.
8-3

4. NAME that COMPANY
This company maintains strict written rules and decision guidelines. Those rules enable the firm to deliver packages quickly because employees don’t have to pause to make decisions – procedures are clearly spelled out for them.
Name that company!
Company: UPS
8-4

5. REORGANIZATION is for EVERYONE
LO 8-1
Many companies are reorganizing, especially those in decline. Including:
Auto makers
Homebuilders
Banks
Adjusting to changing markets is normal in capitalist economies.
Companies must go back to basic organizational principles and firm up the foundation.
See Learning Objective 1: Outline the basic principles of organization management.
Changing economic times require businesses to alter their approach via reorganization. Using organizational principles is an important aspect to this reorganization.
8-5

6. STRUCTURING an ORGANIZATION
LO 8-1
Create a division of labor
Set up teams or departments
Allocate resources
Assign tasks
Establish procedures
Adjust to new realities
See Learning Objective 1: Outline the basic principles of organization management.
8-6

7. WOULD YOU SACRIFICE SAFETY for PROFITS?
You own a lawn-mowing business and are aware of the hazards in the job. But you’ve seen other companies save money by eliminating safety equipment. You’d also like to make more money.
What do you do?
Save money with less safety precautions?
What are the consequences?
See Learning Objective 1: Outline the basic principles of organization management.
8-7

8. THE CHANGING ORGANIZATION
LO 8-2
Often change in organizations is due to evolving business environments:
More global competition
Declining economy
Faster technological change
Pressure to protect the environment
Customer expectations have also changed -- Consumers today want high-quality products with fast, friendly service and all at low cost.
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
8-8

9. HOW MUCH CHANGES in a DECADE?
LO 8-2
What?
2000
2010
Amount of cell phone use
34%
89%
Number of active blogs
12,000
141,000,000
Amount of reality shows 4
320
Daily s sent
12 billion
247 billion
Number of hours spent online per week
2.7 18
Number of daily newspapers
1,480
1,302
Number of daily letters mailed
207 billion
175 billion
Amount of books published
282,242
1,052,803
iTunes downloads
10 billion
Percentage of obese Americans
26%
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
How Much Changes in a Decade?
This slide shows just how much our country has changed since 2000.
Clearly the digital revolution is shown here with the amount of blogs, cell usage, s sent, etc. Ask students: Do you expect these numbers to continue to grow? What may this table look like in 2020?
The number of daily newspapers and letters sent has dropped. Ask students: Do you think we will lose more daily newspapers? What about letters? How many still receive letters/cards from grandparents opposed to s or Facebook posts?
Source: Fast Company, accessed March 2014.
8-9

10. PRODUCTION CHANGED ORGANZIATION DESIGN
LO 8-2
Mass production of goods led to complexities in organizing businesses.
Economies of Scale -- Companies can reduce their production costs by purchasing raw materials in bulk.
The average cost of goods decreases as production levels rise.
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
8-10

11. FAYOL’S PRINCIPLES Unity of command Hierarchy of authority
LO 8-2
Unity of command
Hierarchy of authority
Division of labor
Subordination of individual interests to the general interest
Authority
Degree of centralization
Clear communication channels
Order
Equity
Esprit de corps
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
This slide presents Fayol’s principles of organization. Fayol published General and Industrial Management in Unity of command and hierarchy of authority suggest that each employee reports to one and only one boss. Management courses throughout the world teach these principles, and organizations are designed accordingly. When these principles become rules, policies, and regulations, they create inflexibility which hampers organizations’ ability to respond quickly to situations. An example of this inflexibility or a slower response time can be seen in FEMA’s response to Hurricane Katrina.
8-11

12. ORGANIZATIONS BASED on FAYOL’S PRINCIPLES
LO 8-2
Organizations in which employees have no more than one boss; lines of authority are clear.
Rigid organizations that often don’t respond to customers quickly.
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
8-12

13. WEBER’S PRINCIPLES Employees just need to do what they’re told.
In addition to Fayol’s principles, Weber emphasized:
Job descriptions
Written rules, decision guidelines and detailed records
Consistent procedures, regulations and policies
Staffing and promotion based on qualifications
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
Weber, a German sociologist and economist, wrote The Theory of Social and Economic Organizations. Weber’s principles were similar to Fayol’s. He emphasized job descriptions, written rules, consistent policies, regulations, and procedures, and staffing and promotions based on qualifications. Weber was in favor of bureaucracy and believed that these principles were necessary for large organizations’ effective functioning. However, in today’s corporate world, these rules and bureaucracy do not necessarily work. Organizations need to respond to customers and other environmental factors quickly which calls for a creative, flexible, and a quick decision making process contrary to a bureaucratic process.
8-13

14. HIERARCHIES and COMMAND
LO 8-2
When following Fayol and Weber, managers control workers.
Hierarchy -- A system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down.
Chain of Command -- The line of authority that moves from the top of the hierarchy to the lowest level.
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
8-14

15. ORGANIZATIONAL CHARTS
LO 8-2
Organization Chart -- A visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom.
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
7-15

16. TYPICAL ORGANIZATION CHART
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
8-16

17. BUREAUCRATIC ORGANIZATIONS
LO 8-2
Bureaucracy -- An organization with many layers of managers who set rules and regulations and oversee all decisions.
It can take weeks or months to have information passed down to lower-level employees.
Bureaucracies can annoy customers.
See Learning Objective 2: Compare the organizational theories of Fayol and Weber.
8-17

18. TEST PREP
What do the terms division of labor and job specialization mean?
What are the principles of management outlined by Fayol?
What did Weber add to the principles of Fayol?
Division of labor is dividing tasks among workers to complete a job. Job specialization is dividing tasks into smaller jobs.
Fayol’s principles of management are:
-Unity of command
-Hierarchy of authority
-Division of labor
-Subordination of individual interests to the general interest
-Authority
-Degree of centralization
-Clear communication channels
-Order
-Equity
-Esprit de corps
3. Weber added:
-Job descriptions
-Written rules, decision guidelines and detailed records
-Consistent procedures, regulations and policies
-Staffing and promotion based on qualifications.
8-18

19. CENTRALIZATION or DECENTRALIZATION?
LO 8-3
Centralized Authority -- When decision-making is concentrated at the top level of management.
Decentralized Authority -- When decision-making is delegated to lower-level managers and employees more familiar with local conditions than headquarters is.
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
Centralization can be defined as an organizational structure that focuses on retaining control of authority with higher level managers. One of the disadvantages of this type of management style is slower decisions because of layers of management. Ask the students: What specific problems do you see with this type of management? (Slower decision-making means the company is less responsive to both internal an external customers needs.) Share with the students a simple rule to follow when dealing with centralized authority: Decisions regarding overall company policy and establishment of goals and strategies should be made at the top.
Decentralization is an organizational structure that focuses on delegating authority throughout the organization to middle and lower-level managers. The most significant advantage of this form of management style is the empowerment of the employees. Statistics indicate when delegation is practiced in a company, absenteeism, injuries, loyalty and production improve. Share with the students a simple rule to follow when dealing with decentralized authority: The closer an employee interacts with the customer, the more decentralized the decision-making should be. For example, a customer service manager must have the authority to make a decision that will satisfy a customer immediately, not wait until the home office makes a decision.
8-19

20. CENTRALIZATION and DECENTRALIZATION
LO 8-3
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-20

21. SPAN of CONTROL
LO 8-3
Span of Control -- The optimal number of subordinates a manager supervises or should supervise.
When work is standardized, broad spans of control are possible.
Appropriate span narrows at higher levels of the organization.
The trend today is to reduce middle managers and hire better low-level employees.
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-21

22. ORGANIZATIONAL STRUCTURES
LO 8-3
Structures determine the way the company responds to employee and customer needs.
Tall Organization Structures -- An organizational structure in which the organization chart would be tall because of the various levels of management.
Flat Organization Structures -- An organizational structure that has few layers of management and a broad span of control.
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
Many organizations have moved from tall organizations to flat organizations in an effort to increase nimbleness in the marketplace.
8-22

23. FLAT ORGANIZATIONAL STRUCTURE
LO 8-3
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-23

24. ADVANTAGES and DISADVANTAGES of the DIFFERENT SPANS of CONTROL
LO 8-3
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-24

25. DEPARTMENTALIZATION
LO 8-3
Departmentalization -- Divides organizations into separate units.
Workers are grouped by skills and expertise to specialize their skills.
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-25

26. ADVANTAGES of DEPARTMENTALIZATION
LO 8-3
Employees develop skills and progress within a department as they master skills.
The company can achieve economies of scale.
Employees can coordinate work within the function and top management can easily direct activities.
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-26

27. DISADVANTAGES of DEPARTMENTALIZATION
LO 8-3
Departments may not communicate well.
Employees may identify with their department’s goals rather than the organization’s.
The company’s response to external changes may be slow.
People may not be trained to take different managerial responsibilities, instead they become specialists.
Department members may engage in groupthink and may need outside input.
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-27

28. WAYS to DEPARTMENTALIZE
LO 8-3
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-28

29. WAYS to DEPARTMENTALIZE
LO 8-3
See Learning Objective 3: Evaluate the choices managers make in structuring organizations.
8-29

30. TEST PREP Why are organizations becoming flatter?
What are some reasons for having a narrow span of control in an organization?
What are the advantages and disadvantages of departmentalization?
What are the various ways a firm can departmentalize?
Over the last 25 years businesses have adopted flatter organizations with fewer layers of management and a broader span of control in order to quickly respond to customer demands. A flatter organization gives lower-level employees the authority and responsibility to make decisions directly affecting customers.
Span of control refers to the number of subordinates a manager supervises. Generally, the span of control narrows at higher levels of the organization, because work becomes less standardized and managers need more face-to face communication.
3. The advantages of departmentalization include: Departmentalization may reduce costs, since employees should be more efficient; employees can develop skills in depth and progress within a department as they master more skills; the company can achieve economies of scale by centralizing all the resources it needs and locating various experts in that particular area; employees can coordinate work within the function; and top management can easily direct and control various departments’ activities. The disadvantages of departmentalization include: Communication is inhibited; employee’s may identify with their department’s goals rather than the organization’s; the company’s response may be slowed by departmentalization; employees tend to be narrow specialists; department members may engage in groupthink and may need input from the outside to become more competitive.
4. An organization can elect to departmentalize in the following ways: customer group, product, functional, geographic, process, and hybrid.
8-30

31. FOUR WAYS to STRUCTURE an ORGANIZATION
LO 8-4
Line Organizations
Line-and-Staff Organizations
Matrix-Style Organizations
Cross-Functional Self- Managed Teams
See Learning Objective 4: Contrast the various organizational models.
Traditional business models, such as line organizations and line-and-staff organizations, are giving way to new structures.
8-31

32. LINE ORGANIZATIONS
LO 8-4
Line Organization -- Has direct two-way lines of responsibility, authority and communication running from the top to the bottom. Everyone reports to one supervisor.
There are no specialists, legal, accounting, human resources or information technology departments.
Line managers issue orders, enforce discipline and adjust the organization to changes.
See Learning Objective 4: Contrast the various organizational models.
8-32

33. LINE PERSONNEL
LO 8-4
Line Personnel -- Workers responsible for directly achieving organizational goals, and include production, distribution and marketing employees.
Line personnel have authority to make policy decisions.
See Learning Objective 4: Contrast the various organizational models.
8-33

34. STAFF PERSONNEL
LO 8-4
Staff Personnel -- Employees who advise and assist line personnel in meeting their goals, and include marketing research, legal advising, IT and human resource employees.
See Learning Objective 4: Contrast the various organizational models.
8-34

35. SAMPLE LINE-and-STAFF ORGANIZATION
LO 8-4
See Learning Objective 4: Contrast the various organizational models.
8-35

36. MATRIX ORGANIZATIONS
LO 8-4
Matrix Organization -- Specialists from different parts of the organization work together temporarily on specific projects, but still remain part of a line-and-staff structure.
Emphasis is on product development, creativity, special projects, communication and teamwork.
See Learning Objective 4: Contrast the various organizational models.
The creation of matrix organizations was in response to the inflexibility of other more traditional organizational structures. This structure brings specialists from different parts of the organization to work together temporarily on specific projects.
8-36

37. SAMPLE MATRIX ORGANIZATION
LO 8-4
See Learning Objective 4: Contrast the various organizational models.
8-37

38. ADVANTAGES of the MATRIX STYLE
LO 8-4
Managers have flexibility in assigning people to projects.
Interorganizational cooperation and teamwork is encouraged.
Creative solutions to product development problems are produced.
Efficient use of organizational resources.
See Learning Objective 4: Contrast the various organizational models.
8-38

39. DISADVANTAGES of the MATRIX STYLE
LO 8-4
It’s costly and complex.
Employees may be confused about where their loyalty belongs.
Good interpersonal skills and cooperative employees are a must.
It’s a temporary solution to a possible long-term problem.
Teams are not permanent.
See Learning Objective 4: Contrast the various organizational models.
8-39

40. CROSS-FUNCTIONAL SELF-MANAGED TEAMS
LO 8-4
Cross-Functional Self-Managed Teams -- Groups of employees from different departments who work together on a long-term basis.
A way to fix the problem of matrix-style teams is to establish long-term teams.
Empower teams to work closely with suppliers, customers and others to figure out how to create better products.
See Learning Objective 4: Contrast the various organizational models.
8-40

41. GOING BEYOND ORGANIZATIONAL BOUNDARIES
LO 8-4
Cross-functional teams work best when the voice of the customer is heard.
Teams that include customers, suppliers and distributors go beyond organizational boundaries.
Government coordinators may assist in sharing market information beyond national boundaries.
See Learning Objective 4: Contrast the various organizational models.
8-41

42. BUILDING SUCCESSFUL TEAMS Important Conditions for Small Teams
LO 8-4
Clear purpose
Clear goals
Correct skills
Mutual accountability
Shift roles when appropriate
See Learning Objective 4: Contrast the various organizational models.
Important For Small Teams
This slide presents five important conditions for garnering the maximum benefits of small teams, according to Jon Katzenbach, co-author of The Wisdom of Teams.
Ask the students: Which of these five conditions do you believe would be most important in your team experience? Why? (The most critical factor of these five conditions, according to Katzenbach, is a clear performance purpose for the team.)
Source: CIO Magazine, accessed November 2014.
8-42

43. TEST PREP What’s the difference between line and staff personnel?
What management principle does a matrix-style organization challenge?
What’s the main difference between a matrix- style organization’s structure and the use of cross-functional teams?
Line personnel are responsible for directly achieving organizational goals. Line personnel include production workers, distribution people, and marketing personnel. Staff personnel advise and assist line personnel in meeting their goals.
The flexibility inherent in the matrix-style organization directly challenge the rigid line and line-and-staff organization structures.
The main difference between matrix-style organization and cross-functional teams is that cross-functional teams tend to be long-lived as compared to the temporary and fluid nature of teams in a matrix-style organization.
8-43

44. REAL-TIME BUSINESS
LO 8-5
Networking -- Using communications technology to link organizations and allow them to work together.
Most companies are no longer self-sufficient; they’re part of a global business network.
Real Time -- The present moment or actual time in which something takes place.
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
8-44

45. TRANSPARENCY and VIRTUAL CORPORATIONS
LO 8-5
Transparency -- When a company is so open to other companies that electronic information is shared as if the companies were one.
Virtual Corporation -- A temporary networked organization made up of replaceable firms that join and leave as needed.
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
8-45

46. A VIRTUAL CORPORATION LO 8-5 8-46
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
A Virtual Corporation
This slide illustrates the concept of a virtual corporation as an organizational model that could propel American businesses into the next century.
The theory behind the virtual corporation can be understood by picturing a company stripped to its core competencies. All other business functions will be accomplished by:
Forming joint ventures
Forming temporary alliances with other virtual companies with different areas of expertise
Hiring consulting services
Outsourcing or subcontracting of services
Share with the students some other interesting concepts of a virtual corporation:
On-demand knowledge workers who operate independently
Skill-selling professionals such as engineers, accountants, human resource experts who manage your projects from their homes through worldwide telecommunications
Team-building will change as companies hire individuals with expertise in various areas to solve business problems. As a solution is identified, the team will cease to exist.
8-46

47. CUTTING BACK WHILE CUTTING COSTS
Hiring workers is a major expense for small business owners.
This has led to more offshore outsourcing.
The increase can be partly attributed to the presence of online job marketplaces like ODesk.
See Learning Objective 6: Explain how organizational culture can help businesses adapt to change.
8-47

48. BENCHMARKING and CORE COMPETENCIES
LO 8-5
Benchmarking -- Compares an organization’s practices, processes and products against the world’s best.
Core Competencies -- The functions an organization can do as well as or better than any other organization in the world.
K2 Skis researched other companies’ practices in order to create the best possible skis and snowboards.
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
8-48

49. BENEFITS and CONCERNS of HEALTHCARE OUTSOURCING
LO 8-5
Benefits
Concerns
Provides enough staff to operate the facility
Lower employee morale
Cost savings
Liability
Should patients be informed
Confidentiality and security
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
Benefits and Concerns of Healthcare Outsourcing
This slide identifies the benefits and concerns of healthcare outsourcing.
Have the students identify the possible countries to which healthcare can be outsourced. (India is used by many hospitals and healthcare organizations due to availability of knowledge workers.)
Ask students: Why do you think these countries represent a threat to U.S. jobs? (Lower wages will result in lower costs.)
Ask the students about another country: What could be outsourced to South Africa? Why? (South Africa is considered a good choice for customer service centers for French, English, and German speaking customers. Work force is trained to speak several different languages while wages are low. As a global company dealing with consumer inquiries, the central location of a call center may reduce cost significantly.)
Source: Healthcare Financial Management.
8-49

50. WHICH JOBS are most often OUTSOURCED?
LO 8-5
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
Which Jobs Will Be Outsourced Next?
This slide supports the previous discussion of outsourcing by identifying the most common functional areas for whichU.S. companies plan on hiring outside organizations. The results are from the TEC International’s survey of 1,091 CEOs.
As mentioned in previous discussion, the number-one reason companies outsource is to reduce cost. This slide shows Manufacturing, Information Technology and Customer Support as the largest planned outsourced business categories.
Ask the students: Why do you think these categories are outsourced more often? (Manufacturing can be done a lot cheaper in a country with lower wages; IT and customer support represent functional areas that provide basic or routine types of job performance; unlike sales and marketing, where specific strategies are closely aligned to meet specific customer needs.)
Source: USA Today.
8-50

51. ADAPTING to MARKET CHANGES
LO 8-5
Change isn’t easy. Employees like to do things the way they always have.
Get rid of old, inefficient facilities and equipment.
Use the Internet to get to know your customers and sell directly to them.
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
8-51

52. KEEP in TOUCH Amazon and its Customer Database
LO 8-5
Amazon uses information stored in databases to reach out to customers. The company s customers letting them know about music, DVDs or books they might like based on past purchases.
Have you ever received an like this from Amazon or another company?
What benefits would a database of personal information, like past purchases, provide Amazon?
Do you think these databases are helpful for both companies and consumers or are they an invasion of privacy?
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
Keep in Touch
Information technology has allowed companies like Amazon to better understand customer needs.
Use the three questions on this slide to start a discussion with students in class.
8-52

53. Photo Credit: Marc Wathieu
MAKING the CHANGE
LO 8-5
Digital Natives -- Young people who have grown up using the Internet and social networking.
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
Photo Credit: Marc Wathieu
8-53

54. WHEN OPEN COMMUNICATION SHOULD NOT BE SO OPEN
The blending of mobile technology and work has been helpful to business.
However, it also has encroached on the traditional work-life boundaries.
Over 1/3 of surveyed employees responded that receive work- related s after hours, many complain it affects quality of life.
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
8-54

55. RESTRUCTURING
LO 8-5
Restructuring -- Redesigning an organization so it can more effectively and efficiently serve its customers.
Inverted Organization -- An organization that has contact people at the top and the CEO at the bottom of the organizational chart.
The manager’s job is to assist and support frontline workers, not boss them.
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
8-55

56. TRADITIONAL and INVERTED ORGANIZATIONS
LO 8-5
See Learning Objective 5: Identify the benefits of inter-firm cooperation and coordination.
1. The inverted organization structure is an alternative to the traditional management layers. The critical idea behind the inverted organization structure is that the managers’ job is to support and facilitate the jobs of the frontline people, not boss them around.
2. Ask the students: What type of organization structure would they prefer to work under: traditional or inverted? Why?
8-56

57. ORGANIZATIONAL CULTURE
LO 8-6
Organizational or Corporate Culture -- The widely shared values within an organization that foster unity and cooperation to achieve common goals.
Some of the best organizational cultures emphasize service.
Culture is shown in stories, traditions and myths.
See Learning Objective 6: Explain how organizational culture can help businesses adapt to change.
When you search for a job, make sure the organizational culture is one you can thrive in.
8-57

58. FORMAL ORGANIZATION
LO 8-6
Formal Organization -- Details lines of responsibility, authority and position.
The formal system is often slow and bureaucratic, but it helps guide the lines of authority.
No organization can be effective without formal and informal organization.
See Learning Objective 6: Explain how organizational culture can help businesses adapt to change.
8-58

59. INFORMAL ORGANIZATION
Informal Organization -- The system of relationships that develop spontaneously as employees meet and form relationships.
Informal organization helps foster camaraderie and teamwork among employees.
See Learning Objective 6: Explain how organizational culture can help businesses adapt to change.
8-59

60. LIMITATIONS of INFORMAL ORGANIZATIONS
The informal system is too unstructured and emotional on its own.
Informal organization may also be powerful in resisting management directives.
See Learning Objective 6: Explain how organizational culture can help businesses adapt to change.
8-60

61. GROUP NORMS Examples of Informal Group Norms
LO 8-6
Do your job but don’t produce more than the rest of your group.
Don’t tell off-color jokes or use profanity.
Everyone is to be clean and organized at the workstation.
Respect and help your fellow group members.
Drinking is done off the job – NEVER at work.
See Learning Objective 6: Explain how organizational culture can help businesses adapt to change.
Examples of Informal Group Norms
Group norms are an interesting topic to discuss in teaching organizational structure. This slide illustrates some informal group norms.
Ask students: Have you ever felt pressure to conform to such informal norms? If you gave in to group pressure not to produce more than the rest of the group, did you feel good about yourself? (Focus on the self-gratification feeling of a job well-done and the corresponding compensation.)
Discuss the importance of informal groups in an organization that become somewhat formal themselves (i.e. labor unions).
Source: CIO Magazine, accessed November 2014.
8-61

62. TEST PREP What is an inverted organization?
Why do organizations outsource functions?
What is organizational culture?
Some service-oriented organizations have elected to turn the traditional organizational structure upside down. An inverted organization has employees who come into contact with customers at the top of the organization and the chief executive officer at the bottom. A manager’s job is to assist and support frontline people, not tell them what to do.
In the past organizations have often tried to do all functions themselves, maintaining departments for each function including: accounting, finance, marketing, and production. If an organization is not able to efficiently perform the function themselves they will outsource the function. Outsourcing is the process of assigning various functions, such as accounting, production, security, maintenance, and legal work, to an outside firm. The goal is to retain the functions that the organization considers its core competencies.
Organizational or corporate culture is the widely shared values within an organization that create unity and cooperation. Usually the culture of an organization is passed to employees via stories, traditions, and myths.
8-62