Managing Organizational Structure and Culture

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2. Managing Organizational Structure and CultureMcGraw-Hill/Irwin Contemporary Management, 5/eCopyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.chapter ten
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.3
4. Learning ObjectivesExplain why managers must coordinate jobs, functions, and divisions using the hierarchy of authority and integrating mechanisms List the four sources of organizational culture and differentiate between a strong, adaptive culture and a weak, inert culture4
5. Organizational StructureOrganizational Architecture The organizational structure, control systems, culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used.5
6. Designing Organizational StructureOrganizing The process by which managers establish working relationships among employees to achieve goals. Organizational Structure Formal system of task and reporting relationships showing how workers use resources.6
7. Designing Organizational StructureOrganizational design The 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 7
8. Factors Affecting Organizational StructureFigure 10.18
9. The Organizational EnvironmentThe 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.9
10. The Organizational EnvironmentStrategy Different 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.10
11. The Organizational EnvironmentTechnology The 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.11
12. The Organizational EnvironmentTechnology Technology 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.12
13. The Organizational EnvironmentHuman Resources Highly 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.13
14. The Organizational EnvironmentHuman Resources Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization.14
15. The Organizational EnvironmentThe way an organization’s structure works depends on the choices managers make about: How to group tasks into individual jobs How to group jobs into functions and divisions How to allocate authority and coordinate functions and divisions 15
16. Job DesignJob Design The process by which managers decide how to divide tasks into specific jobs. The appropriate division of labor results in an effective and efficient workforce. 16
17. Job DesignJob Simplification The process of reducing the tasks each worker performs. Too much simplification and boredom results.17
18. Job DesignJob Enlargement Increasing the number of different tasks in a given job by changing the division of labor Job Enrichment Increasing the degree of responsibility a worker has over a job 18
19. Job EnrichmentEmpowering workers to experiment to find new or better ways of doing the job Encouraging workers to develop new skills Allowing workers to decide how to do the work Allowing workers to monitor and measure their own performance19
20. The Job Characteristics ModelFigure 10.2Source: Adapted from J. R. Hackman and G. R. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980).20
21. Job Characteristics Model21
22. Grouping Jobs into FunctionsFunction Group of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs22
23. Grouping Jobs into FunctionsFunctional Structure An organizational structure composed of all the departments that an organization requires to produce its goods or services.23
24. Functional StructureAdvantages 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 environment24
25. Functional StructureDisadvantages Difficult for departments to communicate with others. Preoccupation with own department and losing sight of organizational goals. 25
26. Figure10.3The Functional Structure of Pier 1 Imports26
27. Divisional StructuresDivisional Structure Managers create a series of business units to produce a specific kind of product for a specific kind of customer27
28. Figure 10.4Product, Market, and Geographic Structures28
29. Types of Divisional StructuresProduct Structure Managers place each distinct product line or business in its own self-contained division Divisional managers have the responsibility for devising an appropriate business-level strategy to allow the division to compete effectively in its industry29
30. Product StructureAllows functional managers to specialize in one product area Division managers become experts in their area Removes need for direct supervision of division by corporate managers Divisional management improves the use of resources 30
31. Types of Divisional StructuresGeographic Structure Divisions are broken down by geographic location Global geographic structure Managers locate different divisions in each of the world regions where the organization operates. Generally, occurs when managers are pursuing a multi-domestic strategy 31
32. Types of Divisional StructuresGlobal Product Structure Each product division takes responsibility for deciding where to manufacture its products and how to market them in foreign countries worldwide32
33. Global Geographic and Global Product StructuresFigure 10.533
34. Types of Divisional StructuresMarket Structure Groups divisions according to the particular kinds of customers they serve Allows managers to be responsive to the needs of their customers and act flexibly in making decisions in response to customers’ changing needs34
35. Matrix Design StructureMatrix Structure An 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.35
36. Matrix StructureFigure 10.636
37. Product Team Design StructureProduct Team Structure Does away with dual reporting relationships and two-boss managers Functional employees are permanently assigned to a cross-functional team that is empowered to bring a new or redesigned product to work37
38. Product Team Design StructureProduct Team Structure Cross-functional team is composed of a group of managers from different departments working together to perform organizational tasks. 38
39. Product Team StructureFigure 10.639
40. Hybrid StructuresHybrid Structure The structure of a large organization that has many divisions and simultaneously uses many different organizational structures40
41. Federated’s Hybrid StructureFigure 10.741
42. Coordinating Functions:Allocating AuthorityAuthority The power vested in a manager to make decisions and use resources to achieve organizational goals by virtue of his position in an organization42
43. Coordinating Functions:Allocating AuthorityHierarchy of Authority An 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 43
44. Allocating AuthorityLine Manager Someone in the direct line or chain of command who has formal authority over people and resources Staff Manager Managers who are functional-area specialists that give advice to line managers.44
45. Figure 10.8The Hierarchy of Authority and Span of Control at McDonald’s Corporation45
46. Tall and Flat OrganizationsTall 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 expensive46
47. Tall OrganizationsFigure 10.947
48. Tall and Flat OrganizationsFlat structures have fewer levels and wide spans of control. Structure results in quick communications but can lead to overworked managers. 48
49. Flat OrganizationsFigure 10.949
50. Minimum Chain of CommandMinimum Chain of Command Top managers should always construct a hierarchy with the fewest levels of authority necessary to efficiently and effectively use organizational resources50
51. Centralization and Decentralization of AuthorityDecentralizing authority giving lower-level managers and non-managerial employees the right to make important decisions about how to use organizational resources51
52. Decentralizing AuthorityDisadvantages Teams may begin to pursue their own goals at the expense of organizational goals Can result in a lack of communication among divisions52
53. Integrating MechanismsFigure 10.1053
54. Organizational CultureOrganizational 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 goals54
55. Sources of an Organization’s CultureFigure 10.1155
56. Characteristics of Organizational MembersUltimate source of organizational culture is the people that make up the organization Members become similar over time which may hinder their ability to adapt and respond to changes in the environment56
57. Organizational EthicsOrganizational 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 organization57
58. Employment RelationshipHuman resource policies: Can influence how hard employees will work to achieve the organization’s goals, How attached they will be to it Whether or not they will buy into its values and norms 58
59. Organizational StructureIn a centralized organization: people have little autonomy norms that focus on being cautious, obeying authority, and respecting traditions emerge predictability and stability are desired goals59
60. Organizational StructureIn a flat, decentralized structure: people have more freedom to choose and control their own activities norms that focus on being creative and courageous and taking risks appear gives rise to a culture in which innovation and flexibility are desired goals. 60
61. Strong, Adaptive Cultures Versus Weak, Inert CulturesAdaptive cultures values and norms help an organization to build momentum and to grow and change as needed to achieve its goals and be effective61
62. Strong, Adaptive Cultures Versus Weak, Inert CulturesInert cultures Those that lead to values and norms that fail to motivate or inspire employees Lead to stagnation and often failure over time62

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