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Managing Organizational

Structure and Culture


McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.
chapter ten
10-3
Learning Objectives
Identify 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.
10-4
Learning Objectives
Explain 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 culture
10-5
Organizational Structure
Organizational Architecture
The organizational structure, control
systems, culture, and human resource
management systems that together
determine how
efficiently and
effectively
organizational
resources are used.
10-6
Designing Organizational Structure
Organizing
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.
10-7
Designing Organizational Structure
Organizational 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

10-8
Factors Affecting Organizational Structure
Figure 10.1
10-9
The Organizational Environment
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.
10-10
The Organizational Environment
Strategy
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 Environment
Technology
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.
10-12
The Organizational Environment
Technology
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.
10-13
The Organizational Environment
Human Resources
Highly skilled workers whose jobs require
working in teams usually need a more
flexible structure.
Higher skilled workers (e.g., CPAs and
doctors) often have internalized professional
norms and values.
10-14
The Organizational Environment
Human Resources
Managers must take into account all four
factors (environment, strategy, technology
and human resources) when designing the
structure of the organization.
10-15
The Organizational Environment
The way an organizations structure works
depends on the choices managers
make about:
1. How to group tasks into individual jobs
2. How to group jobs into functions and
divisions
3. How to allocate authority and
coordinate functions and divisions

10-16
Job Design
Job 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.

10-17
Question?
What is the process of reducing the tasks
each worker performs?
A. Job simplification
B. Job enlargement
C. Job enrichment
D. Job enhancement
10-18
Job Design
Job Simplification
The process of reducing the tasks each
worker performs.
Too much simplification and boredom
results.
10-19
Job Design
Job 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

10-20
Job Enrichment
1. Empowering workers to experiment to
find new or better ways of doing the job
2. Encouraging workers to develop new
skills
3. Allowing workers to decide how to do
the work
4. Allowing workers to monitor and
measure their own performance
10-21
The Job Characteristics Model
Figure 10.2
Source: Adapted from J. R. Hackman and G. R. Oldham,
Work Redesign (Reading, MA: Addison-Wesley, 1980).
10-22
Job Characteristics Model
Job Characteristic
Skill variety Employee uses a wide range of skills.
Task identity Worker is involved in all tasks of the job
from beginning to end of the production
process
Task significance Worker feels the task is meaningful to
organization.
Autonomy Employee has freedom to schedule tasks
and carry them out.
Feedback Worker gets direct information about how
well the job is done.

10-23
Grouping Jobs into Functions
Function
Group of people, working together, who
possess similar skills or use the same kind
of knowledge, tools, or techniques to
perform their jobs
10-24
Grouping Jobs into Functions
Functional Structure
An organizational structure composed of all
the departments that an organization
requires to produce its goods or services.
10-25
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
10-26
Functional Structure
Disadvantages
Difficult for departments to communicate
with others.
Preoccupation with own department and
losing sight of organizational goals.


10-27
Figure10.3
The
Functional
Structure of
Pier 1
Imports
10-28
Divisional Structures
Divisional Structure
Managers create a series of business units
to produce a specific kind of product for a
specific kind of customer
10-29
Figure 10.4
Product,
Market, and
Geographic
Structures
10-30
Types of Divisional Structures
Product 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 industry
10-31
Product Structure
Allows 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

10-32
Types of Divisional Structures
Geographic 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

10-33
Types of Divisional Structures
Global Product Structure
Each product division takes responsibility
for deciding where to manufacture its
products and how to market them in foreign
countries worldwide
10-34
Global Geographic and
Global Product Structures
Figure 10.5
10-35
Types of Divisional Structures
Market 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 needs
10-36
Matrix Design Structure
Matrix 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.
10-37
Matrix Structure
Figure 10.6
10-38
Discussion Question?
Which is the most effective and efficient
organizational structure?
A. Matrix structure
B. Divisional structure
C. Market structure
D. Geographic structure
10-39
Product Team Design Structure
Product 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 work
10-40
Product Team Design Structure
Product Team Structure
Cross-functional team is composed of a
group of managers from different
departments working together to perform
organizational tasks.

10-41
Product Team Structure
Figure 10.6
10-42
Hybrid Structures
Hybrid Structure
The structure of a large organization that
has many divisions and simultaneously
uses many different organizational
structures
10-43
Federateds Hybrid Structure
Figure 10.7
10-44
Question?
What is the power vested in a manager to
make decisions?
A. Power
B. Influence
C. Authority
D. Control
10-45
Coordinating Functions:
Allocating Authority
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
10-46
Coordinating Functions:
Allocating Authority
Hierarchy of Authority
An organizations chain of command,
specifying the relative authority of each
manager.
Span of Control: the number of
subordinates who report directly to a
manager

10-47
Allocating Authority
Line 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.
10-48
Figure 10.8
The
Hierarchy
of Authority
and Span
of Control
at
McDonalds
Corporatio
n
10-49
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
10-50
Tall Organizations
Figure 10.9
10-51
Tall and Flat Organizations
Flat structures have fewer levels and
wide spans of control.
Structure results in quick communications
but can lead to overworked managers.

10-52
Flat Organizations
Figure 10.9
10-53
Minimum Chain of Command
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
10-54
Centralization and Decentralization of
Authority
Decentralizing authority
giving lower-level managers and non-
managerial employees the right to make
important decisions about how to use
organizational resources
10-55
Decentralizing Authority
Disadvantages
Teams may begin to pursue their own goals
at the expense of organizational goals
Can result in a lack of communication
among divisions
10-56
Integrating Mechanisms
Figure 10.10
10-57
Organizational Culture
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
10-58
Sources of an Organizations Culture
Figure 10.11
10-59
Characteristics of Organizational
Members
Ultimate 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
environment
10-60
Organizational Ethics
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
10-61
Employment Relationship
Human resource policies:
Can influence how hard employees will
work to achieve the organizations goals,
How attached they will be to it
Whether or not they will buy into its values
and norms
10-62
Organizational Structure
In a centralized organization:
people have little autonomy
norms that focus on being cautious, obeying
authority, and respecting traditions emerge
predictability and stability are desired goals
10-63
Organizational Structure
In 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.

10-64
Strong, Adaptive Cultures Versus
Weak, Inert Cultures
Adaptive cultures
values and norms help an organization to
build momentum and to grow and change
as needed to achieve
its goals and be
effective
10-65
Strong, Adaptive Cultures Versus
Weak, Inert Cultures
Inert cultures
Those that lead to values and norms that
fail to motivate or inspire employees
Lead to stagnation and often failure over
time
10-66
Movie Example: Apollo 13
What organizational
structure does
NASA use
to handle a moon
launch?

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