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 © 2010 John Wiley & Sons, Inc. 16-2

Societal goals  Reflect an organization’s intended contributions to the broader society.  Enable organizations to make legitimate claims over resources, individuals, markets, and products. Copyright © 2010 John Wiley & Sons, Inc. 16-3

 A written statement of organizational purpose.  A good mission statement identifies whom the firm will serve and how it will go about accomplishing its societal purpose. Copyright © 2010 John Wiley & Sons, Inc. Mission statement 16-4

Aflac Aflac “To combine innovative strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers.” Harley-Davidson 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 © 2010 John Wiley & Sons, Inc.

Output goals  Define the type of business the organization is pursuing.  Provide some substance to the more general aspects of mission statements. Copyright © 2010 John Wiley & Sons, Inc. 16-6

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. Copyright © 2010 John Wiley & Sons, Inc. 16-7

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. Copyright © 2010 John Wiley & Sons, Inc. 16-8

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 organization. Copyright © 2010 John Wiley & Sons, Inc. 16-9

Vertical specialization  A 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. Copyright © 2010 John Wiley & Sons, Inc

Organization charts  Diagrams that depict the formal structures of organizations.  Typically show the various positions, the position holders, and the lines of authority. Copyright © 2010 John Wiley & Sons, Inc

Copyright © 2010 John Wiley & Sons, Inc

Span of control  The number of individuals reporting directly to a supervisor.  New information technologies have made it possible for complex organizations to broaden span of control. Copyright © 2010 John Wiley & Sons, Inc

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, public relations). Copyright © 2010 John Wiley & Sons, Inc

Control  The set of mechanisms used to keep actions and outputs within predetermined limits.  Deals with:  Setting standards  Measuring results against standards  Instituting corrective action Copyright © 2010 John Wiley & Sons, Inc

Output controls  Focus on desired targets and allow managers to use their own methods to reach defined targets.  Part of overall method of managing by exception. Copyright © 2010 John Wiley & Sons, Inc

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. Copyright © 2010 John Wiley & Sons, Inc

Policy  Outlines important objectives and broadly indicates how activities are to be carried out. Procedures  Describes the best method for performing a task; shows which aspects of a task are most important. Copyright © 2010 John Wiley & Sons, Inc

Rules  Describe in detail how a task or a series of tasks is to be performed, or indicate what cannot be done. Copyright © 2010 John Wiley & Sons, Inc

Formalization The written documentation of policies, procedures, and rules 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 Copyright © 2010 John Wiley & Sons, Inc

Total Quality Management  Process approach to continual improvement based on statistical analyses of the firm’s operations.  Outlined by W. Edward Deming’s 14 points. Copyright © 2010 John Wiley & Sons, Inc

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. Copyright © 2010 John Wiley & Sons, Inc

Benefits of decentralization  Higher subordinate satisfaction.  Quicker response to a series of unrelated problems.  Assists in on-the-job training of subordinates for higher-level positions.  Encourages participation in decision making. Copyright © 2010 John Wiley & Sons, Inc

Horizontal specialization  A division of labor that establishes specific work units or groups within an organization. Functional departmentation  Grouping individuals by skill, knowledge, and action. Copyright © 2010 John Wiley & Sons, Inc

Functional departmentation  Grouping individuals by skill, knowledge, and action.  Examples include marketing, finance, production, and human resources.  Most frequent form of horizontal specialization found in organizations. Copyright © 2010 John Wiley & Sons, Inc

Copyright © 2010 John Wiley & Sons, Inc

Divisional departments  Individuals and departments are grouped by products, territories, services, clients, or legal entities. Copyright © 2010 John Wiley & Sons, Inc

Copyright © 2010 John Wiley & Sons, Inc

Matrix departmentation  Uses both the functional and divisional forms simultaneously. Copyright © 2010 John Wiley & Sons, Inc

Coordination  The set of mechanisms that an organization uses to link the actions of its units into a consistent pattern. Copyright © 2010 John Wiley & Sons, Inc

Personal methods of coordination  Produce synergy by promoting dialogue, discussion, innovation, creativity, and learning, both within and across units.  Common personal methods of coordination are direct contact and committee memberships. Copyright © 2010 John Wiley & Sons, Inc

Impersonal methods of coordination  Produce synergy by stressing consistency and standardization so that individual pieces fit together.  Contemporary use of matrix departmentation and management information systems for coordination. Copyright © 2010 John Wiley & Sons, Inc

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. Copyright © 2010 John Wiley & Sons, Inc

Mechanistic bureaucracy  Rigid, command-and-control structure.  Important when there is a need for uniform product quality, speedy service, and cleanliness Copyright © 2010 John Wiley & Sons, Inc

Benefits of the mechanistic type  Efficiency. Limitations of the mechanistic type  Employees dislike rigid designs, which makes work motivation problematic.  Unions may further solidify rigid designs.  Key employees may leave.  Can hinder organization’s ability to adapt. Copyright © 2010 John Wiley & Sons, Inc

Organic bureaucracy  Emphasizes horizontal specialization, lateral relations, and coordination.  Minimal use of formal procedures.  Considerable reliance on judgment of experts. Copyright © 2010 John Wiley & Sons, Inc

Benefits of the organic type  Good for problem solving and serving individual customer needs.  Centralized direction by senior management is less intense.  Good at detecting external changes and adjusting to new technologies. Copyright © 2010 John Wiley & Sons, Inc

Limitations of the organic type  Less efficient than mechanistic type.  Restricted capacity to respond to central management direction. Copyright © 2010 John Wiley & Sons, Inc

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. Copyright © 2010 John Wiley & Sons, Inc