Chapter 8 Organization Structure, Culture, and Change

2 Principles of Organization in a Bureaucracy 1. Hierarchy of authority 2. Unity of command (one boss only) 3. Task specialization 4. Responsibilities and job descriptions 5. Line and staff functions (primary purpose of organization versus support activities)

3 Departmentalization Functional: arrange by functions such as marketing or information technology Geographic: arrange by territory, such as northern and southern Product-Service: arrange according to products or services, such as Gatorade division of PepsiCo.

4 The Matrix Organization A project structure is superimposed on a functional structure to capitalize on the advantages of both. Function Project Worker Program CEO Project workers have two bosses

5 Flat Structures Has relatively few layers. Shorter chain of command can lead to faster decision making. Managers have larger spans of control Fewer layers can save money, yet many valuable managers might be eliminated.

6 Outsourcing Other companies perform your work, often in lower-wage area. High-level work, such as marketing, is also subject to outsourcing. Homeshoring (moving customer service into workers’ homes) is popular. Outsourcing saves money yet not so good for building loyal and proud workforce.

7 Informal Structures and Communication Networks Informal structure adds flexibility and speed to formal structure through unofficial relationships. Informal networks are contacts used to accomplish work. Information technology can help solve problems through information networks.

8 Selection of Organization Structure Company strategy and goals High technology versus low technology Large size versus small size Financial condition of the firm (e.g. flat structure costs less than tall structure) Environmental stability (flexible structure better suited for uncertainty)

9 Delegation Suggestions 1. Assign duties to right people. 2. Delegate whole task, let go of details. 3. Give as much instruction as needed. 4. Retain some important tasks. 5. Get feedback on delegated task.

10 Dimensions of Organizational Culture 1. Values 2. Relative diversity 3. Resource allocation and rewards 4. Degree of change 5. Strength of the culture (strong culture guides employees in everyday actions)

11 Consequences of Organizational Culture 1. Gaining competitive advantage 2. Productivity, quality, and morale 3. Innovation if creativity is encouraged 4. Effectiveness of merger with another company 5. Closeness of person-organization fit 6. Direction of leadership activity

12 Why Workers Resist Change 1. Fear of unfavorable outcome 2. Not wanting to break old habits 3. Personality factors such as rigidity 4. Fear of not having right skills 5. Preference for “familiar devil” 6. Perceived weaknesses of change

13 Gaining Support for Change 1. Allow for discussion and negotiation. 2. Allow for participation. 3. Point out financial benefits. 4. Avoid change overload. 5. Observation of successful change. 6. Get best people behind program.

14 Six Sigma and Planned Change Shift is to high-quality company, following the standard: 1. Six Sigma = 3.4 errors in 1 million opportunities. 2. Six Sigma also refers to philosophy of driving out waste and improving quality, and cost performance. 3. Highly data-driven and behavioral

15 DICE Framework for Change Management D. Short duration of project is better. I. Integrity (good) of performance counts. C. Commitment of senior executives and staff to the change effort. E. Additional effort required of all employees affected by the change.