1. Organizations and Structures
Module 7
LIS 580: Spring 2006
Instructor- Michael Crandall

2. Roadmap Organizing and organizations Structure of organizations
Matrix organizations
Networked organizations
Learning organizations
Challenges in organizations
April 18, 2006
LIS580- Spring 2006

3. What Is Organizing? Organizing
Arranging the activities of the enterprise in such a way that they systematically contribute to the enterprise’s goals.
G.Dessler, 2003
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4. Depicting the Organization
Organization Chart
A chart that shows the structure of the organization including the title of each manager’s position and, by means of connecting lines, who is accountable to whom and who has authority for each area.
G.Dessler, 2003
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LIS580- Spring 2006

5. Organization Chart
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6. Organization Design and Structure
A process in which managers develop or change their organization’s structure
Work specialization
A component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job
Prentice Hall, 2002
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7. Economies of Work Specialization
Prentice Hall, 2002
April 18, 2006
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8. Stages of Organizational Development
Simple structure
An organization that is low in specialization and formalization but high in centralization
Functional structure
An organization in which similar and related occupational specialties are grouped together
Divisional structure
An organization made up of self-contained units
Prentice Hall, 2002
April 18, 2006
LIS580- Spring 2006

9. Stages of Organizational Development (cont’d)
Matrix structure
An organization in which specialists from functional departments are assigned to work on one or more projects led by a project manager
Team-based structure
An organization that consists entirely of work groups or teams
Boundaryless organization
An organization that is not defined or limited by boundaries or categories imposed by traditional structures
Prentice Hall, 2002
April 18, 2006
LIS580- Spring 2006

10. Mechanistic and Organic Organizations
Mechanistic organization
The bureaucracy; a structure that is high in specialization, formalization, and centralization
Organic organization
An adhocracy; a structure that is low in specialization, formalization, and centralization
Structure follows strategy
Prentice Hall, 2002
April 18, 2006
LIS580- Spring 2006

11. Burns and Stalker
G.Dessler, 2003
April 18, 2006
LIS580- Spring 2006

12. Structure Variables Principles Departmentalization Chain of command
Span of control
Authority
Power
Responsibility
Departmentalization
Functional
Divisional
Product
Customer
Geographic
Process
Prentice Hall, 2002
April 18, 2006
LIS580- Spring 2006

13. Organizational Structure: Control
Chain of command
The management principle that no person should report to more than one boss
Span of control
The number of subordinates a manager can direct efficiently and effectively
Authority
The rights inherent in a managerial position to give orders and expect them to be obeyed
Responsibility
An obligation to perform assigned activities
Power
An individual’s capacity to influence decisions
Prentice Hall, 2002
April 18, 2006
LIS580- Spring 2006

14. Chain of Command April 18, 2006 LIS580- Spring 2006
Prentice Hall, 2002
April 18, 2006
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15. Tall And Flat Organizations, And The Span Of Control
The number of subordinates reporting directly to a supervisor.
Wide spans: larger number of direct reports.
Narrow spans: fewer number of direct reports.
Tall vs. Flat Organizations
Tall organizations: more management layers and more hierarchical controls.
Flat organizations: fewer management layer and decision making closer to the customer.
G.Dessler, 2003
April 18, 2006
LIS580- Spring 2006

16. Spans of Control in Country-Based Organization
FIGURE 6–9
G.Dessler, 2003
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17. Types of Organizational Authority
Line authority
The position authority (given and defined by the organization) that entitles a manager to direct the work of operative employees
Staff authority
Positions that have some authority (e.g., organization policy enforcement) but that are created to support, assist, and advise the holders of line authority
Prentice Hall, 2002
April 18, 2006
LIS580- Spring 2006

18. Authority Versus Power
Prentice Hall, 2002
April 18, 2006
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19. Types of Power Legitimate Coercive Reward Expert Referent
Power based on one’s position in the formal hierarchy
Coercive
Power based on fear
Reward
Power based on the ability to distribute something that others value
Expert
Power based on one’s expertise, special skill, or knowledge
Referent
Power based on identification with a person who has resources or traits
Prentice Hall, 2002
April 18, 2006
LIS580- Spring 2006

20. Checklist 7.3 Principles of Delegation
The manager can delegate authority but cannot delegate responsibility.
Clarify the assignment.
Delegate, don’t abdicate.
Know what to delegate.
Specify the subordinate’s range of discretion.
Authority should equal responsibility.
Make the person accountable for results.
Beware of backward delegation.
G.Dessler, 2003
April 18, 2006
LIS580- Spring 2006

21. Departmentalization: Creating Departments
The process through which an organization’s activities are grouped together and assigned to managers; the organizationwide division of work.
G.Dessler, 2003
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22. Departmentalization Functional Product Customer Geographic Process
The grouping of activities by functions performed
Product
The grouping of activities by product produced
Customer
The grouping of activities by common customers
Geographic
The grouping of activities by territory
Process
The grouping of activities by work or customer flow
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23. Organizing Departments by Function
Functional Departmentalization
A form of organization that groups a company’s activities around essential functions such as
manufacturing,
sales, or finance.
G.Dessler, 2003
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24. Functional Departmentalization
FIGURE 6–1
G.Dessler, 2003
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25. Organizing Departments by Self-Contained Divisions/Purposes
Product Departmentalization
Grouping departments around a firm’s products or services, or each family of products or services; also referred to as a “divisional” organization.
Customer Departmentalization
Self-contained departments are organized to serve the needs of specific groups of customers.
G.Dessler, 2003
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LIS580- Spring 2006

26. Divisional Organization for a Pharmaceuticals Company
FIGURE 6–2
G.Dessler, 2003
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27. Customer Departmentalization, Grayson Steel Company
FIGURE 6–3
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28. Organizing Departments by Self-Contained Divisions/Purposes (cont’d)
Marketing-channel Departmentalization
Departments focus on particular marketing channels, such as drugstores or grocery stores.
Geographic (Territorial) Departmentalization
Separate departments are established for each of the territories in which the enterprise does business.
G.Dessler, 2003
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29. Marketing Channel Departmentalization
FIGURE 6–4
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30. Divisional Organizations Facilitate Coordination
FIGURE 6–5
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31. Checklist 6.1 Functional vs. Divisional Organizations
Functional Organization Advantages
It is simple, obvious, and logical.
It fosters efficiency.
It can simplify executive hiring and training.
It can facilitate the top manager’s control.
Functional Organization Disadvantages
It increases the workload on the executive to whom the functional department heads report.
It may reduce the firm’s sensitivity to and service to the customer.
It produces fewer general managers.
G.Dessler, 2003
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LIS580- Spring 2006

32. Checklist 6.1 (cont’d) Functional vs. Divisional Organizations
Divisional Organization Advantages
The product or service gets the single-minded attention of its own general manager and unit, and its customers may get better, more responsive service.
It’s easier to judge performance.
It develops general managers.
It reduces the burden for the company’s CEO.
G.Dessler, 2003
April 18, 2006
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33. Checklist 6.1 (cont’d) Functional vs. Divisional Organizations
Divisional Organization Disadvantages
It creates duplication of effort.
It may diminish top management’s control.
It requires more managers with general management abilities.
It can breed compartmentalization.
G.Dessler, 2003
April 18, 2006
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34. Creating Matrix Organizations
An organization structure in which employees are permanently attached to one department but also simultaneously have ongoing assignments in which they report to project, customer, product, or geographic unit heads.
G.Dessler, 2003
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LIS580- Spring 2006

35. Matrix Organization Departmentalization
FIGURE 6–6
G.Dessler, 2003
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36. Matrix Organizations Advantages Access to expertise.
Stability of permanent department assignments for employees.
Allows for focus on specific projects, products, or customers.
Disadvantages
Confusion of command.
Power struggles and conflicts.
Lost time in coordinating.
Excess overhead for managing matrix functions.
G.Dessler, 2003
April 18, 2006
LIS580- Spring 2006

37. Departmentalization in Practice: A Hybrid
Why mix the types of departmentalization?
Hierarchical considerations
The relationship of top level departments to their subsidiary departments.
Efficiency
Product, customer, and territorial departments tend to result in duplicate sales, manufacturing, and other functional departments.
Common sense
Departmentalizing is still more an art than a science.
G.Dessler, 2003
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LIS580- Spring 2006

38. The New Summer Tour Organization
FIGURE 6–8
G.Dessler, 2003
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39. Network-based Organizations
Organizational Network
A system of interconnected or cooperating individuals.
Informal Networks
Communication pathways and relationships between individuals in an organization that do not necessarily conform to the formal chain of command and communication networks of an organization.
G.Dessler, 2003
April 18, 2006
LIS580- Spring 2006

40. Network-based Organizations (cont’d)
Formal Organizational Network
A recognized group of managers or other employees assembled by the CEO and the other senior executive team, drawn from across the company’s functions, business units, geography, and levels.
Electronic Organizational Networks
Networking through technology-supported devices such as , video-conferencing, and collaborative computing software like Lotus Notes.
G.Dessler, 2003
April 18, 2006
LIS580- Spring 2006

41. Formal vs. Social Structure
Rarely do the communication patterns match the formal structure
Cross, Rob. A bird's-eye view: Using social network analysis to improve knowledge creation and sharing. IBM Executive strategy report  04Jun
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42. Network-based Organizations (cont’d)
Team-Based Organizations
Team
A group of people committed to a common purpose, set of performance goals, and approach for which they hold themselves mutually accountable.
Horizontal Corporations
A structure that is organized around customer-oriented processes performed by multidisciplinary cross-functional teams rather than by formal functional departments.
G.Dessler, 2003
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43. The Horizontal Corporation
Source: John A. Byrne, “The Horizontal Corporation,” Business Week, 20 December 1993, p. 80.
FIGURE 6–11
G.Dessler, 2003
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44. Checklist 6.2 Building Horizontal Organizations
Make responsibilities overlap. Design individual jobs as broadly as possible, and keep the number of job titles to a minimum.
Base rewards on unit performance to emphasize the importance of working together.
Change the physical layout to promote collective responsibility. Let people see each other’s work.
Redesign work procedures, provide computer terminals, use the network, and make sure managers are available.
G.Dessler, 2003
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45. How to Create a Horizontal Corporation
Source: Source: Reprinted from the December 20, 1993, issue of Business Week by special permission. Copyright © 1993 by the McGraw-Hill Companies, Inc.
FIGURE 6–12
G.Dessler, 2003
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46. Other Organization Types
Federal Organization
An organization in which power is distributed between a central unit and a number of constituents, but the central unit’s authority is intentionally limited.
Virtual Organization
A temporary network of independent companies that use information technology to share skills, reduce costs, and provide access to one another’s markets.
Its success depends on each of the individual firms’ responsibility and self-interest to accomplish the network’s purpose.
G.Dessler, 2003
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47. Effect of Technology on Structure
G.Dessler, 2003
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48. When Organizing: Always Keep Your Goals in Mind
Business environments are in a constant state of change.
An organization’s strategy must be adapted to changes in its competitive environment.
Structure follows strategy.
Strategic change creates the need for restructuring the organization to acquire new and different knowledge, skills and abilities.
G.Dessler, 2003
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49. Checklist 7.1 What Determines Organization Structure
Environment. Fast-changing environments require organic structures; slowly changing environments favor mechanistic structures.
Technology. Unit and continuous production processes favor organic structures. Mass production processes favor mechanistic structures.
Goals. Ask, “What are the main goals we want to achieve via this organization?”
Pros and cons. Each approach to departmentalization has pros and cons.
Logic and common sense.
G.Dessler, 2003
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50. What Are Learning Organizations?
Adopt an organic, networked organizational form.
Encourage their employees to learn and to confront their assumptions
Have employees who share a common vision
Have the capacity
to adapt to unforeseen situations
to learn from their own experiences
to shift their shared mindsets
to change more quickly, broadly, and deeply than ever before.
G.Dessler, 2003
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51. Organizational Learning as a Dynamic Process
Crossan, Lane, & White (1999)
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52. Abolishing Organizational Boundaries
Boundaryless Organization
An organization in which management strips away the “walls” which typically separate organizational functions and hierarchical levels, through
the widespread use of
teams, networks, and
similar structural
mechanisms.
G.Dessler, 2003
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53. The Four Organizational Boundaries That Matter
Source: Reprinted by permission of Harvard Business Review. “The Four Organizational Boundaries that Matter,” from “The New Boundaries of the Boundaryless Company,” by Larry Hirschorn and Thomas Gilmore, May–June Copyright © 1992 by the President and Fellows of Harvard College. All rights reserved.
FIGURE 0–3
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54. Managing Learning Organizations
How to Streamline Organizational Decision Making
Downsize
Reduce management layers
Establish miniunits
How to Cultivate Employees’ Personal Mastery
Provide continuous learning opportunities.
Foster inquiry and dialogue.
Establish mechanisms to ensure that the organization is continuously aware of and can interact with its environment.
G.Dessler, 2003
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LIS580- Spring 2006

55. Challenges in Organization
Merging separate organizations with different structures
Changing an existing organization to meet external or internal changes in conditions
Conflicts between departments or groups
Interdependence between organizational units
Centralization vs. decentralization
April 18, 2006
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56. Part of the “Independent Integrator” Challenge Facing the Homeland Security Director
Source: Alison Mitchell, “Disputes Erupt over Ridges Needs for His Job,” New York Times, 9 November 2001, p. B7.
FIGURE 7–5
G.Dessler, 2003
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57. Methods for Achieving Coordination
Mutual Adjustment
Achieving coordination through face-to-face interpersonal interaction.
Use Rules and Procedures
Standardize
Exercise Direct Supervision: Use the Chain of Command
Divisionalize
Appoint Staff Assistants
Appoint Liaisons
Appoint Committees
Organize Independent Integrators
An individual or a group that coordinates the activities of several interdependent departments, but is independent of them.
G.Dessler, 2003
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58. Managing Organizational Conflict
Line–Staff Conflict
Disagreements between a line manager and the staff manager who is giving him or her advice.
How to Organize to Reduce Interunit Conflict
Appeal to power and
the chain of command
Reduce interdependence
Exchange personnel
G.Dessler, 2003
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59. Types of Interdependence
Source: Based on James Thompson, Organizations in Action (New York: McGraw-Hill, 1967), Chapter 2.
FIGURE 7–6
G.Dessler, 2003
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60. Centralization and Decentralization
A function of how much decision-making authority is pushed down to lower levels in an organization; the more centralized an organization, the higher the level at which decisions are made
Decentralization
The pushing down of decision-making authority to the lowest levels of an organization
Prentice Hall, 2002
April 18, 2006
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61. Decentralize? Decentralized Organization Decentralization Rules:
Organizational authority for most departmental decisions is delegated to the department heads.
Control for major companywide decisions is maintained at the headquarters office.
Decentralization Rules:
Decentralize decisions that affect only one division or area and that would take a long time for upper management to make.
Centralize decisions that could adversely affect the entire firm and that upper management can fairly quickly and easily.
G.Dessler, 2003
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62. Problems With Size
“There is a fairly common perception that large organizations tend to behave much less “intelligently” than their size suggests. They often lose the decisiveness seen in small groups and may seem "stupid" to people within them who work with ideas and knowledge.”
“There appears to be a fundamental upper limit on the average per capita decision rate that an organization can sustain, depending inversely on the organization's entropy. If the limit is broached, impaired productivity among knowledge managers may result and large organizations may be disadvantaged when performing knowledge-intensive tasks that require efficient use of intellectual capital.”
Janow, R. Shannon “Entropy and Productivity: Why Big Organizations Can Seem Stupid”. Analytic Solutions Group, LLC. 2/28/2004
April 18, 2006
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63. Hammer vs. Deming
What tradeoffs did Deming and Hammer make in their approaches to designing organizations?
Did you notice who was given power in Deming’s approach vs. Hammer?
What is driving NYNEX to make changes in their organization structure?
What component of the organization is hardest to change?
Do you see the same issues arising in the “War at Work” article?
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64. Next Time Managing People Discussion group questions:
Read Chapter 9 (not 8!!) and the articles
Discussion group questions:
How can relations be improved between Stanley and the reference librarians?
How, without simply complaining about Stanley, can you persuade Joanna to listen to the reference department’s perspective?
Who defines the responsibilities of each department, and how can you, as an interested party, help accomplish this?
April 18, 2006
LIS580- Spring 2006