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Organizations and Structures

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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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

5 Organization Chart April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

7 Economies of Work Specialization
Prentice Hall, 2002 April 18, 2006 LIS580- Spring 2006

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 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

24 Functional Departmentalization
FIGURE 6–1 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

26 Divisional Organization for a Pharmaceuticals Company
FIGURE 6–2 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

27 Customer Departmentalization, Grayson Steel Company
FIGURE 6–3 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

29 Marketing Channel Departmentalization
FIGURE 6–4 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

30 Divisional Organizations Facilitate Coordination
FIGURE 6–5 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 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 LIS580- Spring 2006

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 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

35 Matrix Organization Departmentalization
FIGURE 6–6 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

38 The New Summer Tour Organization
FIGURE 6–8 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

43 The Horizontal Corporation
Source: John A. Byrne, “The Horizontal Corporation,” Business Week, 20 December 1993, p. 80. FIGURE 6–11 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

47 Effect of Technology on Structure
G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

51 Organizational Learning as a Dynamic Process
Crossan, Lane, & White (1999) April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 G.Dessler, 2003 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 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 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 LIS580- Spring 2006

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 April 18, 2006 LIS580- Spring 2006

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 LIS580- Spring 2006

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? April 18, 2006 LIS580- Spring 2006

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


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