1. PowerPoint Presentation to Accompany Management, 9/e John R. Schermerhorn, Jr. Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc. Chapter 10: Organizing Structures and Designs

2. Management 9/e - Chapter 102 Planning Ahead — Chapter 10 Study Questions  What is organizing as a management function?  What are the traditional types of organization structures?  What are the newer types of organization structures?  How are organizational designs changing the workplace?

3. Management 9/e - Chapter 103 Study Question 1: What is organizing as a management function?  Organizing and organization structure Organizing  The process of arranging people and other resources to work together to accomplish a goal. Organization structure  The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups.

4. Management 9/e - Chapter 104 Figure 10.1 Organizing viewed in relationship with the other management functions.

5. Management 9/e - Chapter 105 Study Question 1: What is organizing as a management function?  Formal structures  The structure of the organization in its official state. An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. An organization chart identifies the following aspects of formal structure:  The division of work.  Supervisory relationships.  Communication channels.  Major subunits.  Levels of management.

6. Management 9/e - Chapter 106 Study Question 1: What is organizing as a management function?  Informal structures  A “shadow” organization made up of the unofficial, but often critical, working relationships between organization members. Potential advantages of informal structures:  Helping people accomplish their work.  Overcoming limits of formal structure.  Gaining access to interpersonal networks.  Informal learning.

7. Management 9/e - Chapter 107 Study Question 1: What is organizing as a management function?  Informal structures (cont.) Potential disadvantages of informal structures:  May work against best interests of entire organization.  Susceptibility to rumor.  May carry inaccurate information.  May breed resistance to change.  Diversion of work efforts from important objectives.  Feeling of alienation by outsiders.

8. Management 9/e - Chapter 108 Study Question 2: What are the traditional types of organization structures?  Functional structures People with similar skills and performing similar tasks are grouped together into formal work units. Members work in their functional areas of expertise. Are not limited to businesses. Work well for small organizations producing few products or services.

9. Management 9/e - Chapter 109 Figure 10.2 Functional structures in a business, branch bank, and community hospital.

10. Management 9/e - Chapter 1010 Study Question 2: What are the traditional types of organization structures?  Potential advantages of functional structures: Economies of scale. Task assignments consistent with expertise and training. High-quality technical problem solving, In-depth training and skill development. Clear career paths within functions.

11. Management 9/e - Chapter 1011 Study Question 2: What are the traditional types of organization structures?  Potential disadvantages of functional structures: Difficulties in pinpointing responsibilities. Functional chimneys problem. Sense of cooperation and common purpose break down. Narrow view of performance objectives. Excessive upward referral of decisions.

12. Management 9/e - Chapter 1012 Study Question 2: What are the traditional types of organization structures?  Divisional structures Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region. Common in complex organizations. Avoid problems associated with functional structures.

13. Management 9/e - Chapter 1013 Figure 10.3 Divisional structures based on product, geography, customer, and process.

14. Management 9/e - Chapter 1014 Study Question 2: What are the traditional types of organization structures?  Potential advantages of divisional structures: More flexibility in responding to environmental changes. Improved coordination. Clear points of responsibility. Expertise focused on specific customers, products, and regions. Greater ease in restructuring.

15. Management 9/e - Chapter 1015 Study Question 2: What are the traditional types of organization structures?  Potential disadvantages of divisional structures: Duplication of resources and efforts across divisions. Competition and poor coordination across divisions. Emphasis on divisional goals at expense of organizational goals.

16. Management 9/e - Chapter 1016 Study Question 2: What are the traditional types of organization structures?  Types of divisional structures and how they group job and activities: Product structures focus on a single product or service. Geographical structures focus on the same location or geographical region. Customer structures focus on the same customers or clients. Process structures focus on the same processes.

17. Management 9/e - Chapter 1017 Study Question 2: What are the traditional types of organization structures?  Matrix structure Combines functional and divisional structures to gain advantages and minimize disadvantages of each. Used in:  Manufacturing  Service industries  Professional fields  Non-profit sector  Multi-national corporations

18. Management 9/e - Chapter 1018 Figure 10.4 Matrix structure in a small multi-project business firm.

19. Management 9/e - Chapter 1019 Study Question 2: What are the traditional types of organization structures?  Potential advantages of matrix structures : Better cooperation across functions. Improved decision making. Increased flexibility in restructuring. Better customer service. Better performance accountability. Improved strategic management.

20. Management 9/e - Chapter 1020 Study Question 2: What are the traditional types of organization structures?  Potential disadvantages of matrix structures : Two-boss system is susceptible to power struggles. Two-boss system can create task confusion and conflict in work priorities. Team meetings are time consuming. Team may develop “groupitis.” Increased costs due to adding team leers to structure.

21. Management 9/e - Chapter 1021 Study Question 3: What are the newer types of organization structures?  Guidelines for horizontal structures: Focus the organization around processes, not functions. Put people in charge of core processes. Decrease hierarchy and increase the use of teams. Empower people to make decisions critical to performance. Utilize information technology. Emphasize multiskilling and multiple competencies. Teach people how to work in partnership with others. Build a culture of openness, collaboration, and performance commitment.

22. Management 9/e - Chapter 1022 Study Question 3: What are the newer types of organization structures?  Team structures Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks. Often use cross-functional teams.

23. Management 9/e - Chapter 1023 Figure 10.5 How a team structure uses cross-functional teams for improved lateral relations.

24. Management 9/e - Chapter 1024 Study Question 3: What are the newer types of organization structures?  Potential advantages of team structures: Eliminates difficulties with communication and decision making. Eliminates barriers between operating departments. Improved morale. Greater sense of involvement and identification. Increased enthusiasm for work. Improved quality and speed of decision making.

25. Management 9/e - Chapter 1025 Study Question 3: What are the newer types of organization structures?  Potential disadvantages of team structures: Conflicting loyalties among members. Excessive time spent in meetings. Effective use of time depends on quality of interpersonal relations, group dynamics, and team management.

26. Management 9/e - Chapter 1026 Study Question 3: What are the newer types of organization structures?  Network structures A central core that is linked through networks of relationships with outside contractors and suppliers of essential services. Own only core components and use strategic alliances or outsourcing to provide other components.

27. Management 9/e - Chapter 1027 Figure 10.6 A network structure for a Web-based retail business.

28. Management 9/e - Chapter 1028 Study Question 3: What are the newer types of organization structures?  Potential advantages of network structures: Firms can operate with fewer full-time employees and less complex internal systems. Reduced overhead costs and increased operating efficiency. Permits operations across great distances.

29. Management 9/e - Chapter 1029 Study Question 3: What are the newer types of organization structures?  Potential disadvantages of network structures: Control and coordination problems may arise from network complexity. Potential loss of control over outsourced activities. Potential lack of loyalty among infrequently used contractors. Excessively aggressive outsourcing can be dangerous.

30. Management 9/e - Chapter 1030 Study Question 3: What are the newer types of organization structures?  Boundaryless organizations Eliminate internal boundaries among subsystems and external boundaries with the external environment. A combination of team and network structures, with the addition of “temporariness.” Key requirements:  Absence of hierarchy.  Empowerment of team members.  Technology utilization.  Acceptance of impermanence.

31. Management 9/e - Chapter 1031 Study Question 3: What are the newer types of organization structures?  Boundaryless organizations (cont.) Encourage creativity, quality, timeliness, flexibility, and efficiency. Knowledge sharing is both a goal and essential component. Virtual organization.  A special form of boundaryless organization.  Operates in a shifting network of external alliances that are engaged as needed, using IT and the Internet.

32. Management 9/e - Chapter 1032 Figure 10.7 The boundaryless organization eliminates internal and external barriers.

33. Management 9/e - Chapter 1033 Study Question 4: How are organizational designs changing the workplace?  Organizational design Choosing and implementing structures that best arrange resources to serve the organization’s mission and objectives. A problem-solving activity that should be approached from a contingency perspective.

34. Management 9/e - Chapter 1034 Study Question 4: How are organizational designs changing the workplace?  Bureaucracy A form of organization based on logic, order, and the legitimate use of formal authority. Bureaucratic designs feature …  Clear-cut division of labor.  Strict hierarchy of authority.  Formal rules and procedures.  Promotion based on competency.

35. Management 9/e - Chapter 1035 Study Question 4: How are organizational designs changing the workplace?  Contingency perspective on bureaucracy asks the questions: When is a bureaucratic form a good choice for an organization? What alternatives exist when it is not a good choice?  Environment determines the answers to these questions. A mechanistic design works in a stable environment An organic design works in a rapidly changing and uncertain environment.

36. Management 9/e - Chapter 1036 Study Question 4: How are organizational designs changing the workplace?  Mechanistic Designs Predictable goals Centralized authority Many rules and procedures Narrow spans of control Specialized tasks Few teams and task forces Formal and impersonal means of coordination  Organic Designs Adaptable goals Decentralized authority Few rules and procedures Wide spans of control Shared tasks Many teams and task forces Informal and personal means of coordination

37. Management 9/e - Chapter 1137 Figure 10.8 A continuum of organizational design alternatives: from bureaucratic to adaptive organizations.

38. Management 9/e - Chapter 1038 Study Question 4: How are organizational designs changing the workplace?  Basics of subsystem design Subsystem  A department or work unit headed by a manager.  Operates as a smaller part of the larger organization. Ideally, each subsystem supports other subsystems, working toward interests of entire organization.

39. Management 9/e - Chapter 1039 Study Question 4: How are organizational designs changing the workplace?  Lawrence and Lorsch’s findings on subsystems design … The total system structures of successful firms match the challenges of their environments. The subsystems structures of successful firms match the challenges of their respective subenvironments. Subsystems in successful firms worked well with each other.

40. Management 9/e - Chapter 1040 Study Question 4: How are organizational designs changing the workplace?  Managing subsystem differentiation: Differentiation is the degree of difference that exists among the internal components of an organization. Common sources of subsystems differentiation:  Time orientation  Objectives  Interpersonal orientation  Formal structure

41. Management 9/e - Chapter 1041 Figure 10.9: Subsystems differentiation among research and development, manufacturing, and sales

42. Management 9/e - Chapter 1042 Study Question 4: How are organizational designs changing the workplace?  Managing subsystem integration: Integration is the level of coordination achieved among an organization’s internal components. Organization design paradox —  Increased differentiation creates the need for greater integration.  Integration is more difficult to achieve as differentiation increases.

43. Management 9/e - Chapter 1043 Study Question 4: How are organizational designs changing the workplace?  Mechanisms for achieving subsystem integration : Rules and procedures Hierarchical referral Planning Direct contact Liaison role Task forces Teams Matrix organizations

44. Management 9/e - Chapter 1044 Study Question 4: How are organizational designs changing the workplace?  Contemporary organizing trends include: Fewer levels of management  Shorter chains of command.  Less unity of command. Wider spans of control. More delegation and empowerment. Decentralization with centralization. Reduced use of staff.

45. Management 9/e - Chapter 1045 Study Question 4: How are organizational designs changing the workplace?  Shorter chains of command The line of authority that vertically links all persons with successively higher levels of management. Organizing trend:  Organizations are being “streamlined” by cutting unnecessary levels of management.  Flatter structures are viewed as a competitive advantage.

46. Management 9/e - Chapter 1046 Study Question 4: How are organizational designs changing the workplace?  Less unity of command Each person in an organization should report to one and only one supervisor. Organizing trend:  Organizations are using more cross- functional teams, task forces, and horizontal structures.  Organizations are becoming more customer conscious.  Employees often find themselves working for more than one boss.

47. Management 9/e - Chapter 1047 Study Question 4: How are organizational designs changing the workplace?  Wider spans of control The number of persons directly reporting to a manager. Organizing trend:  Many organizations are shifting to wider spans of control as levels of management are eliminated.  Managers have responsibility for a larger number of subordinates who operate with less direct supervision.

48. Management 9/e - Chapter 1048 Study Question 4: How are organizational designs changing the workplace?  More delegation and empowerment Delegation is the process of entrusting work to others by giving them the right to make decisions and take action. The manager assigns responsibility, grants authority to act, and creates accountability. Authority should be commensurate with responsibility.

49. Management 9/e - Chapter 1049 Study Question 4: How are organizational designs changing the workplace?  Guidelines for effective delegation: Carefully choose the person to whom you delegate. Define the responsibility; make the assignment clear. Agree on performance objectives and standards. Agree on a performance timetable. Give authority; allow the other person to act independently. Show trust in the other person. Provide performance support. Give performance feedback Recognize and reinforce progress. Help when things go wrong. Don’t forget your accountability for performance results.

50. Management 9/e - Chapter 1050 Study Question 4: How are organizational designs changing the workplace?  More delegation and empowerment A common management failure is unwillingness to delegate. Delegation leads to empowerment. Organizing trend:  Managers are delegating more and finding more ways to empower people at all levels.

51. Management 9/e - Chapter 1051 Study Question 4: How are organizational designs changing the workplace?  Decentralization with centralization Centralization is the concentration of authority for making most decisions at the top levels of the organization. Decentralization is the dispersion of authority to make decisions throughout all levels of the organization.

52. Management 9/e - Chapter 1052 Study Question 4: How are organizational designs changing the workplace?  Decentralization with centralization Centralization and decentralization not an “either/or” choice. Organizing trend:  Delegation, empowerment, and horizontal structures contribute to more decentralization in organizations.  Advances in information technology allow for the retention of centralized control.

53. Management 9/e - Chapter 1053 Study Question 4: How are organizational designs changing the workplace?  Reduced use of staff Specialized staff  People who perform a technical service or provide special problem-solving expertise to other parts of the organization. Personal staff  People working in “assistant-to” positions that provide special support to higher- level managers.

54. Management 9/e - Chapter 1054 Study Question 4: How are organizational designs changing the workplace?  Reduced use of staff (cont.) Line and staff managers may disagree over staff authority.  Advisory Authority.  Functional authority. No one best solution for dividing line-staff responsibilities. Organizing trend:  Organizations are reducing staff size.  Organizations are seeking increased operating efficiency by employing fewer staff personnel and smaller staff units.

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