Contemporary Management: Organization Structure

• Contemporary Management covers Organization Structure and Culture

Organizational Architecture

• Involves the organizational structure, control systems, culture, and human resource management systems.
• Determines how efficiently and effectively organizational resources are used.

Organizing

• Managers establish the structure of working relationships among employees so that they can achieve an organization's goals efficiently and effectively.

Organizational Structure

• Is a formal system of task and reporting relationships.
• Coordinates and motivates organizational members to work together to achieve organizational goals.

Organizational Design

• Managers create a specific type of organizational structure and culture so that a company can operate efficiently and effectively.
• Factors that affect organizational structure include: the organizational environment, strategy, technology and human resources.

Structuring Choices

• Managers make choices about how to group tasks into individual jobs.
• They also decide how to group jobs into functions and divisions.
• Authority should be allocated and functions and divisions need to be coordinated.

Job Design

• Job design is the process by which managers decide how to divide tasks into specific jobs (division of labor).
• An appropriate division of labor results in an effective and efficient workforce.
• Job simplification is the process of reducing the number of tasks that each worker performs.
• Job enlargement involves increasing the number of different tasks in a given job by changing the division of labor.
• Job enrichment means increasing the degree of responsibility a worker has over a job.
• Job enrichment involves empowering workers to experiment to find new or better ways of doing the job.
• Job enrichment encourages workers to develop new skills.
• Workers are allowed to decide how to do the work with job enrichment.
• Job enrichment allows workers to monitor and measure their own performance.

Job Characteristics Model

• Skill variety means an employee uses a wide range of skills.
• Task identity occurs when a worker is involved in all tasks of the job from beginning to end of the production process.
• Task significance means a worker feels the task is meaningful to the organization.
• Autonomy means an employee has freedom to schedule tasks and carry them out.
• Feedback means a worker gets direct information about how well the job is done.

Functional Structure

• A Functional structure is composed of all the departments that an organization requires to produce its goods or services.
• Functional structures encourage learning from others doing similar jobs.
• They make it easy for managers to monitor and evaluate workers.
• Functional structures allow managers to create the set of functions they need in order to scan and monitor the competitive environment.
• Functional structures can make it difficult for different departments to communicate with each other.
• Preoccupation with their own department, those in a functional structure, run the risk of losing sight of organizational goals.

Divisional Structure

• A divisional structure is composed of separate business units within which are the functions that work together to produce a specific product for a specific customer.

Product Structure

• Managers place each distinct product line or business in its own self-contained division with product structure.
• Divisional managers are responsible for devising an appropriate business-level strategy so the division can compete effectively in its industry or market.
• GlaxoSmithKline groups research into 8 product divisions to focus on particular clusters of diseases.
• Product structures allow functional managers to specialize in one product area.
• They also allow division managers to become experts in their area.
• Product structures removes the need for direct supervision of division by corporate managers.
• Product structure allows divisional management to improve the use of resources and put them close to customers for a quick and appropriate response.

Geographic Structure

• Geographic structure means divisions are broken down by geographic location.
• Global geographic structures enable managers to locate different divisions in each of the world regions where the organization operates.
• This structure works when managers are pursuing a multidomestic strategy.

Market Structure

• Market structure means divisions are grouped according to the particular kinds of customers they serve.
• Market structure allows managers to be responsive to the needs of their customers and act flexibly in making decisions in response to customers’ changing needs.

Matrix Structure

• Is an organizational structure that simultaneously groups people and resources by function and product.
• Matrix Structures are very flexible and each employee has two bosses.

Product Team Structure

• Employees are permanently assigned to a cross-functional team that reports only to the product team manager or to one of the manager's direct subordinates.
• Effectively does away with dual reporting relationships and two-boss managers.

Cross-functional Team

• Is a group of managers brought together from different departments to perform tasks; for example, Northwestern Mutual’s work on redesigning visuals for customers.

Authority

• Gives power to hold people accountable for their actions and to make decisions concerning the use of organizational resources.
• Hierarchy of Authority: This refers to an organization's chain of command and specifies the relative authority of each manager.
• Span of Control: This is the number of subordinates who report directly to a manager.
• Line Manager: Someone in the direct line or chain of command who has formal authority over people and resources at lower levels.
• Staff Manager: Someone responsible for managing a specialist function, such as finance or marketing.

Tall & Flat Organizations

• Tall structures have many levels of authority and narrow spans of control
• As hierarchy levels increase, communication gets difficult, creating delays in the time being taken to implement decisions.
• Communications can also become distorted as they are repeated through the firm and tall structures can become expensive.
• Flat structures have fewer levels and wide spans of control.
• Results in quick communications but can lead to overworked managers.
• Firms should construct a hierarchy with the fewest levels of authority necessary to efficiently and effectively use organizational resources.

Decentralizing Authority

• Means giving lower-level managers and non-managerial employees the right to make important decisions about how to use organizational resources, making them flexible and responsive.

Organizational Culture

• Shared: Means a set of beliefs, expectations, values, and norms that influence how members of an organization relate to one another and cooperate to achieve organizational goals.
• Organizational Values: These are the shared standards that its members use to evaluate whether they have helped the company achieve its vision and goals
• Organizational Norms: Specifies or prescribes the kinds of shared beliefs, attitudes, and behaviors that its members should observe and follow and are informal, but powerful, rules dictating how employees should behave or conduct themselves.

Organizational Ethics

• The moral values, beliefs, and rules that establish the appropriate way for an organization and its members to deal with each other and with people outside the organization.

Human Resource Policies

• Influence how hard employees will work to achieve the organization’s goals.
• Affect how attached they will be to the organization and whether or not they will buy into its values and norms.
• Different structures give rise to different cultures.
• Tall organizations have little personal autonomy, perhaps a focus on authority.
• Flat organizations might have more freedom with a focus on creativity.
• Centralized or decentralized might lead to different values.

Adaptive & Inert Cultures

• Adaptive cultures are those with values and norms that help an organization to build momentum and to grow and change as needed to achieve its goals and be effective.
• Inert cultures are those that lead to values and norms that fail to motivate or inspire employees.
• Inert cultures lead to stagnation and often failure over time.