Organizational Design and Job Characteristics

Contemporary Management Chapter 10: Managing Organizational Structure and Culture

• Learning Objectives: This chapter aims to:
  • Identify factors influencing managers' organizational structure choices.
  • Explain how managers group tasks into motivating jobs.
  • Describe different organizational structures and their rationale.
  • Explain job coordination using authority and integration mechanisms.
  • Identify and explain the sources of organizational culture and its impact on competitiveness.

Organizational Architecture

• Definition: Organizational structure, control systems, culture, and human resource management practices that determine resource utilization efficiency and effectiveness.

Designing Organizational Structure

• Organizing: The process by which managers establish working relationships among employees to achieve organizational goals efficiently and effectively.
• Organizational Structure: A formal system of task and reporting relationships that coordinates and motivates organizational members to achieve organizational goals.
• Organizational Design: The process managers use to create a specific organizational structure and culture to ensure efficient and effective company operation.

Factors Affecting Organizational Structure

• Organizational Environment: External factors impacting design decisions.
• Strategy: The plan for achieving goals influences the structure chosen.
• Technology: The technological processes impact grouping & coordinating.
• Human Resources: Existing skills and capabilities in the workforce shape structural decisions.

Grouping Tasks into Jobs: Job Design

• Job Design: The process of deciding how tasks are divided into jobs (division of labor).
• Division of Labor: Effective and efficient workforce results from appropriate task division.
• Job Simplification: Reducing the number of tasks performed by each worker.
• Job Enlargement: Increasing the number of tasks in a given job through changes in division of labor.
• Job Enrichment: Increasing the degree of responsibility a worker has over a job (e.g., empowering workers, encouraging skills development, decision-making authority, performance monitoring).

The Job Characteristics Model

• Skill Variety: Employee uses a range of skills.
• Task Identity: Worker completes tasks from beginning to end.
• Task Significance: Worker sees the task's importance to the organization.
• Autonomy: Employee has freedom to schedule & complete tasks.
• Feedback: Worker receives direct information about job performance.

Grouping Jobs into Functions

• Functional Structure: Organizational structure with departments for each part needed to produce goods or services.

Functional Structure: Advantages & Disadvantages

• Advantages: Encourages learning, facilitating monitoring and evaluation of work, and creating a structure to monitor the competitive environment.
• Disadvantages: Potential for poor communication between departments, and a focus on one department rather than the organization as a whole.

Divisional Structures: Product, Market, and Geographic

• Divisional Structure: An organizational structure organized by business units, where functions work together toward a specific product or customer.
  • Product Structure: Distinct product lines in separate, self-contained divisions.
  • Geographic Structure: Divisions based on geographic locations.
  • Market Structure: Divisions based on customer types.

Divisional Structures: Advantages

• Product Structure: Allows functional managers to specialize, specialization of division managers, removes corporate supervision, improves resource use, brings managers closer to customers, enabling faster response.
• Geographic Structure: Suitable for diverse markets, more responsive to local market needs, and allows for local adaptation.
• Market Structure: Allows for responsiveness to specific customer needs.

Matrix Structure

• Matrix Structure: Simultaneously groups people and resources by function and product.
• Flexibility: Very adaptable design.
• Two-Boss Employees: Employees have two managers.
• Product Team Structure: Employees are permanently assigned to cross-functional teams, reporting to a product team manager.
• Cross-functional Team: Team comprised of employees from diverse departments to achieve organizational tasks.

Allocating Authority

• Authority: The power to hold people accountable for their actions and to make decisions about organizational resources.
• Hierarchy of Authority: The organization's chain of command; specifies relative authority of each manager.
• Span of Control: Number of subordinates who directly report to a manager.
• Line Managers: Someone in the direct line of command with formal authority over lower-level employees.
• Staff Managers: Someone responsible for managing a specialist function.

Tall and Flat Organizations

• Tall Structures: Many levels of authority, narrow spans of control.
  • Challenges: Communication difficulty, delays in decision implementation, communication distortion.
• Flat Structures: Few levels of authority, wide spans of control.
  • Challenges: Potential for overworked managers.
• Minimum Chain of Command: Organizing principle that emphasizes maintaining the fewest levels of authority necessary for efficient utilization of organizational resources.

Centralization and Decentralization of Authority

• Decentralization: Giving lower-level managers and employees responsibility to make important decisions concerning the use of organizational resources.

Integrating Mechanisms

• Used to coordinate tasks and activities across different departments.
  • Direct Contact: Managers meet to solve problems collaboratively.
  • Liaison Roles: Dedicated roles to facilitate communication among different departments.
  • Task Forces: Temporary teams to address specific projects.
  • Cross-functional teams: Permanently formed teams of diverse functional areas to achieve a goal, example product launch.
  • Integrating roles and departments: Senior managers integrating teams and gathering information from other teams.

Organizational Culture

• Definition: Shared beliefs, values, norms, and expectations that shape how employees relate and cooperate to achieve organizational goals.
  • Organizational Norms: Specify the kinds of shared beliefs, attitudes, and behaviors employees should observe and follow, and define appropriate approaches to interactions internally and externally.
  • Organizational Values: Shared standards to evaluate whether employees contribute to achieving company vision and goals.
• Sources of Organizational Culture:
  • Organizational characteristics of members
  • Organizational ethics
  • Organizational structure
  • Employment relationships (HR).
• Strong Cultures: Help build momentum, enable adaptation.
• Weak Cultures: Fail to inspire employees, lead to stagnation