schermerhorn mgmt9 ch10
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PowerPoint Presentation
to Accompany
Management, 9/eJohn R. Schermerhorn, Jr.
Chapter 10:
Prepared by: Jim LoPresti
University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.
Chapter 10: Organizing Structures and Designs
Planning Ahead — Chapter 10 Study Questions
�What is organizing as a management function?
�What are the traditional types of organization structures?
Management 9/e - Chapter 10 2
organization structures?
�What are the newer types of organization structures?
�How are organizational designs changing the workplace?
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
Management 9/e - Chapter 10 3
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.
Figure 10.1 Organizing viewed in relationship with
the other management functions.
Management 9/e - Chapter 10 4
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
Management 9/e - Chapter 10 5
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.
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.
Management 9/e - Chapter 10 6
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.
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.
Management 9/e - Chapter 10 7
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.
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
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� Members work in their functional areas of expertise.
� Are not limited to businesses.
� Work well for small organizations producing few products or services.
Figure 10.2 Functional structures in a business, branch bank,
and community hospital.
Management 9/e - Chapter 10 9
Study Question 2: What are the traditional types of
organization structures?
� Potential advantages of functional structures:
� Economies of scale.
� Task assignments consistent with
Management 9/e - Chapter 10 10
� Task assignments consistent with expertise and training.
� High-quality technical problem solving,
� In-depth training and skill development.
� Clear career paths within functions.
Study Question 2: What are the traditional types of
organization structures?
� Potential disadvantages of functional structures:
� Difficulties in pinpointing responsibilities.
Management 9/e - Chapter 10 11
responsibilities.
� Functional chimneys problem.
� Sense of cooperation and common purpose break down.
� Narrow view of performance objectives.
� Excessive upward referral of decisions.
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
Management 9/e - Chapter 10 12
similar customers, and/or are located in the same area or geographical region.
� Common in complex organizations.
� Avoid problems associated with functional structures.
Figure 10.3 Divisional structures based on product,
geography, customer, and process.
Management 9/e - Chapter 10 13
Study Question 2: What are the traditional types of
organization structures?
� Potential advantages of divisional structures:� More flexibility in responding to environmental changes.
Management 9/e - Chapter 10 14
environmental changes.
� Improved coordination.
� Clear points of responsibility.
� Expertise focused on specific customers, products, and regions.
� Greater ease in restructuring.
Study Question 2: What are the traditional types of
organization structures?
� Potential disadvantages of divisional structures:
� Duplication of resources and efforts across divisions.
Management 9/e - Chapter 10 15
across divisions.
� Competition and poor coordination across divisions.
� Emphasis on divisional goals at expense of organizational goals.
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.
Management 9/e - Chapter 10 16
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.
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.
Management 9/e - Chapter 10 17
disadvantages of each.
� Used in:
� Manufacturing
� Service industries
� Professional fields
� Non-profit sector
� Multi-national corporations
Figure 10.4 Matrix structure in a small multi-project
business firm.
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Study Question 2: What are the traditional types of
organization structures?
� Potential advantages of matrix
structures:
� Better cooperation across functions.
Management 9/e - Chapter 10 19
� Better cooperation across functions.
� Improved decision making.
� Increased flexibility in restructuring.
� Better customer service.
� Better performance accountability.
� Improved strategic management.
Study Question 2: What are the traditional types of
organization structures?
� Potential disadvantages of matrix
structures:
� Two-boss system is susceptible to power
struggles.
Management 9/e - Chapter 10 20
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.
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.
Management 9/e - Chapter 10 21
� 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.
Study Question 3: What are the newer types of
organization structures?
� Team structures
� Extensively use permanent and temporary
teams to solve problems, complete special
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projects, and accomplish day-to-day
tasks.
� Often use cross-functional teams.
Figure 10.5 How a team structure uses cross-functional
teams for improved lateral relations.
Management 9/e - Chapter 10 23
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
Management 9/e - Chapter 10 24
� Eliminates barriers between operating departments.
� Improved morale.� Greater sense of involvement and identification.
� Increased enthusiasm for work.� Improved quality and speed of decision making.
Study Question 3: What are the newer types of
organization structures?
� Potential disadvantages of team
structures:
� Conflicting loyalties among members.
Management 9/e - Chapter 10 25
� Conflicting loyalties among members.
� Excessive time spent in meetings.
� Effective use of time depends on
quality of interpersonal relations, group
dynamics, and team management.
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
Management 9/e - Chapter 10 26
contractors and suppliers of essential
services.
� Own only core components and use
strategic alliances or outsourcing to
provide other components.
Figure 10.6 A network structure for a Web-based
retail business.
Management 9/e - Chapter 10 27
Study Question 3: What are the newer types of
organization structures?
� Potential advantages of network
structures:
� Firms can operate with fewer full-time
Management 9/e - Chapter 10 28
employees and less complex internal
systems.
� Reduced overhead costs and increased
operating efficiency.
� Permits operations across great distances.
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.
Management 9/e - Chapter 10 29
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.
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,
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� 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.
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
Management 9/e - Chapter 10 31
� 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.
Figure 10.7 The boundaryless organization
eliminates internal and external barriers.
Management 9/e - Chapter 10 32
Study Question 4: How are organizational designs
changing the workplace?
�Organizational design
� Choosing and implementing structures
that best arrange resources to serve
Management 9/e - Chapter 10 33
that best arrange resources to serve
the organization’s mission and
objectives.
� A problem-solving activity that should
be approached from a contingency
perspective.
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.
Management 9/e - Chapter 10 34
� Bureaucratic designs feature …
� Clear-cut division of labor.
� Strict hierarchy of authority.
� Formal rules and procedures.
� Promotion based on competency.
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
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� 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.
Study Question 4: How are organizational designs
changing the workplace?
� Mechanistic Designs� Predictable goals� Centralized
authorityMany rules and
� Organic Designs� Adaptable goals� Decentralized
authority� Few rules and
procedures
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� Many rules and procedures
� Narrow spans of control
� Specialized tasks� Few teams and
task forces� Formal and
impersonal means of coordination
procedures� Wide spans of
control� Shared tasks� Many teams and
task forces� Informal and
personal means of coordination
Figure 10.8 A continuum of organizational design alternatives: from bureaucratic to adaptive organizations.
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Study Question 4: How are organizational designs
changing the workplace?
� Basics of subsystem design
� Subsystem
� A department or work unit headed by a
manager.
Management 9/e - Chapter 10 38
manager.
� Operates as a smaller part of the larger
organization.
� Ideally, each subsystem supports other
subsystems, working toward interests
of entire organization.
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.
Management 9/e - Chapter 10 39
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.
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
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� Common sources of subsystems differentiation:� Time orientation
� Objectives
� Interpersonal orientation
� Formal structure
Figure 10.9: Subsystems differentiation among research and
development, manufacturing, and sales
Management 9/e - Chapter 10 41
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.
Management 9/e - Chapter 10 42
internal components.
� Organization design paradox —
� Increased differentiation creates the need
for greater integration.
� Integration is more difficult to achieve as
differentiation increases.
Study Question 4: How are organizational designs
changing the workplace?
� Mechanisms for achieving subsystem integration:� Rules and procedures
� Hierarchical referral
Planning
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� Planning
� Direct contact
� Liaison role
� Task forces
� Teams
� Matrix organizations
Study Question 4: How are organizational designs
changing the workplace?
� Contemporary organizing trends
include:
� Fewer levels of management
� Shorter chains of command.
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� Shorter chains of command.
� Less unity of command.
� Wider spans of control.
� More delegation and empowerment.
� Decentralization with centralization.
� Reduced use of staff.
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.
Management 9/e - Chapter 10 45
levels of management.
� Organizing trend:
� Organizations are being “streamlined” by cutting unnecessary levels of management.
� Flatter structures are viewed as a competitive advantage.
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:
Management 9/e - Chapter 10 46
� 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.
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:
Management 9/e - Chapter 10 47
� 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.
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.
Management 9/e - Chapter 10 48
to make decisions and take action.
� The manager assigns responsibility, grants authority to act, and creates accountability.
� Authority should be commensurate with responsibility.
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
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� 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.
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.
Management 9/e - Chapter 10 50
� Delegation leads to empowerment.
� Organizing trend:
� Managers are delegating more and finding
more ways to empower people at all
levels.
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.
Management 9/e - Chapter 10 51
the top levels of the organization.
� Decentralization is the dispersion of
authority to make decisions throughout
all levels of the organization.
Study Question 4: How are organizational designs
changing the workplace?
� Decentralization with centralization� Centralization and decentralization not an “either/or” choice.
� Organizing trend:
Management 9/e - Chapter 10 52
� Organizing trend:
�Delegation, empowerment, and horizontal structures contribute to more decentralization in organizations.
�Advances in information technology allow for the retention of centralized control.
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
Management 9/e - Chapter 10 53
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.
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.
Management 9/e - Chapter 10 54
� 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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