Managing Organizational

Structureand Culture

chapter ten

Learning Objectives

1. Identify the factors that influence managers’ choice of an organizational structure.

2. Explain how managers group tasks into jobs that are motivating and satisfying for employees.

3. Describe the types of organizational structures managers can design, and explain why they choose one structure over another.

4. Explain why managers must coordinate jobs, functions, and divisions using the hierarchy of authority and integrating mechanisms

5. List the four sources of organizational culture, and explain why and how a company’s culture can lead to competitive advantage.

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Organizational Structure

Organizational Architecture└ The organizational structure, control systems,

culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used.

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Designing Organizational Structure

Organizing└ The process by which managers establish working

relationships among employees to achieve goals.

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Designing Organizational Structure

Organizational Structure└ formal system of task

and reporting relationships that coordinates and motivates organizational members so they work together to achieve organizational goals.

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Factors Affecting Organizational Structure

6Figure 10.1

Designing Organizational Structure

Organizational design└ The process by which managers create a specific

type of organizational structure and culture so that a company can operate in the most efficient and effective way

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Designing Organizational Structure

The way an organization’s structure works depends on the choices managers make about:

1.How to group tasks into individual jobs2.How to group jobs into functions and divisions3.How to allocate authority and coordinate

functions and divisions

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Grouping Tasks into Jobs: Job Design

Job Design└ The process by which managers decide how to

divide tasks into specific jobs.└ The appropriate division of labor results in an

effective and efficient workforce.

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Job Design

Job Simplification└ The process of reducing the tasks each worker

performs. Job Enlargement

└ Increasing the number of different tasks in a given job by changing the division of labor

Job Enrichment└ Increasing the degree of responsibility a worker has

over a job

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Job Enrichment

1. Empowering workers to experiment to find new or better ways of doing the job

2. Encouraging workers to develop new skills3. Allowing workers to decide how to do the

work4. Allowing workers to monitor and measure

their own performance

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The Job Characteristics Model

10-12Figure 10.2

Grouping Jobs into Functions

Functional Structure└ An organizational

structure composed of all the departments that an organization requires to produce its goods or services.

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Functional Structure

Advantages└ Encourages learning from others doing similar

jobs.└ Easy for managers to monitor and evaluate

workers.└ Allows managers to create the set of functions

they need in order to scan and monitor the competitive environment

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Example – A.C. Moore Arts & Crafts

A.C. Moore is organized with a functional structure

Examples of divisions are Marketing & Merchandising, Stores & Loss Prevention, Store Operations, Merchandise Administration, Real Estate, and Legal

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Functional Structure

Disadvantages└ Difficult for departments to communicate with

others.└ Preoccupation with own department and losing

sight of organizational goals.

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Divisional Structures

Divisional Structure└ An organizational structure composed of separate

business units within which are the functions that work together to produce a specific product for a specific customer.

└ Product, market, geographic

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Product, Market, and Geographic Structures

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Figure 10.4

Types of Divisional Structures

Product Structure└ Managers place each distinct product line or

business in its own self-contained division└ Divisional managers have the responsibility for

devising an appropriate business-level strategy to allow the division to compete effectively in its industry

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Product Structure

Allows functional managers to specialize in one product area

Division managers become experts in their area

Removes need for direct supervision of division by corporate managers

Divisional management improves the use of resources

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Types of Divisional Structures

Geographic Structure└ Divisions are broken down by geographic location

Global geographic structure└ Managers locate different divisions in each of the

world regions where the organization operates.└ Generally, occurs when managers are

pursuing a multi-domestic strategy

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Types of Divisional Structures

Market Structure└ Groups divisions according to the particular kinds

of customers they serve└ Allows managers to be responsive to the needs of

their customers and act flexibly in making decisions in response to customers’ changing needs

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Matrix Design Structure

Matrix Structure└ An organizational structure that simultaneously

groups people and resources by function and product.

└ The structure is very flexible and can respond rapidly to the need for change.

└ Each employee has two bosses

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Matrix Structure

10-24Figure 10.6

Product Team Design Structure

Product Team Structure└ Does away with dual reporting relationships and

two-boss managers└ Functional employees are permanently assigned

to a cross-functional team that is empowered to bring a new or redesigned product to work

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Product Team Structure

Cross-functional team └ A group of managers brought together from

different departments to perform organizational tasks.

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Product Team Structure

10-27Figure 10.6

Allocating Authority

Authority└ power to hold people accountable for their

actions and to make decisions concerning the use of organizational resources.

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Allocating Authority

Line Manager└ Someone in the direct

line or chain of command who has formal authority over people and resources

Staff Manager└ Managers who are

functional-area specialists that give advice to line managers.

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Tall and 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 it is repeated through the firm.

└ Can become expensive

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Tall Organizations

10-31Figure 10.9

Tall and Flat Organizations

Flat structures have fewer levels and wide spans of control.└ Structure results in quick communications but can

lead to overworked managers.

10-32Figure 10.9

Centralization and Decentralization of Authority

Decentralizing authority └ giving lower-level managers and non-managerial

employees the right to make important decisions about how to use organizational resources

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Integrating Mechanisms

10-34Figure 10.10

Sources of an Organization’s Culture

10-35Figure 10.11

Employment Relationship

Human resource policies:└ Can influence how hard employees will work to

achieve the organization’s goals, └ How attached they will be to it └ Whether or not they will buy into its values and

norms

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Organizational Structure

In a centralized organization:└ people have little autonomy └ norms that focus on being cautious, obeying

authority, and respecting traditions emerge└ predictability and stability are desired goals

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Organizational Structure

In a flat, decentralized structure: └ people have more freedom to choose and control

their own activities└ norms that focus on being creative and

courageous and taking risks appear └ gives rise to a culture in which innovation and

flexibility are desired goals.

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Strong, Adaptive Cultures Versus Weak, Inert Cultures

Adaptive cultures └ values and norms help

an organization to build momentum and to grow and change as needed to achieve its goals and be effective

Inert cultures └ Those that lead to

values and norms that fail to motivate or inspire employees

└ Lead to stagnation and often failure over time

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Video Case: Making Changes in New Orleans’ Most Troubled Schools

How would you rate teaching according to the five characteristics that determine how motivating a job is?

Does establishing organizational culture in a school present any different challenges than establishing culture in other types of organizations?

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