ORGANIZATIONALSTRUCTUREANDEFFECTIVENESS
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7.17.27.37.47.57.67.7TheOrganizingProcess...................................................TheContingencyApproach.................................................Departmentation.........................................................LineandStaffDesign.....................................................SpanofControl..........................................................CentralizationandDecentralization...........................................StudyUnit7Summary....................................................27912141518Thisstudyunitaddressestheorganizingfunctionofmanagement.Itoutlinesthemajortheoriesoforganizationaldesignanddescribestheelementsoforganizationaleffectiveness.Particularemphasisisplacedonthecontingencyapproachtodesigndevelopedfromsystemsthinking.Othersubunitsconcernsomeoftheprincipalformatsforintegratingandcoordinatinganorganization’sactivities.
CoreConcepts
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Theelementsoforganizationare(1)coordinationofeffort,(2)acommongoal,(3)divisionoflabor,and(4)ahierarchyofauthority.
Organizationshavebeenclassifiedas(1)businesses,(2)nonprofitsocialorganizations,(3)mutualbenefitorganizations,and(4)commonwealorganizations.
Organizationalchartsrepresenttheformalorganizationalstructureintwodimensions:verticalhierarchyandhorizontalspecialization.
Theclosed-systemperspectivetreatstheorganizationasfocusedoneconomicefficiencyinareasonablypredictableenvironment.
Theopen-systemperspectivetreatstheorganizationasfocusedonsurvivalinanuncertainenvironment.
Inthenarrowestsense,effectivenessisachievementofobjectives.Itiscontrastedwithefficiency,whichistheratioofoutputtoinput.Inthebroadestsense,anorganizationmustachieveitsobjectivesefficientlytobeconsideredeffective.
Organizationaldeclineislossofeffectivenessandefficiencycoupledwithinflexibility.
Contingencydesigndeterminesthestructurethatsuitstheenvironmental(state)uncertaintyfacedbytheorganization.
Mechanisticorganizationsaremostlikelytosucceedinstableandcertainenvironments.Organicorganizationsaremostlikelytosucceedinunstableanduncertainenvironments.
Insuccessfulorganizations(andintheirsubunits),adynamicequilibriumexistsbetweenthetendenciesofdifferentiationandcoordination.Furthermore,differentiationandintegrationaredirectlycorrelatedwithenvironmentalcomplexity.
AccordingtoMintzberg,thestructurethatevolvesdependsonwhichorganizationalcomponentisincontrol:(1)operatingcore,(2)strategicapex,(3)middleline,(4)technostructure,or(5)supportstaff.
Divisionoflaborbreakscomplexprocessesintotheirsimplercomponents.Thismakestaskspecializationbyemployeespossible.
Inmatrixdesign,thefunctionalorganizationremains,butpartsofitaretemporarilylentorassignedtoagivenproject.
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Theclassicalapproachtoorganizationtheoryviewslineactivitiesasthosedirectlyresponsiblefortheprimaryfunction,product,orserviceoftheorganization.Staffmembersprovidesupportingtechnicalexpertise.Behavioraltheoristsseeexerciseofinformalauthorityasaconstraintonformalchainofcommand.
Lineandstaffconflictsarealmostinevitablegiventheconsiderabledifferenceintheirbackgroundsandactivities.
Spanofcontrol(spanofmanagementorspanofauthority)isanupperlimittothenumberofpeoplewhocanbeeffectivelyandefficientlysupervisedbyoneperson.
Thenumberoflevelsinanorganizationwillbegreatlyinfluencedbythespanofcontrol.
Majordesignissuesaretheconcentrationofauthorityinanorganization,itsdegree,andthelevelsatwhichitoccurs.
Themodernorcontingencyviewisthatneithercentralizationnordecentralizationisgoodorbadinitself.Thedegreetowhicheitherisstresseddependsuponagivensituation.
Establishmentofstrategicbusinessunits(SBUs)isameansofdecentralizationusedbylargecorporationsseekingtoenjoytheentrepreneurialadvantagesofsmallerentities.
Delegationistheformalprocessofassigningauthoritydownward.Delegationissimilartodecentralizationinphilosophy,process,andrequirements.
Newtypesoforganizationstendtohaveflatterstructures(fewerlayers),makemoreuseofteams,andavoidthedisadvantagesofthecomplexlargeentitybycreatingentrepreneurialunits.
7.1THEORGANIZINGPROCESS
1.
EdgarScheindescribesthefollowingelementsoforganizations:a.b.c.d.
CoordinationofeffortinacooperativesocialarrangementAcommongoalorpurpose
Divisionoflabor(efficientspecialization)Ahierarchyofauthority1)
2.
Authorityistherighttodirect,andtoexpectperformancefrom,otherpeople.Thosepeopleareaccountabletotheirsuperiorsinthehierarchy.
Kreitner(Management,9thed.,HoughtonMifflin,pages285-287)classifiesorganizationsasfollows:a.b.c.d.
Businessesareengagedineconomicactivitieswiththeintenttomakeaprofit.
Nonprofitserviceorganizations,suchascharitiesanduniversities,serveparticulargroupsofclients.Moneymaycomefromdonations,appropriations,orgrants.Mutualbenefitorganizationsaregroupsthatexisttoservetheirmembers,e.g.,laborunions,politicalparties,orcreditunions.
Commonwealorganizationsprovideastandardservicetoallmembersofapopulation.Examplesarelocalpolicedepartmentsandpublicschoolsystems.
3.
Organizationalchartsrepresenttheformalorganizationalstructureintwodimensions:verticalhierarchyandhorizontalspecialization.Theyoftenresembleapyramid,withthechiefexecutiveontopandtheoperatingworkforceonbottom.Recenttrendsin
management,includingincreasedspanofcontrolanddecreasedhierarchy,haveresultedinflatterorganizationalcharts.
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a.Thetypicalorganizationalchartcanbedesignedto
Reflectclassical,formalverticalauthoritychannels(chainofcommand)Showreportingrelationshipsandtaskgroupings(departmentation)Describecommunicationchannels
IdentifylocationofsourcesoforganizationalexpertiseShowpromotionalorcareertracks
Depictthespanofcontrolandnumberoforganizationallevels
Showmajorfunctionsandtheirrespectiverelationships(horizontalspecialization)
Shortcomingsoforganizationalchartsincludea1)2)3)4)5)6)
Limitedpresentationofinformation–ashortcomingthatcanbeovercomebysupplementingthechartwithadetailedmanual
Tendencytoquicklybecomeobsoleteduetorapidchange
Failuretoshowinformalcommunication,influence,power,orfriendshipsTendencytoignoreinformaljobtrade-offsamongtitlesonthechart
Possibilityofmisleadingmanagementbygivinganappearanceofstructureandorderthatmightnotexist
Possibilitythatpositiontitlesdonotreflectactualfunctions1)2)3)4)5)6)7)
b.
4.
Theoriesoforganizingmayberoughlydividedintotwocategories:traditional,closed-systemtheoriesandmodern,open-systemtheories.a.
Theclosed-systemperspectivetreatstheorganizationasfocusedoneconomicefficiencyinareasonablypredictableenvironment.Planningandcontrolprocessescansubstantiallyeliminateuncertainty.1)
Thescientificschoolofmanagementwasthefirstmajorschooltodevelop.Itfocusedontheproductionprocessandwaystomakeitmoreefficient.ItisbasedontheworkofFrederickW.Taylor,whoadvocatedasystematicquantitativeapproachorientedtowardsindividualjobdesign.Taylor’sprinciplesofscientificmanagementare
Scientificanalysisofwork
Scientificselection,training,anddevelopmentofworkersCooperationamongworkplannersandoperators
Equalsharingofresponsibilitybylaborandmanagement,whoperformthetasksforwhichtheyarebestsuited
HenriFayol(aFrenchmanpublishedin1916),sometimescalledthefatherofadministration,advocatedtheseparationofadministrationfromtechnical,commercial,financial,andaccountingoperations.Fayol’sfunctionsofmanagementlistedbelowformthefoundationforthemodernfunctionalorprocessapproachtoclassifyingamanager’sactivities.a)b)c)d)e)
PlanningOrganizingCommandingCoordinatingControllinga)b)c)d)
2)
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SU7:OrganizationalStructureandEffectiveness
3)
Taylor,Fayol,andothertraditionalistsadvocatedthecreationofauthoritarianorganizationscharacterizedbynarrowspansofcontrol,closesupervision,andthetop-downflowofauthority.
Thehierarchyofauthorityshouldbepreciselydeterminedtofosterpursuitofcommonobjectives(unityofobjective).
b)Theprincipleofunityofcommandshouldbefollowed.Each
subordinateshouldhaveonlyonesuperior(thoughasuperiormayhaveasmanysubordinatesasallowedbythesuperior’sspanofcontrol).Violationofthisprincipleleadstoconfusionandfrustrationforthesubordinate.
c)Authorityshouldbeproportionatetoresponsibility.Thus,aperson
shouldnotbeheldaccountableforperformanceunless(s)hehasthepowertoperform.
d)Authoritybutnotresponsibilitymaybedelegated.
MaxWeber,anineteenth-centuryGermansociologist,coinedtheterm
bureaucracy.Itdescribedatraditionalistorganizationfoundedonefficientmilitaryprinciples,including“impartiality,”orthemakingofpersonneldecisionsbasedonmerit.a)
Despiteitsbadreputation,bureaucracyisafeatureofeverylarge
organization.Becausebureaucracy(characterizedbydivisionoflabor,ahierarchyofauthority,aframeworkofrules,andimpersonality)is
necessary,managersshouldbeawareofthesymptomsofaninefficientandotherwisedysfunctionalbureaucracy.Theseincludei)ii)iii)iv)v)a)
4)
b.
AhighdegreeofbureaucratizationToomanyboringjobs
Obediencetoauthorityatallcosts
DevelopmentofrulesthatarepointlessorthatobscureaccountabilityImpersonalityinthesenseofignoringthehumanneedsofcustomersandemployees
Theopen-systemperspectivetreatstheorganizationasfocusedonsurvivalinanuncertainenvironment.Theorganizationitselfandtheenvironmentcontainvariablesthatmaynotbecontrollable.1)
ChesterBarnard(1938)arguedthatanorganizationisacooperativesystemwithabottom-upflowofauthority.Hisacceptancetheoryofauthorityisbasedonthepremisethatamanager’sleadershipdependsonemployees’acceptanceofit.Thus,compliancewithamessagefromasuperiorisdependentonemployees’a)b)c)d)2)3)
Understandingofthemessage
BeliefthatitservesanorganizationalobjectiveBeliefthatitservestheirobjectivesAbilitytocomply
Theopen-systemsperspectivereflectstherealitythatasuccessfulorganizationmustadaptrapidlytochangesinsuchfactorsastechnologyprogress,productevolution,marketfluctuations,competitivechallenges,andglobalization.Anorganizationalsystemisagrouporsetofthings(subsystems)thatareinterrelatedorinterdependentsoastoformapartofalargerwhole.Theopen-systemsperspectiverecognizesthatunderstandinganorganizationisimpossiblewithoutconsideringthelargercontextorsystemofwhichitisapart.a)
Italsoconsidersbothhumanrelationsandstructuralissues.
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b)
Systemsmaybeclosedoropen.Closedsystemsareclosedtothe
externalenvironment.Fewsystemsaretrulyclosed,butboundariesmaybeartificiallydrawntofacilitateanalysisbytreatingasystemasifitwereclosed.
Classicalviewpointstreatedmanagementasaclosedsystemandignoredmostthingsexternaltotheorganization.Suchpolicyislimitedanddangerousinthateffectivemanagementofasocialsystemisnotdeterministicormechanistic.
Opensystemsarenotself-sufficient.Theymustbeopento,andhaveinteractionwith,anexternalenvironment.Thesystemboundariesaredrawntoreflectexternalinputsandsystemoutputs.
Aclosedsystemsuffersentropy,orprogressivedegradationanddisorganization.Anopensystemseeksreplenishmentthroughitsboundarieswiththelargersystem(environment).Accordingly,anopensystemisindynamicequilibrium.Forexample,abusinessmayobtainexternalfinancingtomodernizeitsplant.
ii)Closed-systemsmanagementwritersviewedtheenvironmentas
beyondtheirconcern;open-systemswritersseetheenvironmentasvital.
Anopensystemischaracterizedbysynergism,theinteractionofitspartssothatthetotaleffectexceedsthesumoftheeffectsoftheseparateparts.
Anotherattributeofopensystemsisequifinality,ortheabilitytoachievedesiredresultsbyusingdifferentmethods.Thus,amanufacturermayvarysuchinputsintotheproductionprocessaslaborandmaterials.Abusinessorotheropensystemobtainsinputs(information,capital,labor,materials,etc.)andproducesoutputs(goods,services,earnings,nonrecycledscrap,etc.).
Anopensystemmaybeviewedasconsistingofthefollowing:
Thetechnicalsubsystem(theproductionfunction)
Theboundary-spanningsubsystem,whichinteractswiththeenvironment(sales,purchasing,publicrelations,planning,etc.)iii)Themanagementsubsystem,whichcoordinatestheother
subsystems
Anopen-systemsorganizationshouldalsobealearningorganization.AccordingtoDavidGarvin,itshouldeffectivelycreate,acquire,andtransferknowledge.Itmustalsosucceedinchangingitsbehaviorinresponse.i)ii)
Organizationallearningproceedsbycognition(acquiringnewknowledge),behavior(acquiringnewskills),andperformance.Theskillsrequiredforanorganizationtoprosperasitcopeswithinevitablechangeare
qqqqq
i)
c)
i)
d)
e)
f)
g)
i)ii)
h)
Problemsolving
LearningbysystematicexperimentationLearningfromitsexperience
Learningfromcustomers,competitors,andothers
Transferringandimplementingwhathasbeenlearned,e.g.,throughtrainingandcommunication
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SU7:OrganizationalStructureandEffectiveness
5.OrganizationalEffectivenessa.
Inthenarrowestsense,effectivenessisachievementofobjectives.Itiscontrastedwithefficiency,whichistheratioofoutputtoinput.Inthebroadestsense,anorganizationmustachieveitsobjectivesefficientlytobeconsideredeffective.1)Economistsdefineproductivityastheratioofrealoutputtoaunitofinput.Continuedprofitabilityandgrowtharetheobviouseffectivenesscriteriaforbusinesses.However,society’sexpectationsexpressedthroughlawsand
regulations(antitrust,securitiesregulation,laborlaw,workersafety,environmentalprotection,pensionsecurity,antidiscrimination,consumerprotection,etc.)providemanyothercriteria.
1)Theweightingoftheseconcernsraisesdifficultissuesforallbusinesses.Timeisacomponentoforganizationaleffectiveness.Accordingly,anorganizationshouldstrivetobeeffectiveandefficient,grow,beprofitable,satisfysociety’sanditsstakeholders’expectations,learn,adapt,develop,andsurviveoveraperiodofyears.Theorganizationneedstobeeffectiveandefficientandmeetexpectationsofsociety,owners,employees,customers,andcreditorsinthenearterm(about1year).
2)Itmustadapttochangeanddevelopitscapacitiesintheintermediateterm
(about2-4years).
3)Itmustsurviveinanuncertainenvironmentfullofobstaclesandopportunitiesin
thelongterm(about5yearsormore).
Organizationaldecline(lossofeffectivenessandefficiencycoupledwithinflexibility)mayleadtodownsizing,merger,reorganization,orliquidation.Itresultsfromdecreaseddemand,resourcelimitations,ormismanagement.1)
Thefollowingarecharacteristicsoforganizationsthatarestableorindecline:a)Centralization
b)Lackoflong-termplanningbecauseofashort-termcrisismentalityc)Lackofinnovation
d)Atendencytoplaceblameonleaderse)Rejectionofchangewhenmostneededf)Highturnoverofthebestleadersg)Poormorale
h)Notsettingprioritiesforcutbacksi)Conflictovercontrolandresourceswhenteamworkismostneeded
Managementcomplacencyhasbeenidentifiedasthemostimportantcauseoforganizationaldecline.Itscharacteristicsare
a)Alackofinnovation
b)Faultyperceptionofmarketsandcompetition
c)Failuretoobserveorproperlyappraisetheinitialwarningsofdeclined)NotfocusingondailyobjectivesAnadaptiveorganizationa)b)c)d)e)
Monitorsproblemsandwatchesforthesymptomsofdecline.Restatesandclarifiesitsobjectivesonatimelybasis.
Identifiesthebestmarketsandcustomersandthemostthreateningcompetitors.
Promotesexperimentation,communication,andparticipation.Recognizesthatitmaybethemostvulnerablewhenitisthemostsuccessful.Arrogantoverconfidencetendstobegreatestthen.
1)
b.
c.
d.
2)
3)
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4)
Downsizingresultsfromorganizationaldecline,changesinthebusinesscycle,orbusinesscombinations.Theobjectivesarecostreduction,improvedefficiency,andhigherprofits.a)
Thesepurposesareoftennotachieved.Manyorganizationsfollowcyclesofhiring,firing,andrehiringthatdonotyieldtheexpectedbenefitstooffsettheharmtoterminatedemployees,thelossofmoraleofthesurvivors,andthedamagetocommunities.
Downsizingalsotendstohaveadisproportionateeffectonwomenandmembersofminorities,whotendtobethelasthiredandfirstfired.Themoreenlightenedviewisthatemployeesarenotreadilydisposablecommoditiesbutvaluableresourceswhoshouldbeterminatedonlyasalastresort.Thisviewseeksalternativestoinvoluntarytermination.i)
Redeploymentinvolvesretrainingortransferringemployeesorlendingthemtoothercompanies.
ii)Voluntaryretirementprogramsofferacceleratedretirementbenefits,
severanceallowances,orothercompensation.
iii)Employeesmaysharejobsorbeshiftedtolower-levelpositions.iv)Allemployeesmaybeaskedtoacceptreducedhoursorpay.v)Outplacementassistslaid-offemployeesinfindingnewjobs.vi)Thelawmayrequirenoticeoffacilities’closingsorlayoffs.
vii)Ajobbankprovidesdownsizedemployeeswithworkthatisusually
outsourced.
viii)Counselingandtrainingmaybeofferedtocounterthestressfeltby
employeeswhoareretained.
b)c)
7.2THECONTINGENCYAPPROACH
1.
Thecontingencyapproachisderivedfromopensystemsthinking.Itstressesthatthesearchforanswerstoorganizationaldesignproblemsdependsoncontingenciesthatcanbediscoveredandstudied.Accordingly,noonedesignformatfitsallorganizations.a.b.2.
Becausethisapproacharguesforsituationallydeterminedanswers,thekeyisfindingtherelevantfactorsintheorganization’senvironment.
Moreover,thegreatertheenvironmentaluncertainty,themoreadaptivetheorganizationmustbe.
Contingencydesigndeterminesthestructurethatsuitstheenvironmental(state)
uncertaintyfacedbytheorganization.Environmentaluncertaintyisafunctionof,amongotherthings,a.b.c.d.
Stabilityofdemandfortheorganization’sgoodsorservicesReliabilityofsupply
Rateoftechnologicalchange
Socioeconomicandpoliticalpressures
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SU7:OrganizationalStructureandEffectiveness
3.BurnsandStalkerdistinguishedbetweenmechanisticandorganicorganizations.a.
Inamechanisticorganization(aninflexiblebureaucracy),tasksarespecificallydefinedandhavelittleflexibility.Moreover,knowledgetendstobetask-specific.Hierarchicalauthorityisstrong,withanemphasisonemployeeobedience,andcommunicationismostlytop-down.Rightsandobligationsareclearlydefined,buthowindividualeffortsrelatetoachievingorganizationalobjectivesisnot.
Mechanisticorganizationsaremostlikelytosucceedinstableandcertainenvironments.
Anorganicorganizationisadaptive.Tasksarebroadlyandflexiblydefined,andtherelationshipofindividualeffortandorganizationalobjectivesisclear.Inaddition,knowledgetendstobeprofessional.Workmethods,rights,andobligationsarepurposelyleftunclear.Self-controlispreferredtohierarchicalcontrol.Thus,
superiorshaveaninformationalandadvisoryrole.Communicationisparticipativeandhorizontal.1)
Organicorganizationsaremostlikelytosucceedinunstableanduncertainenvironments.1)
b.
4.
LawrenceandLorschaddressedtherelationshipbetweenenvironmentalcomplexityandtheorganization’sbalancebetweendifferentiationandintegration.a.
Differentiationiscausedbythedivisionoflaborandtechnicalspecialization.Thus,specialistsin,forexample,marketingandITmayhavesubstantialdifferencesin
skills,attitudes,andbehavior.Differentiationleadstoorganizationalfragmentationbecausespecialiststendtohaveanarrowfocus.
Integrationisthecoordinationofeffortrequiredforachievementofmutualobjectives.Typicalstructuralarrangementsforachievingintegrationincludeahierarchyofauthority,aframeworkofrules,departmentation,formationofcross-functionalgroups,computersystems,liaisonbodies,andhumanrelationstraining.
Insuccessfulorganizations(andintheirsubunits),adynamicequilibriumexistsbetweenthetendenciesofdifferentiationandcoordination.Furthermore,1)2)3)
Differentiationandintegrationaredirectlycorrelatedwithenvironmentalcomplexity.
Thehigherthedifferentiation,thegreatertheobstaclestointegration.
Anunsuccessfulorganizationinacomplexenvironmentislikelytobehighlydifferentiatedbutpoorlyintegrated.
b.
c.
5.
AccordingtoHenryMintzberg,anorganizationhasfivecomponents.Dependingonwhichisincontrol,oneoffivedifferentstructureswillevolve.Thefiveorganizationalcomponentsincludethea.b.c.d.e.
Operatingcore--workerswhoperformthebasictasksrelatedtoproductionStrategicapex--topmanagers
Middleline--managerswhoconnectthecoretotheapex
Technostructure--analystswhoachieveacertainstandardizationintheorganizationSupportstaff--indirectsupportservices
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6.Mintzberg’sfiveorganizationalstructuresincludethefollowing:a.
Asimplestructure,suchasthatofasmallretailer,hasalowcomplexityand
formality,andauthorityiscentralized.Itssmallsizeandsimplicityusuallyprecludessignificantinefficiencyintheuseofresources.Thestrategicapexisthedominantcomponent.
Amachinebureaucracyisacomplex,formal,andcentralizedorganizationthatperformshighlyroutinetasks,groupsactivitiesintofunctionaldepartments,hasastrictchainofcommand,anddistinguishesbetweenlineandstaffrelationships.Thetechnostructuredominates.
Aprofessionalbureaucracy(e.g.,auniversityorlibrary)isacomplexandformalbutdecentralizedorganizationinwhichhighlytrainedspecialistshavegreatautonomy.Duplicationoffunctionsisminimized.Forexample,auniversitywouldhaveonlyonehistorydepartment.Thus,theoperatingcoreisincontrol.
Adivisionalstructureisessentiallyaself-containedorganization.Hence,itmustperformallormostofthefunctionsoftheoverallorganizationofwhichitisapart.Itischaracterizedbysubstantialduplicationoffunctionscomparedwithmorecentralizedstructures.Themiddlelinedominates.
Anadhocracy(anorganicstructure)haslowcomplexity,formality,andcentralization.Verticaldifferentiationislow,andhorizontaldifferentiationishigh.Theemphasisisonflexibilityandresponse.Thus,thesupportstaffdominates.
b.
c.
d.
e.
7.3DEPARTMENTATION
1.
Divisionoflaborbreakscomplexprocessesintotheirsimplercomponents.Thismakestaskspecializationbyemployeespossible.However,dividinglaborcreatesaneedfor
efficientcoordinationofthoseperformingtheseparatetasks.Oneresponsetotheproblemisdepartmentation,astructuralformatfororganizationalintegrationthatisintendedtopromotecoordination.Itisthegroupingofrelatedactivitiesintosignificantorganizationalsubsystems(groups,divisions,units,departments,etc.).a.
Departmentationbyfunctionisfoundinalmosteveryorganizationatsomelevel,whetherfor-profitornonprofit.Themostcommondepartmentsinfor-profit
organizationsaremarketing,production,andfinance(thoughothertermsmaybeused).Theseoftenextendupwardintheorganizationalcharttothelevelbelowthechiefexecutive.
Advantagesincludeoccupationalspecialization,simplifiedtraining,andrepresentationofprimaryfunctionsatthetopleveloftheorganization.2)Disadvantagesincludelackofcoordinationamongprimaryfunctionsand
absenceofprofitcenterswithintheorganization.
Departmentationbyterritory(geographiclocation)isfavoredbynationalormulti-nationalfirmsandgovernmentagencieswithscatteredresources,offices,orplants.1)2)
Advantagesincludequickerreactiontolocalmarketchanges,greaterfamiliaritywithlocalproblemsoruniquegeographicconcerns,andlogisticalsavingsinfreightcostsandtraveltime.
Disadvantagesincludemoredelegationofauthoritytoregionalmanagers,problemsofcontrolforheadquarters,andduplicationoffacilitiesandservicefunctions(personnel,purchases,etc.).a)
Advancesintelecommunicationscounteractsomeofthedisadvantages.
1)
b.
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SU7:OrganizationalStructureandEffectiveness
c.
Departmentationbyproductorserviceisgrowinginimportanceformultiline,
large-scaleenterprises.Itisoftenanoutgrowthoffunctionaldepartmentation.Theresultisthatproduct-servicesubunitsmaybetreatedasseparatebusinesseswithahighdegreeofautonomy.Managersmustthereforehaveabroadperspective,notamerelyfunctionalorientation.
Advantagesincludebetteruseofspecializedcapitalandskills,easeof
coordination,simplerassignmentofprofitresponsibility,compatibilitywitha
decentralizationstrategy,andabasisforallocatingcapitalefficientlytoproductsorserviceslikelytoachievethebestreturns.
2)Disadvantagesincludetherequirementforagreaternumberofpersonswith
managerialability,duplicationoffacilitiesandservicefunctions,anddifficultyintegratingoperations.
Departmentationbycustomerallowsforservicetoaparticularcustomertobe
providedunderthemanagementofasubunit.Thisformofdepartmentationseldomappearsatthetoplevelofanorganizationalstructure,butitiscommonatmiddlelevels(e.g.,theloanofficerofalargebankwhohandlesoneaccountexclusively).Customerdepartmentationistypicalinthesalesdepartmentofafirmorganizedbyfunction.
Advantagesincludeimprovedcustomerserviceasaresultofgreaterexpertiseinaparticularbusinessandeaseinidentifyingcontributionstoprofitbydifferenttypesandlocationsofcustomers.
2)Disadvantagesincludedifficultiesincoordinationwithotherunitsinthe
organization,pressuretogivepreferentialtreatmenttoagivenmanager’scustomers,andduplicationoffacilitiesandservicefunctions.
Projectdepartmentationisappropriateforexperimentalorone-timeactivities,e.g.,theconstructionofaship,alargebuilding,oramajordesignproject(suchasamilitaryweaponssystem).
Advantagesincludespecializationandeaseofcommunicationandcoordinationofeffortsrequiredwithinaparticularproject.
2)Disadvantagesincludeneedforreorganizationattheendoftheproject,
problemsofrecruitmentatthestartoftheproject,anddifficultyofmaintainingcontrolatthecentraloffice.
Matrixdesignmaybeacombinationofanyofthepreviouslymentionedapproaches.Forexample,amanagerforeachproductmaybeappointedtosupervisepersonnelwhosimultaneouslyreporttoamanagerforeachfunction.ThisformisusedinR&Dandinprojectmanagement.1)2)3)4)
Theemphasisofthearrangementisontheresultortheproduct.
Thefunctionalorganizationremains,butpartsofitaretemporarilylentorassignedtoagivenproject.
Theprojectmaybetomakeaproductindefinitelyortoaccomplishalimitedbutlengthytask,suchasconstructionofasubmarine.
Matrixdesignprovidesthesecurityandaccountabilityofthefunctionalform.
However,italsoprovidesexpertpersonneltotheprojectonlywhenneededandonlytotheextentrequired.Itallowspersonnelaswellasfunctionstobemosteffectivelyandefficientlyused.
Thetechnicalabilityofemployeesisbetterappraisedbythefunctionalmanagersthanbytheprojectmanager.
Practicalapplicationsskillscanbeappraisedbytheprojectmanageronsite.1)1)1)
d.
e.
f.
5)6)
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7)Unnecessarilylargeswingsinlevelsofpersonnelandequipmentareminimized.a)
g.
Themajordisadvantageisthattheunity-of-commandprincipleis
violated.Hence,theauthority,responsibility,andaccountabilityofthepartiesinvolvedmustbeclearlydefinedtoavoidconfusionandemployeedissatisfaction.
b)Aseconddisadvantageisthepossibleinefficientuseofemployees.
Individualsmaybeidlewhilewaitingforprojectassignmentsthatrequiretheirspecifictalents.
8)Itisdifficultforlargeorganizationstousematrixdesignbecausetheytypically
havemanylevels(bothverticalandhorizontal),thusslowingcommunications.
Leanproductionisanimportantconceptthatfocusesonminimizationofwasteineverythingfrominventoriestolaborhours.Theseimprovementsbenefitthe
organization’sstakeholders,includingcustomersandshareholders.Societyalsobenefitsbecausethewastetraditionallyembeddedinthemanufacturingprocessisremoved,releasingresourcesforotheruses.
Leanproduction’sbasicpremiseisthatbetter-designedproducts,avoidanceofdefects,increasedspeedandflexibility,andreducedinventorytranslatetodecreasedcosts.
2)Manyorganizationsusebenchmarkingtodeterminehowlowinventoriesand
costscanbe.
3)Anorganizationcannotbecomealeanproducerovernight.Managementmust
buildandnurturethelogicandmachinerythatdriveleanproduction.
4)Implementingleanproductionusuallymeansbreakingoldpatternsandinstalling
newones.
5)Strategicplanningisessentialtoleanproduction.
6)Effectiveleanproductionrequirespartneringwithsuppliers.
Departmentationbyworkflowprocessisusedinreengineeredorganizations.1)
Reengineeringinvolvesstartinganewtoredesignanorganization’scoreprocessesratherthanattemptingtoimprovethecurrentsystem.
Reengineeringisnotmerelydownsizingorcontinuousimprovement,butacompletechangeinwaysofdoingbusiness.
Inthemodern,highlycompetitivebusinessenvironment,anorganizationneedstoadaptquicklyandradicallytochange.Thus,reengineeringisusuallyacross-functionalprocessofinnovationrequiringsubstantialinvestmentininformationtechnologyandretraining.Successful
reengineeringmaybringdramaticimprovementsincustomerserviceandthespeedwithwhichnewproductsareintroduced.
Organizationsthatuseworkflowprocessdesignarehorizontal
organizations.Theirobjectiveisanoutwardfocusoncustomersatisfaction.Forthispurpose,thehorizontalworkflowbetweenidentificationofcustomerneedsandsatisfactionofthoseneedsistobemanagedquicklyandefficiently.a)1)
h.
2)
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SU7:OrganizationalStructureandEffectiveness
7.4LINEANDSTAFFDESIGN
1.
MajorApproachesa.
Theclassicalapproachviewslineactivitiesasthosedirectlyresponsiblefortheprimaryfunction,product,orserviceoftheorganization.Staffmembersprovidesupportingtechnicalexpertise.Inmechanisticorganizations,aline-and-staffdesignhelpstopreserveunityofcommand.
Productionisalineactivity,butmorecurrentwritersincludesales(marketing)andsometimesfinance,dependingontheobjectivesoftheorganization.2)Staffactivitiesareadvisory.Theyarenecessarytotheorganizationbut
secondarytothelinefunctions.Adistinctionshouldbemadebetween
personalstaffandspecializedstaff.Theformerareindividualsassignedtoagivenmanager,andthelatterarefunctionsthatservethewholeorganization.
Behavioraltheorists’concernswithacceptanceofauthoritydistinguishtheir
approachtolineandstaffrelationships.Theyseeexerciseofinformalauthorityasaveryimportantconstraintonformalchainsofcommand.1)2)3)
Adviceofferedbyseniorstaffisakintoacommand.Theyhaveaccesstoseniormanagementandcanexercisemoreinformalauthoritythanajuniorlinemanager.
Eventheclassicalschoolacknowledgedthedilemmaofhowtoensureadoptionofspecializedstaffadvicewithoutsubvertinglineauthority.Iflinemanagementrefusestoacceptstaff’sadvice,whatcanseniormanagementdo?
Astaffgroupwithadvisoryauthoritycanonlyoffersuggestions,prepareplansforconsiderationbylinemanagers,andevaluateorganizationalperformance.Astaffmemberoftenhasanareaoftechnicalexpertise,suchaslaw,industriallaborrelations,operationsresearch,orpersonnel.
b)Thestaffmember’sgoalistheapproval(orrejection)ofacomplete
recommendedsolution,butalinemanagermaywantaquickfixtoaproblemratherthanacompletesolution.c)Consultationwithlinepersonnelisessential.
Astaffgroupmayhaveconcurrentauthority.Linemanagementmustpersuadeexpertsinspecifiedareastoagreetoanactionordecision.
EXAMPLE:Alineproductionmanagermayberequiredtoobtainasecondsignatureonaleaseagreementfromthelegaldepartment.
Astaffgroupmaybegivencompleteauthorityinaspecializedarea,anditsspecializedactivitiesareseparatedfromlinemanagement.
Unlikeadvisoryactivities,thelinemanagermustusetheservicesofthestafforganization.
b)Examplesincludeinformationsystems,purchasing,andpersonnel.
Astaffgroupmayoccasionallybegivencontrolauthority.Thus,lineauthoritymaybesupersededbythatofthespecialiststaffdesignatedbyhigherlevelsofmanagementtomakecertaindecisionsintheareaofstaffexpertise.a)
Controlstaffauthorityappearstoviolateclassicalprinciplesofunityofcommand.However,thereisnoviolationwhenthecontrolstaffactasagentsforthehigher-levellinemanager,whohasdelegatedauthoritytothestaff.i)
EXAMPLE:Quality-controlinspectorshavetheauthoritytorejectmarginalproducts,butbecausethisauthorityisexercisedonbehalfofthemanufacturingmanager,thechainofcommandactuallyremainsintact.
a)a)a)1)
b.
4)
5)
6)
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13
7)
IftheorganizationadoptsTQMconceptswithanemphasisoninternalaswellasexternalservice,linemanagersandstaffpersonnelmaybeviewedashavingacustomer-serviceproviderrelationship.
2.
Ahybridofthecontrolauthorityrelationshipofstaffandlineiscalledfunctionalauthority.Thiskindofdesigniscommoninorganicorganizations.a.
Anindividualisgivenfunctionalauthorityoutsidethechainofcommandforcertainspecifiedactivities.Theindividualmaybeeitheralineorastaffmanagerwhoisaspecialistinaparticularfield.
EXAMPLE:Thevicepresidentinchargeofsalesmaybegivenfunctionalauthorityovermanufacturingexecutivesinschedulingcustomerorders,packaging,ormakingservicepartsavailable.
Functionalauthoritymaybecreatedfornumerousreasonswhenalinemanagerisnotthepersonbestsuitedtooverseeagivenactivity,forexample,lackofspecial
knowledge,inabilitytosuperviseprocesses,oradangerofdiverseinterpretationsofpolicies.
EXAMPLE:Thevicepresidentforindustriallaborrelationsmayhavefunctionalauthorityovertheproductionmanagerforthepurposeofnegotiatinganewlaborcontract,thoughnolinerelationshipexistsatothertimes.
Functionalspecialistshavetheauthoritytodeterminetheappropriatestandardsintheirownfieldofspecializationandtoenforcethosestandards.1)
EXAMPLE:Thechiefengineerofanairlinemayhavetheauthoritytoremoveairplanesfromservice,overridingthewishesofthevicepresidentforoperations.1)1)
b.
c.
3.
Lineandstaffconflictsarealmostinevitablegiventheconsiderabledifferenceintheir
backgroundsandactivities.Theseindividualstendtohavedifferenttrainingandeducation,perspectivesontheorganization,careerandotherobjectives,andtemperaments.a.b.c.
LineandstaffconflictsareclassicresultsofthedifferentiationandfragmentationprocessdiscussedinSubunit7.2.
Operatingexecutiveswithlineauthorityoftenseeahighpotentialforharminstaffactivity.Astaffmemberwithvaguelydefinedauthorityfromachiefexecutivemayeffectivelyunderminelinemanagers.
Staffarenotresponsibleforthesuccessofalinedepartment,butonlyforgeneratingsuggestions.Ifanimplementedsuggestionfails,linemanagerswillblamethesuggestion,andstaffwillblamethepoorimplementationofthesuggestions.
Thus,conflictmayarisebecauselinemanagersmayhavenoauthoritytoinfluencestaffbehaviorwhenitisinconsistentwiththeachievementofobjectives.
Settingstaffapartfromlineresponsibilitiesgivesthemthetimeandenvironmentinwhichtothink,butthisseparationcanalsoleadtothinkinginavacuumandsuggestionsbystaffthatareinappropriateornotfeasible.
Excessivestaffactivitymayviolatetheprincipleofunityofcommand.Subordinatesmaybecomeconfusedandwonderwhethertheyareprimarilyresponsibletothestaffmemberortotheirlinemanager.1)
d.e.
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SU7:OrganizationalStructureandEffectiveness
4.Line-staffconflictsmaybeminimizedbya.b.c.d.e.
Clearlydefiningareasofactivityandauthority.
Sharplydefiningthenatureandplaceoflineandstaff.Forexample,linemayhaveauthorityandresponsibility,andstaffmayberequiredtoselltheirideastoline.
Stressingthesystemsapproachtoallemployees,whetherlineorstaff,toencouragethemtoworktogethertowardorganizationalgoals.
Reducingareasofpossibleconflict,e.g.,keepingfunctionalauthoritytoaminimumandprovidingfeedbacktostaffofline’sreactiontoproposals.
Usingtheconceptofcompletedstaffworkwhenpossible.Thus,recommendationsshouldbecompleteenoughtomakepossibleyes-or-noresponsesfromlinemanagers.Adviceshouldbeclearandcomplete.
Everypositionandtaskmustcontributetoachievementoforganizationalobjectives.Distinctionsbetweenproducersandhelpersareirrelevant.
Thechangingnatureofworkenvironmentsfrompredominantlyproductionfirmstopredominantlyserviceprovidersmakesithardertopinpointwhoexactlyisresponsibleforproducing.1)
EXAMPLE:Atamotorinnwiththeobjectiveofcustomersatisfaction,whoislineandwhoisstaff?
5.Themodernapproachtolineandstaffisbasedonsystemstheory.a.b.c.
7.5SPANOFCONTROL
1.2.3.
Spanofcontrol(spanofmanagementorspanofauthority)isanupperlimittothenumberofpeoplewhocanbeeffectivelyandefficientlysupervisedbyoneperson.Theclassicalviewholdsthattheuniversalspanofcontrolisfiveorsixpeople.Thebehavioralschooladvocatesexpandingthespanofcontrolifpossible.Theadvantagesarea.b.
Increasingautonomyandmoraleofindividualworkersbyreducingthetime
availabletoamanagertodirectthem(themorepeoplepermanager,thelesstimeavailableperperson)
Decreasingcommunicationproblemsbyreducingorganizationallevels(givenafixednumberofemployees,thenarrowerthespanofcontrol,thetallertheorganization,andthegreaterthenumberoflevels)
4.
Themodernorcontingencyapproachsuggeststhattheappropriatespanofcontrolvarieswidely.Itidentifiesthesituationalvariablesthatdeterminethespanofcontrol,includinga.b.c.d.e.
Thesupervisor’straining,interests,abilities,personality,timeavailabletosupervise,etc.
Workers’interests,drives,commitmenttothejob,training,attitudes,aptitudes,etc.Theworksituation,includingthetechnologicalprocessused(jobshop,mass
production,continuousprocess),frequencyofchangeinjobmethod,complexityofthetask,dependenceontheworkofothers,andsupervisionrequiredTheorganizationalcultureandestablishedpoliciesandprocedures
Theorganization’senvironment,includinghowrapidlyitiscompelledtochangebytechnologicalinnovationormarketpressureandtheamountofuncertaintyintheenvironment
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15
5.Spansofcontroltendtomovefromwidertonarrowerasa.b.c.d.e.f.
Theworkdonebecomeslesssimilar
WorkersbeingsupervisedbecomemoredispersedgeographicallyTheworkdonebecomesmorecomplex
Thefrequencyandintensityofrequiredsupervisionincrease
ThetimeneededforcoordinationwithothersupervisorsincreasesThetimeneededforplanningincreases
Flatorganizationalstructureshaverelativelyfewlevelsfromtoptobottom.Thus,theyhavewidespansofcontrol.
Flatstructuresprovidefastinformationflowfromtoptobottomoftheorganizationandincreasedemployeesatisfaction.
2)Disadvantagesofreducedsupervisionarepooreremployeetraining,lackof
coordination,andbehavioralproblems.
Tallorganizationalstructureshavemanylevelsbetweentopandbottom.Hence,theyhaverelativelynarrowspansofcontrol.
Tallstructuresarefasterandmoreeffectiveatproblemresolutionthanflat
structuresbecauseofincreasedfrequencyofinteractionbetweensuperiorandemployeeandthegreaterorderimposedbythehierarchicalstructure.2)Disadvantagesareslowdecisionmaking,excessivesupervision,greater
administrativecosts,andlackofinitiativeresultingfromtoolittledelegationofauthority.
Studiesdonotindicategreatadvantagesforeitherflatortallstructures.1)1)
6.Thenumberoflevelsinanorganizationwillbegreatlyinfluencedbythespanofcontrol.a.
b.
c.
7.6CENTRALIZATIONANDDECENTRALIZATION
1.2.3.4.5.
Majordesignissuesaretheconcentrationofauthorityinanorganization,itsdegree,andthelevelsatwhichitoccurs.
Centralizationanddecentralizationarerelativeterms.Absolutecentralizationordecentralizationisimpossible.
Classicistsviewdecentralizationwithsomedistrustbecausetheyseektoavoidanydilutionofcontrolbyseniormanagers.
Behavioristsviewdecentralizationinthesamewayasdelegation,thatis,asagoodwaytoimprovemotivationandmoraleoflower-levelemployees.
Themodernorcontingencyviewisthatneithercentralizationnordecentralizationisgoodorbadinitself.Thedegreetowhicheitherisstresseddependsuponagivensituation.a.b.c.d.e.f.
Decisionscannotbedecentralizedtothosewhodonothavenecessaryinformation,e.g.,knowledgeofjobobjectivesormeasuresforevaluationofperformance.
Decisionscannotbedecentralizedtopeoplewhodonothavethetraining,experience,knowledge,orabilitytomakethem.
Decisionsrequiringaquickresponseshouldbedecentralizedtothoseneartheaction.
Decentralizationshouldnotoccurbelowtheorganizationallevelatwhich
coordinationmustbemaintained(e.g.,eachsupervisoronanassemblylinecannotbeallowedtodecidethereportingtimeforemployees).
Decisionsthatareofcriticalimportancetothesurvivaloftheorganizationshouldnotbedecentralized.
Decentralizationhasapositiveinfluenceonmorale.
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SU7:OrganizationalStructureandEffectiveness
6.
Decentralizationisaphilosophyoforganizingandmanaging.Carefulselectionofwhichdecisionstopushdownthehierarchyandwhichtoholdatthetopisrequired.Thedegreeofdecentralizationwillbegreaterifa.b.c.d.
Moredecisionsaremadelowerinthehierarchy
MoreoftheimportantdecisionsaremadelowerinthehierarchyMorefunctionsareaffectedbydecisionsmadeatlowerlevels
Fewerdecisionsmadelowerinthehierarchyaremonitoredbyseniormanagement
7.
Organizationaldesignshouldachieveabalancebetweencentralizationand
decentralization.Themainbenefitsofcentralizationaremoreeffectivecontrolandreducedcoststhroughresourcesharing.Themainbenefitsofdecentralizationareflexibilityandadaptabilitythatpermitarapidresponsetochangesincircumstances.a.b.
Themorecentralizedorganizationtendstothriveinarelativelystableandcertainenvironment.
Themoredecentralizedorganizationtendstobemoresuccessfulinarelativelyunstableanduncertainenvironment.
8.
Establishmentofstrategicbusinessunits(SBUs)isameansofdecentralizationusedbylargecorporationsseekingtoenjoytheentrepreneurialadvantagesofsmallerentities.a.
AnSBUinprincipleispermittedbyitsparenttofunctionasanindependentbusiness,includingdevelopmentofitsownstrategicplans.AtrueSBU1)2)3)4)
Isnotmerelyasupplieroftheparent,butservesitsownmarketsEncounterscompetitionIsaprofitcenter
Makesallimportantdecisionsaboutitsbusinessalthoughitmayshareresourceswiththeparent
9.
Delegationistheformalprocessofassigningauthoritydownward.Delegationissimilartodecentralizationinphilosophy,process,andrequirements.a.b.c.
Theclassicalapproachistoavoiddelegationbecausethesuperiorisdeemedtobebothresponsibleandknowledgeable.Underthatview,delegationavoidsresponsibility.
Thebehavioralviewseesdelegationasusefulineveryorganizationbecausenoonehastimetomakeeverydecision,andemployeesliketomakedecisionsaffectingtheirwork.
Themodernorcontingencyapproachistoviewdelegationasdependentonthesituationandthepeopleinvolved.Delegationrequires1)2)3)4)5)6)d.
1)2)3)4)5)6)
Skill,self-confidence,andknowledgeoforganizationalobjectivesAfeedbacksystemtoallowobjectiveassessmentofperformanceFaithinemployees’abilities
ClearrecognitionofthebasicneedtodelegateWillingnesstoacceptrisk
Desiretodevelopandtrainemployees
Determinationofresultsexpected
Assignmentoftasksandresponsibilities
Delegationofauthorityforaccomplishingthesetasks
RecruitmentofresponsiblepeoplefortheaccomplishmentoftasksClearcommunicationofwhatisexpectedinobjectiveterms
Follow-up,becauseultimateresponsibilitystillresideswiththedelegator
Thedelegationprocessinvolves
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e.f.Thebenefitsofdelegationaretimesavingsforthedelegator,traininganddevelopmentoflower-levelmanagers,andimprovedmorale.ObstaclestoDelegation
Thedelegatorisaperfectionist,haslowself-esteem,fearscriticismorcompetition,lacksconfidenceinlower-levelmanagers,orhaslowrisktolerance.
2)Jobsarepoorlydefined.3)Controlsareineffective.
4)Superiorsarenotrolemodelsfordelegation.TheContinuumofDelegation1)2)3)4)5)
Investigationandreporting
InvestigationandsubmissionofrecommendationsInvestigationandadvisingaboutplans
Investigationandundertakingaction,withreportingonwhatwasdoneInvestigationandundertakingaction1)
g.
10.Newtypesoforganizationstendtohaveflatterstructures(fewerlayers),makemoreuse
ofteams,andavoidthedisadvantagesofthecomplexlargeentitybycreatingentrepreneurialunits.
a.
Anhourglassorganizationhasthreelayers:
Thestrategiclayerdeterminesthemissionoftheorganizationandensuresthatitissuccessful.
2)Asmallgroupofmiddlemanagerscoordinatesavarietyoflower-level
cross-functionalactivities.Thesemanagersaregeneralists,notspecialists,andtheyarenotsimplyconduitsforoperatinginformation.Computersystemscaninstantlytransfersuchinformationdirectlytothetoplayer.
3)Onthelowestlevelareempoweredtechnicalspecialistswhoaremostoften
self-supervised.Theylackpromotionpossibilitiesbutaremotivatedbylateraltransfers,challengingwork,traininginnewskills,andpay-for-performanceplans.
Aclusterorganizationisinessenceagroupofteams.Workersaremultiskilledandshiftamongteamsasneeded.Communicationandgroupskillsarevital,requiringspecialtrainingandteam-buildingexercises.Payisforknowledge.
Networkorganizations.Therelativeindependenceofthevariousfirmsinanetworkdifferentiatesitfromaverticallyintegratedorganization.1)2)3)4)
Anetworkisnotbasedonthepricemechanismoronahierarchicalrelationshipbutoncoordinationthroughadaptation.
Itisalong-term,strategicrelationshipbasedonimplicitcontractswithoutspecificlegalties.
Anetworkallowsmemberfirmstogainacompetitiveadvantageagainstcompetitorsoutsidethenetwork.
Anetworkmaybeviewedasagroupofactivitiesinvolvingsuppliersandcustomersthataddvalue.Eachactivitymaybeperformedinternallyataninternalcostorsubcontractedatanexternalcost.a)b)
Whenanactivityissubcontracted,atransactioncostwillbeincurred.Atechnologicalrestrictionontheexistenceofanetworkisthatexternalcostsmustbelessthaninternalcosts.Thefirmsinthenetworkmustbeabletoreducethetransactioncostssothatthecombinationofexternalandtransactioncostsislessthaninternalcosts.
1)
b.c.
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SU7:OrganizationalStructureandEffectiveness
c)
Thedifferencebetweenanetworkandanormalmarketisthattransactioncostsinthemarketarelowenoughforanyplayer.i)
d.
Inanetwork,theparticipatingfirmsreduceinitiallyhightransactioncoststhroughcooperativeefforts.
5)Anetworkisanultimateexpressionofoutsourcing,whichentailsobtaining
goodsorservicesfromoutsidesourcesthatcouldbeacquiredinternally.Forexample,afirmmaychoosetooutsourceitscomputerprocessingorlegalwork,andamanufacturermaybuyratherthanmakecomponents.
Virtualorganizationsare“flexiblenetworksofvalue-addingsubcontractors,linkedbytheInternet,email,faxmachines,andtelephones”(Kreitner,9thed.,pages343-344).1)2)3)4)
Theemphasisisonspeedandconstant,ifnottoorapid,change.Constantlearningisessential.
Cross-functionalteamsareemphasized.Stressishigh.
7.7STUDYUNIT7SUMMARY
1.
Organizationalchartsrepresenttheformalorganizationalstructureintwodimensions:verticalhierarchyandhorizontalspecialization.Theyoftenresembleapyramid,withthechiefexecutiveontopandtheoperatingworkforceonbottom.
Shortcomingsoforganizationalchartsinclude,amongotherthings,limitedpresentationofinformationandafailuretoshowinformalcommunication,influence,power,orfriendships.Theclosed-systemperspectivetreatstheorganizationasfocusedoneconomicefficiencyinareasonablypredictableenvironment.Planningandcontrolprocessescansubstantiallyeliminateuncertainty.ThisperspectiveisidentifiedwiththeworkofFrederickW.Taylor(thescientificschoolofmanagement),HenriFayol(functionsofmanagement),andMaxWeber(bureaucracy).
Theopen-systemperspectivetreatstheorganizationasfocusedonsurvivalinanuncertainenvironment.Theorganizationitselfandtheenvironmentcontainvariablesthatmaynotbecontrollable.Thisperspectivereflectstherealitythatasuccessfulorganizationmustadaptrapidlytochangesinsuchfactorsastechnologyprogressandproductevolution.ItisidentifiedwiththeworkofChesterBarnard(acceptanceoftheoryofauthority)andDavidGarvin(thelearningorganization).
Inthenarrowestsense,effectivenessisachievementofobjectives.Itiscontrastedwith
efficiency,whichistheratioofoutputtoinput.Inthebroadestsense,anorganizationmustachieveitsobjectivesefficientlytobeconsideredeffective.
Organizationaldecline(lossofeffectivenessandefficiencycoupledwithinflexibility)mayleadtodownsizing,merger,reorganization,orliquidation.Itresultsfromdecreased
demand,resourcelimitations,ormismanagement.Managementcomplacencyhasbeenidentifiedasthemostimportantcauseoforganizationaldecline.
Thecontingencyapproachisderivedfromopensystemsthinking.Itstressesthatthe
searchforanswerstoorganizationaldesignproblemsdependsoncontingenciesthatcanbediscoveredandstudied.Accordingly,noonedesignformatfitsallorganizations.Contingencydesigndeterminesthestructurethatsuitstheenvironmental(state)uncertaintyfacedbytheorganization.
2.3.
4.
5.
6.
7.
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19
8.
BurnsandStalkerdistinguishedbetweenmechanisticandorganicorganizations.Inamechanisticorganization(aninflexiblebureaucracy),tasksarespecificallydefinedandhavelittleflexibility.Moreover,knowledgetendstobetask-specific.Anorganic
organizationisadaptive.Tasksarebroadlyandflexiblydefined,andtherelationshipofindividualeffortandorganizationalobjectivesisclear.Inaddition,knowledgetendstobeprofessional.
LawrenceandLorschaddressedtherelationshipbetweenenvironmentalcomplexityandtheorganization’sbalancebetweendifferentiationandintegration.Differentiationiscausedbythedivisionoflaborandtechnicalspecialization.Thus,specialistsin,forexample,market-ingandITmayhavesubstantialdifferencesinskills,attitudes,andbehavior.Differentiationleadstoorganizationalfragmentationbecausespecialiststendtohaveanarrowfocus.Integrationisthecoordinationofeffortrequiredforachievementofmutualobjectives.
9.
10.AccordingtoHenryMintzberg,anorganizationhasfivecomponents.Dependingonwhichis
incontrol,oneoffivedifferentstructureswillevolve.Thefiveorganizationalcomponentsarethe(a)operatingcore,(b)strategicapex,(c)middleline,(d)technostructure,and(e)supportstaff.Mintzberg’sfiveorganizationalstructuresare(a)simplestructure,(b)machinebureaucracy,(c)professionalbureaucracy,(d)divisionalstructure,and(e)adhocracy.11.Divisionoflaborbreakscomplexprocessesintotheirsimplercomponents.Thismakestask
specializationbyemployeespossible.However,dividinglaborcreatesaneedforefficientcoordinationofthoseperformingtheseparatetasks.Oneresponsetotheproblemisdepartmentation.Departmentationmaybebyfunction,territory,productorservice,customerproject,orworkflowprocess.12.Matrixdesignmaybeacombinationofanyoftheapproachestodepartmentation.For
example,amanagerforeachproductmaybeappointedtosupervisepersonnelwhosimultaneouslyreporttoamanagerforeachfunction.ThisformisusedinR&Dandinprojectmanagement.13.Theclassicalapproachtoorganizationtheoryviewslineactivitiesasthosedirectly
responsiblefortheprimaryfunction,product,orserviceoftheorganization.Staffmembersprovidesupportingtechnicalexpertise.Inmechanisticorganizations,aline-and-staffdesignhelpstopreserveunityofcommand.Staffactivitiesareadvisory.Theyarenecessarytotheorganizationbutsecondarytothelinefunctions.14.Ahybridofthecontrolauthorityrelationshipofstaffandlineiscalledfunctionalauthority.
Thiskindofdesigniscommoninorganicorganizations.15.Lineandstaffconflictsarealmostinevitablegiventheconsiderabledifferenceintheir
backgroundsandactivities.Theseindividualstendtohavedifferenttrainingandeducation,perspectivesontheorganization,careerandotherobjectives,andtemperaments.Lineandstaffconflictsareclassicexamplesofdifferentiationandfragmentation.16.Spanofcontrol(spanofmanagementorspanofauthority)isanupperlimittothenumberof
peoplewhocanbeeffectivelyandefficientlysupervisedbyoneperson.Theclassicalviewholdsthattheuniversalspanofcontrolisfiveorsixpeople.17.Thebehavioralschooladvocatesexpandingthespanofcontrolifpossible.Themodernor
contingencyapproachsuggeststhattheappropriatespanofcontrolvarieswidely.It
identifiesthesituationalvariablesthatdeterminethespanofcontrol.Thenumberoflevelsinanorganizationwillbegreatlyinfluencedbythespanofcontrol.18.Flatorganizationalstructureshaverelativelyfewlevelsfromtoptobottom.Thus,theyhave
widespansofcontrol.Flatstructuresprovidefastinformationflowfromthetoptothe
bottomoftheorganizationandincreasedemployeesatisfaction.Disadvantagesofreducedsupervisionarepooreremployeetraining,lackofcoordination,andbehavioralproblems.19.Tallorganizationalstructureshavemanylevelsbetweentopandbottom.Hence,theyhave
relativelynarrowspansofcontrol.
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SU7:OrganizationalStructureandEffectiveness
20.Majordesignissuesaretheconcentrationofauthorityinanorganization,itsdegree,andthe
levelsatwhichitoccurs.Centralizationanddecentralizationarerelativeterms.Absolutecentralizationordecentralizationisimpossible.21.Classicistsviewdecentralizationwithsomedistrustbecausetheyseektoavoidanydilution
ofcontrolbyseniormanagers.Behavioristsviewdecentralizationinthesamewayasdelegation,thatis,asagoodwaytoimprovethemotivationandmoraleoflower-levelemployees.Themodernorcontingencyviewisthatneithercentralizationnor
decentralizationisgoodorbadinitself.Thedegreetowhicheitherisstresseddependsuponagivensituation.22.Decentralizationisaphilosophyoforganizingandmanaging.Carefulselectionofwhich
decisionstopushdownthehierarchyandwhichtoholdatthetopisrequired.23.Establishmentofstrategicbusinessunits(SBUs)isameansofdecentralizationusedby
largecorporationsseekingtoenjoytheentrepreneurialadvantagesofsmallerentities.AnSBUinprincipleispermittedbyitsparenttofunctionasanindependentbusiness,includingdevelopmentofitsownstrategicplans.24.Delegationistheformalprocessofassigningauthoritydownward.Delegationissimilarto
decentralizationinphilosophy,process,andrequirements.Thecontingencyapproachviewsdelegationasdependentonthesituationandpeopleinvolved.25.Newtypesoforganizationstendtohaveflatterstructures(fewerlayers),makemoreuseof
teams,andavoidthedisadvantagesofthecomplexlargeentitybycreatingentrepreneurialunits.Examplesincludethehourglassorganization,theclusterorganization,andthe
networkorganization.Kreitneridentifiesvirtualorganizationsasbeing“flexiblenetworksofvalue-addingsubcontractors,linkedbytheInternet,email,faxmachines,andtelephones.”
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