Management (Robbins & Coulter) – Chapter 10

Organizing
*Arranging and structuring* work to accomplish an organization’s goals.
Purposes of organizing:
• *Divides work* to be done into specific jobs and departments
• *Assigns tasks and responsibilities* associated with individual jobs
• *Coordinates diverse* organization tasks
• *Clusters jobs* into units
• *Establishes relationships* among individuals, groups, and departments
• *Establishes formal lines* of authority
• *Allocates and deploys* organizational resources
Organizational structure
*Formal arrangement* of jobs within an organization.
Organizational chart
*Visual representation* of an organization’s structure.
Organizational design
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization
• Decentralization
• Formalization
Work specialization (division of labor)
*Dividing work activities* into separate job tasks.
Effects of work specialization:
• Early proponents believed it could *lead to great increases in productivity*
• Overspecialization can result in *boredom, fatigue, stress, poor quality, absenteeism, and higher turnover*
Departmentalization
The basis by which *jobs are grouped together.*
• Functional
By functions performed.
• Product
By product line.
• Geographical
On the basis of territory or geography.
• Process
On the basis of product or customer flow.
• Customer
By type of customer and needs.
Popular departmentalization trend:
• *Increasing use of customer departmentalization*
• *Getting and keeping customers* for their needs is essential for success
• *Use of teams* needed to accomplish complex tasks
Cross-functional team
• Work team composed of individuals from various functional specialties.
• *Ex.: Finance + marketing + human resources management in one team.*
Chain of command
• Continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization—clarifies who reports to whom.
• *Ex.: Employees report to their boss.*
Authority
Rights inherent in a managerial position to *tell people what to do* and to expect them to do it.
Acceptance theory of authority
View that authority comes from the *willingness of subordinates to accept it*.
Line authority
• Entitles a manager to direct the work of an employee.
• *Ex.: Senior manager tells employee to do this or that.*
Staff authority
• Positions with some authority that have been created to support, assist, and advise those holding line authority.
• *Ex.: Assistant manager gives employee advice on how to do this or that.*
Responsibility
*Obligation or expectation* to perform.
Unity of command
Management principle that each person should *report to only one manager*.
Span of control
*Number of employees* who can be effectively and efficiently *supervised by a manager.*
Centralization
Degree to which decision-making is *concentrated at the upper levels* of the organization.
Decentralization
Degree to which *lower-level employees provide input* or actually make decisions.
More centralization:
• *Stable* environment
• *Lower-level managers aren’t as capable or experienced* at decision-making
• *Lower-level managers do not want a say* in decisions
• Decisions are *relatively minor*
• Organization is facing a *crisis or risk of failure*
• Company is *large*
• Effective implementation of company strategies *depends on managers retaining say over what happens*
More decentralization:
• *Complex, uncertain* environment
• *Lower-level managers are capable and experienced* at decision-making
• *Lower-level managers want a voice* in decisions
• Decisions are *significant*
• Corporate culture is *open to allowing managers a say*
• Company is *geographically dispersed*
• Effective implementation of company strategies *depends on having involvement and flexibility in decision-making*
Employee empowerment
*Giving employees more authority* to make decisions.
Formalization
Degree to which jobs within the organization are *standardized* and the extent to which employee behavior is *guided by rules and procedures*.
High formalization:
Offers *little discretion* over what is to be done.
Low formalization:
Offers *fewer constraints / more freedom* on how employees do their work.
Mechanistic organization
Organizational design that’s *rigid and tightly controlled*.
Organic organization
Organizational design that’s highly *adaptive and flexible*.
Mechanistic:
• High specialization
• Rigid departmentalization
• Clear chain of command
• *Narrow* spans of control
• *Centralization*
• *High* formalization
Organic:
• Cross-functional teams
• Cross-hierarchical teams
• Free flow of information
• *Wide* spans of control
• *Decentralization*
• *Low* formalization
Contingency factors that affect structural choice:
• Strategy and structure
• Size and structure
• Technology and structure
• Environmental uncertainty and structure
Strategy and structure:
• Changes in corporate strategy should *lead to changes in an organization’s structure* that support that strategy
• Certain structural designs *work best with different* organizational strategies
Size and structure:
As an organization *grows larger, its structure tends to change from organic to mechanistic* with increased specialization, departmentalization, centralization, and rules/regulations.
Technology and structure:
• Organizations *adapt their structures to their technology*
• Woodward’s classification of firms is based on complexity, whether it’s *unit, mass, or process* productions
*Unit* production
*Small* batches.
*Mass* production
*Large* batches.
*Process* production
*Continuous* process.
Environmental uncertainty and structure:
• Mechanistic organizational structures tend to be *most effective in stable and simple* environments.
• The flexibility of organic organizational structures is *better suited for dynamic and complex* environments.
Simple structure
Organizational design with *low* departmentalization, *wide* spans of control, *centralized* authority, and *little* formalization.
Functional structure
Organizational design that groups together *similar or related* occupational specialties.
Divisional structure
Organizational structure made up of *separate, semiautonomous* units or divisions.
Simple structure strengths & weaknesses:
• *Fast, flexible, inexpensive* to maintain, clear accountability.
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• *Not appropriate as organization grows*; reliance on one person is risky.
Functional structure strengths & weaknesses:
• *Cost-saving advantages* from specialization; employees are grouped with others who have similar tasks.
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• Pursuit of functional goals can cause managers to *lose sight of what’s best* for the overall organization; functional specialists become *insulated and have little understanding* of what other units are doing.
Divisional structure strengths & weaknesses:
• Focuses on *results*—division managers are responsible for what happens to their products and services.
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• *Duplication* of activities and resources *increases costs and reduces efficiency*.