Organizational Behaviour
Canadian Edition
Schermerhorn, Hunt, Osborn, Currie
Prepared by: Joan Condie
Chapter 11
Strategy and the Basic
Attributes of Organizations
Questions
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What is strategy?
What types of contributions do organizations make, and what types
of goals do they adopt?
What is the formal structure of the organization, and what is meant
by the term “division of labour”?
How is vertical specialization used to allocate formal authority within
the organization?
How does an organization control the actions of its members?
What different patterns of horizontal specialization can be used in
the organization?
Which personal and impersonal coordination techniques should the
organization use?
What are bureaucracies and what are the common types?
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Strategy
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Strategy = the process of positioning the
organization in its competitive environment and
implementing actions so it can compete
successfully
Begins with deciding:
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Who it will serve
What it will provide
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Strategy and Goals
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Critical strategic choices start with formation of
goals
Goals then form basis of further decisions
regarding how to allocate resources and how best
to structure the organization to accomplish the
goals
Mission statement is a written statement of an
organization’s purpose
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Societal Contributions
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Noting the organization’s positive contributions to
society (how its specific tasks link to higher
purposes) enhances its image and creates
advantages:
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Desirable missions increase employee motivation
through shared sense of noble purpose
Organization’s claim to society’s resources
becomes more legitimate
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Goals and Missions
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Each organization has one primary beneficiary of
its business success, i.e., one group that benefits
(e.g., shareholders)
Output goals (regarding product or service) define
how the organization will accomplish its mission;
they define the type of business the organization is
in
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Goals and Missions
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Systems goals define desirable conditions in the
organization that are expected to increase the
organization’s survival potential (e.g., flexibility,
quality, innovation, productivity)
•
•
Will differ in different parts of the organization
Need to be well-defined, practical and easy-tounderstand in order to focus managers on what
needs to be done and to be a basis for deciding
appropriate structure
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Formal Structure and the Division of
Labour
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An organization’s structure
must fit the pattern of goals
chosen by senior management
Formal structure of firm is also
known as division of labour,
and outlines:
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CEO
VP
Production
VP
Marketing
VP
Finance
Manager
Manager
Manager
Jobs to be done
Plant A
Plant B
Plant C
Positions designated to
Shift
Shift
Shift
perform specific duties
Supervisor
Supervisor
Supervisor
How tasks of organization are
Shift
Shift
Shift
to be accomplished
Supervisor
Supervisor
Supervisor
Organization chart visually
depicts the formal structure (or
skeleton) of the organization
Shift
Supervisor
Shift
Supervisor
Shift
Supervisor
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
CEO
Vertical Specialization
VP
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VP
VP
A hierarchical division of labour that distributes
formal authority
Distribution of authority reflected in typical
responsibilities in Canada:
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Top managers plan overall strategy, plot future, and
act as final judges
Middle managers guide daily operations, help
formulate policy
Lower-level managers supervise subordinates to
ensure strategies implemented and policies
followed
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Chain of Command
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Chain of command =
listing of who reports to
whom up and down the
organization
Unity of command =
traditional belief that each
individual should have only
one boss and each unit
only one leader
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Avoids confusion, clarifies
responsibility, provides
clear communication
CEO
VP
Production
Manager
Plant A
Shift
Supervisor
Welder
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Span of Control
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Span of control = the number of individuals
reporting to a supervisor
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Narrow: for complex tasks, inexperienced or poorly
trained subordinates
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Creates many levels – expensive, unresponsive to
change, management isolation, less effective
communication
Wide span of control goes along with flatter
structures (fewer levels)
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More possible now with new information technologies
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Line and Staff Units
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Line units = work groups that conduct
the major business of the organization
•
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Internal line units (e.g., production)
External line units (e.g., marketing)
Staff units = groups that assist the line
units by performing specialized services
in the organization
•
•
Internal staff units (e.g., accounting)
External staff units (e.g., public relations)
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Placement of Staff Units
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Staff units can be assigned at any level of the
organization, offering their specialized help at
mostly the senior level, the middle management
level, or to lower-level managers
Increasing interest in outsourcing many staff
functions
Also interest in decreasing need for some internal
staff through greater use of information technology
by managers, enhancing their analytical and
decision-making capabilities
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Control
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Set of mechanisms an organization uses to
ensure that actions and outputs respect
predetermined limits
Involves setting standards, measuring results,
and taking corrective actions
Types of controls:
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Output controls
Process controls
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Output Controls
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Controls that focus on desired targets and allow
managers to use their own methods for reaching
these targets
Steps in developing output controls:
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Developing targets or standards
Measuring results against targets
Taking corrective action
Part of a “management by exception” approach
Promotes flexibility as only goals are defined;
methods still open to creativity
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Process Controls
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Controls that try to specify how tasks are to be
accomplished
Represent use of experience to prevent recurring
problems
Three types of process controls:
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Policies, procedures, and rules
Formalization and standardization
Total quality management controls
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Process Controls (cont’d)
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Policies, procedures, and rules
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A policy is a guideline for action, noting important
objectives and broad indication of performance
approach
A procedure indicates the best method for performing a
task, shows which aspects of a task are most important,
or outlines how an individual is to be rewarded
A rule is a specific, rigid guideline for action, typically
indicating how something should be done or what
should not be done
Are often used as substitutes for direct managerial
supervision
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Process Controls (cont’d)
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Formalization and standardization:
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Formalization refers to the written documentation of
work rules, policies, and procedures
•
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Simplifies jobs, ensures consistency
Standardization is the degree to which the range of
actions in a job or series of jobs is limited
•
Guidelines are created so that similar work activities
are repeatedly performed in a similar manner
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Process Controls (cont’d)
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Total Quality Management (TQM)
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Deming’s process approach focused
on continual improvement through
use of statistical analyses of all firm’s
operations
Emphasizes managers and
employees collaborating in search of
quality improvements
Often uses empowerment and
participative management
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Allocating Formal Authority
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Where is decision-making power in the
organization?
Centralization = authority to make decisions is
restricted to higher levels of management
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Preferred when facing a major threat
Decentralization = authority to make decisions is
given to lower levels in an organization’s hierarchy
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Leads to higher satisfaction in subordinates, quicker
response to problems, easier training for promotion
Linked to idea of participation; many want to be
involved in decisions that affect their work
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Horizontal Specialization
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Division of labour by forming work units or work
groups within organizations
Process of departmentation
Several pure forms of departmentation:
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Functional
Divisional
Matrix
Mixed
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Functional
Departmentation
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Production
Marketing
Finance
HR
Common grouping of individuals by skill, knowledge,
and action yields
Advantages:
•
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CEO
Clear task assignments, easy for department
members to build on each other’s experience, easy
to explain, excellent management training, uses
employee technical quality
Disadvantages:
•
Rigidity to change, difficulty coordinating functions,
reinforces narrow training and thinking, may create
routine jobs, difficulties in communicating across
technical areas
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Divisional
Departmentation
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Industrial
Commercial
Residential
Grouping individuals and resources by products,
territories, services, clients, or legal entities
Advantages:
•
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HQ
Flexibility in responding to external demands,
spotting external changes, integration of specialized
personnel, focusing on delivery of special products to
specific customers
Disadvantages:
•
Duplication of effort by function, tendency for
divisional goals to be placed above corporate
interests, conflict among divisions
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Manager
Engineering
Project
Manager
Matrix Departmentation
Engineer
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Combination of functional and divisional patterns
which assigns an individual to more than one type of
unit
Advantages:
 Combines strengths of functional and divisional
approaches, blends technical and market emphasis
Disadvantages:
 Loss of unity of command means potential conflict
and ambiguity and communication difficulties,
expensive due to number of managers
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Mixed Forms of Departmentation
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Common to blend two or more forms of
departmentation to take advantage of
different benefits
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Coordination
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Set of mechanisms used to link the actions of the
organization’s units into a consistent pattern
Personal methods of coordination
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Direct contact among members, assignment of
managers to committees and task forces
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Promote dialogue, learning, innovation
Impersonal methods of coordination
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Written policies and procedures (e.g., budgets,
schedules), matrix departmentation, management
information system
•
Stress consistency and standardization
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Bureaucracy
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Originally conceived by Weber as an ideal form of
organization that emphasizes importance of legal
authority, logic and order as basis for design as
opposed to a firm based on charisma or cultural
tradition
Relies on division of labour, hierarchical control,
promotion by merit, career opportunities for
employees, administration by rule
Types of bureaucracies:
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Mechanistic
Organic
Hybrid
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Mechanistic Type
(or Machine Bureaucracy)
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Emphasizes vertical specialization and control,
with impersonal coordination and a heavy
reliance on standardization, formalization, rules,
policies, and procedures
Emphasizes routine
Challenges of this design:
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Employee motivation weakened by rigidity;
unions protect employees from the many
controls by imposing more controls; limited
ability to adjust to subtle external changes or
new technologies
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Organic Type
(Professional Bureaucracy)
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Emphasizes horizontal specialization, extensive use of
personal coordination, and loose rules, policies, and
procedures, decentralization
Staff units placed toward middle here than at top, as in
mechanistic
Less efficient than mechanistic and less responsive to
direction from central management
But better for problem-solving, satisfying individual
customer needs, detecting external changes, adjusting
to new technologies
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
Hybrid Types
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Different divisions in divisional departmentation
can differ in how mechanistic or organic they are
Conglomerate (a single corporation that consists
of a number of unrelated businesses) can use
different designs for various businesses,
depending on need dictated by size, environment,
technology and strategy
Schermerhorn, Hunt, Osborn, Currie Organizational Behaviour, Canadian Edition Copyright 2005 John Wiley & Sons Canada, Ltd.
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