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Chapter Objectives
 Identify and describe four characteristics common to all
organizations and distinguish between line and staff
positions.
 Describe a business organization in terms of the opensystem model and explain the term learning organization.
 Describe the time dimension of organizational
effectiveness.
 Explain the concept of contingency organization design
and distinguish between mechanistic and organic
organizations.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter Objectives (cont’d)
 Identify and briefly describe the five basic
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departmentalization formats.
Describe how a highly centralized organization differs from
a highly decentralized one.
Define the term delegation and list at least five common
barriers to delegation.
Explain how the traditional pyramid organization is being
reshaped.
Describe at least three characteristics of organizational
cultures and explain the cultural significance of stories.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Organization
Structure and Effectiveness
 An organization is a cooperative social system of two
or more people with a common purpose
 Common Characteristics of Organizations
 Coordination of effort: Multiplying individual
contributions to achieve results greater than those
possible by individuals working alone
 Common goal or purpose: Having a focus to strive for
something of mutual interest
 Division of labor: Dividing tasks into specialized jobs
that use human resources efficiently
 Hierarchy of authority: Using a chain of command to
control and direct the actions of others
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Organization Charts
 Organization Chart (Table)
 A visual display of an organization’s positions and lines
of authority that is useful as a blueprint for deploying
human resources
 Vertical and Horizontal Dimensions
 Vertical hierarchy establishes the chain of command.
 Horizontal specialization denotes the division of labor.
 Line and Staff Positions
 Line managers make decisions and staff personnel
provide advice and support.
 Personal staff are assigned to a specific manager in
supporting roles.
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Figure 9.1:
A Simplified Sample Organization Chart
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Organizations as Open Systems
 Characteristics of Open Systems
 Interaction with the external environment through
permeable boundaries
 An open-system model encourages managers to think
about the organization’s life-support system
 Interacting organizational subsystems:
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Technical (production function) subsystems define the
organization’s transformation process.
Boundary-spanning subsystems provide the organization’s
interface with the external environment.
Managerial subsystems bridge (control and direct) the
technical and boundary-spanning subsystems.
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Figure 9.2: Open-System
Model of a Business
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Organizational Learning
 Learning Organization
 One that can create, acquire, and transfer knowledge,
and can then adapt its behavior accordingly
 Necessary Skills for a Learning Organization
 Solving problems
 Experimenting
 Learning from organizational experience and history
 Learning from others
 Transferring and implementing
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Figure 9.3:
Garvin’s Model of the Learning Organization
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Organizational Effectiveness
 Effectiveness
 A measure of whether or not organizational objectives
are accomplished
 Efficiency
 A measure of the relationship between inputs and
outputs for the organization
 No Silver Bullet
 No single approach to the evaluation of effectiveness is
appropriate in all circumstances or for all organizational
types.
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Organizational Effectiveness
(cont’d)
 A Time Dimension
 Organizational Effectiveness: Meeting organizational
objectives and prevailing societal expectations in the
near future
 Adapting to environmental demands
 Maturing and learning in the immediate future
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Figure 9.4: The Time Dimension
of Organizational Effectiveness
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Contingency Design
 Contingency Design
 The process of determining the degree of
environmental uncertainty and adapting the
organization and its subunits to the situation
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How much environmental uncertainty is there?
What combination of structural characteristics is most
appropriate?
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Table 9.1: Determining Degree of
Environmental Uncertainty
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The Burns and Stalker Model
 Mechanistic Organizations
 Are rigid in design, rely on formal communications,
and have strong bureaucratic qualities best suited to
operating in relatively stable and certain environments
 Organic Organizations
 Have flexible structures, have participative
communication patterns, and are successful in
adapting to change in unstable and uncertain
environments
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Table 9.2: Mechanistic
versus Organic Organizations
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Basic Departmentalization Formats
 Departmentalization
 Grouping of related jobs or processes into major
organizational units
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Overcomes some of the effect of fragmentation caused by
differentiation (job specialization)
Permits coordination (integration) to be handled in the
least costly manner
 Sometimes refers to divisions, groups, or units in large
organizations
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Basic Departmentalization Formats (cont’d)
 Functional Departments
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Categorize jobs according to the activity performed
 Product-Service Departments
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Group jobs around a specific product or service
 Geographic Location Departments
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Based on the physical dispersion of assets, resources, and customers
 Customer Classification Departments
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Centered on various customer categories
 Work Flow Process Departments in Reengineered Organizations
 Emphasis on smooth and speedy work flow between two points:
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Identifying customer needs
Satisfying the customer
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Figure 9.5A: Alternative
Departmentalization Formats
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Figure 9.5B: Alternative
Departmentalization Formats (cont’d)
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 9.5 C, D, E: Alternative
Departmentalization Formats (cont’d)
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Span of Control
 Span of Control (Management)
 The number of people who report to a manager.
 Narrow spans of control foster tall organizations with
many organizational/managerial layers.
 Flat organizations have wider spans of control.
 Is There an Ideal Span of Control?
 The right span of control efficiently balances too little
and too much supervision.
 Situational factors dictate the width of spans of
control.
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Figure 9.6: Narrow
and Wide Spans of Control
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Figure 9.7: Situational
Determinants of Span of Control
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Centralization and Decentralization
 Centralization
 The retention of decision-making authority by top
management
 Decentralization
 The sharing of decision-making authority by
management with lower-level employees
 The Need for Balance
 The challenge to balance the need for responsiveness to
changing conditions (decentralization) with the need
to create low-cost shared resources (centralization)
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Figure 9.8: Factors in Relative
Centralization/Decentralization
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Effective Delegation
 Delegation
 Assigning various degrees of decision-making
authority to lower-level employees
 Advantages of Delegation
 Frees up managerial time for other important tasks
 Serves as a training and development tool for lowerlevel managers
 Increases subordinates’ commitment by giving them
challenging assignments
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Figure 9.9: The Delegation Continuum
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Effective Delegation
(cont’d)
 Barriers to Delegation
 Belief that only you can do the job right
 Lack of confidence and trust in lower-level employees
 Low self-confidence
 Fear of being called lazy
 Vague job definition
 Fear of competition from those below
 Reluctance to take risks that depend on others
 Lack of early warning controls
 Poor example of bosses who do not delegate
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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The Changing Shape of Organizations
 Characteristics of New Organizations
 Fewer organizational layers
 More teams
 Smallness within bigness
 New Organizational Configurations
 Hourglass organization: Three-layer structure with
constricted middle (management) layer
 Cluster organization: Collaborative structure in which teams
are the primary unit
 Virtual organizations: Internet-linked networks of valueadding subcontractors
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Figure 9.10: Reshaping
the Traditional Pyramid Organization
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Organizational Cultures
 Organizational Culture
 The collection of shared beliefs, values, rituals, stories,
myths, and specialized language that creates a
common identity and sense of community
 The “social glue” that binds an organization’s members
together
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Characteristics of Organizational Cultures
 Collective: Organizations are social entities.
 Emotionally charged: The organization’s culture serves as a
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security blanket to its members.
Historically based: Trust and loyalty result from long-term
organizational associations.
Inherently symbolic: Actions often speak louder than
words.
Dynamic: Culture promotes stability and control.
Inherently fuzzy: Ambiguity, contradictions, and multiple
meanings are part of culture.
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Forms and Consequences
of Organizational Cultures
 Organizational values are shared beliefs about what
the organization stands for.
 The degree of sharing and the degree of intensity
determine whether an organization’s culture is strong
or weak.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 9.11: Forms and Consequences
of Organizational Culture
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The Organizational Socialization Process
 Organizational socialization: The process of
transforming outsiders into accepted insiders
 Orientations
 Orientation programs familiarize new employees with
the organization’s history, culture, competitive
realities, and compensation and benefits.
 Storytelling
 Recitations of heroic or inspiring deeds provide “social
road maps” for new employees.
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Strengthening Organizational Cultures
 Symptoms of a weak organizational culture
 Inward focus
 Morale problems
 Fragmentation/inconsistency
 Ingrown subcultures
 Warfare among subcultures
 Subculture elitism
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Summary
 All organizations exhibit four characteristics: (1) coordination of
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effort, (2) common goal or purpose, (3) division of labor, and (4)
hierarchy of authority.
In open-system terms, business organizations are made up of
interdependent technical, boundary-spanning, and managerial
subsystems.
Organizations need to satisfy different effectiveness criteria in
the near, intermediate, and distant future.
Contingency advocates contend that there is no one best
organizational setup for all situations.
There are five basic departmentalization formats: functional,
product-service, geographic location, customer classification,
and work flow process departmentalization.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Summary
(cont’d)
 Situational factors dictate degree of centralization and how
many people a manager can directly supervise
 Effective delegation permits managers to tackle higherpriority duties while helping train and develop lower-level
managers.
 Management is reshaping the traditional pyramid
bureaucracy. Three emerging configurations are the
hourglass, cluster, and virtual organization.
 Organizational culture is the “social glue” binding people
together through shared symbols, language, stories, and
practices.
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Terms to Understand
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Organization
Authority
Organization chart
Line and staff organization
Learning organization
Organizational
effectiveness
Contingency design
Mechanistic organizations
Organic organizations
Departmentalization
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Span of control
Centralization
Decentralization
Delegation
Hourglass organization
Cluster organization
Virtual organization
Organizational culture
Organizational values
Organizational
socialization
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