Chapter 17
Organizational Goals
and Structures
The key is to match
structures to goals
Chapter 17 Study Questions
• What are the different types of
organizational goals?
• What are the hierarchical attributes of
organizations?
• How is work organized and coordinated?
• What are bureaucracies and what are the
common forms?
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What are the different types of
organizational goals?
• Societal goals
– Reflect an organization’s intended contributions
to the broader society
– Enable organizations to make legitimate claims
over resources, individuals, markets, and
products
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What are the different types of
organizational goals?
• Mission statement
– A written statement of organizational purpose
– A good mission statement identifies whom the
firm will serve and how it will go about
accomplishing its societal purpose
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What are the different types of
organizational goals?
• Output goals
– Define the type of business the organization is
pursuing
– Provide some substance to the more general
aspects of mission statements
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What are the different types of
organizational goals?
• Systems goals
– Concerned with the conditions within the
organization that are expected to increase the
organization’s survival potential
– Typical systems goals include growth,
productivity, stability, harmony, flexibility,
prestige, and human resource maintenance
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What are the different types of
organizational goals?
• Well-defined systems goals can:
– Focus managers’ attention on what needs to be
done
– Provide flexibility in devising ways to meet
important targets
– Be used to balance the demands, constraints,
and opportunities facing the firm
– Form a basis for dividing the work of the firm
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What are the hierarchical
attributes of organizations?
• Successful organizations develop a
structure consistent with the pattern of
goals established by senior management
• The formal structure shows the planned
configuration of positions, job duties, and
the lines of authority among different parts
of the organization
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What are the hierarchical
attributes of organizations?
• Vertical specialization
– A hierarchical division of labor that distributes
formal authority and establishes where and
how critical decisions are to be made
– Creates a hierarchy of authority
• An arrangement of work positions in order of
increasing authority.
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What are the hierarchical
attributes of organizations?
• Organization charts
– diagrams that depict the formal structures of
organizations
– Typically show the various positions, the
position holders, and the lines of authority
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Figure 17.1
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What are the hierarchical
attributes of organizations?
• Chain of command
– A listing of who reports to whom up and down
the organization
• Unity of command
– Each person has only one boss and each unit
one leader
• Span of control
– The number individuals reporting to a
supervisor
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What are the hierarchical
attributes of organizations?
• Line units
– Work groups that conduct the major business
of the organization
• Staff units
– Work groups that assist the line units by
providing specialized expertise and services to
the organization
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What are the hierarchical
attributes of organizations?
• Control
– The set of mechanisms used to keep actions or
outputs within predetermined limits
– Deals with:
• Setting standards
• Measuring results against standards
• Instituting corrective action
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What are the hierarchical
attributes of organizations?
• Output controls
– Focus on desired targets and allow managers
to use their own methods to reach defined
targets
– Part of overall method of managing by
exception
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What are the hierarchical
attributes of organizations?
• Process controls
– Attempt to specify the manner in which tasks
are accomplished
• Types of process controls
– Policies, procedures, and rules
– Formalization and standardization
– Total quality management controls
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What are the hierarchical
attributes of organizations?
• Policy
– Guideline for action that outlines important
objectives and broadly indicates how activities
are to be carried out
• Procedures
– Indicate the best method for performing a task,
show which aspects of a task are most
important, or outline how an individual is to be
rewarded
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What are the hierarchical
attributes of organizations?
• Rules
– Describe in detail how a task or a series of
tasks is to be performed, or indicate what
cannot be done
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What are the hierarchical
attributes of organizations?
• Formalization
– The written documentation of policies,
procedures, and rules to guide behavior and
decision making
• Standardization
– The degree to which the range of allowable
actions in a job or series of jobs is limited so
that actions are performed in a uniform manner
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What are the hierarchical
attributes of organizations?
• Total Quality Management
– process approach to continual improvement
based on statistical analyses of the firm’s
operations
– Deming’s 14 points
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What are the hierarchical
attributes of organizations?
• Centralization
– Degree to which the authority to make
decisions is restricted to higher levels of
management
• Decentralization
– Degree to which the authority to make
decisions is given to lower levels in an
organization’s hierarchy
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What are the hierarchical
attributes of organizations?
• Benefits of decentralization
– Higher subordinate satisfaction
– Quicker response to a series of unrelated
problems
– Assists in on-the-job training of subordinates for
higher-level positions
– Encourages participation in decision making
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How is work organized and
coordinated?
• Horizontal specialization
– A division of labor that establishes specific work
units or groups within an organization
– Often referred to as departmentation
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How is work organized and
coordinated?
• Functional departmentation
– grouping individuals by skill, knowledge, and
action
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Figure 17.2
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How is work organized and
coordinated?
• Divisional departments
– individual and departments are grouped by
products, territories, services, clients, or legal
entities
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Figure 17.3
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How is work organized and
coordinated?
• Matrix departmentation
– uses both the functional and divisional forms
simultaneously
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Figure 17.4
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How is work organized and
coordinated?
• Coordination
– The set of mechanisms that an organization
uses to link the actions of its units into a
consistent pattern
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How is work organized and
coordinated?
• Personal methods of coordination
– Produce synergy by promoting dialogue,
discussion, innovation, creativity, and learning,
both within and across units
– Common personal methods of coordination are
direct contact between and among
organizational members and committee
memberships
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How is work organized and
coordinated?
• Impersonal methods of coordination
– Produce synergy by stressing consistency and
standardization so that individual pieces fit
together
– Contemporary use of matrix departmentation
and management information systems for
coordination
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What are bureaucracies and
what are the common forms?
• Bureaucracy
– Form of organization that emphasizes legal
authority, logic, and order
– Relies on a division of labor, hierarchical
control, promotion by merit with career
opportunities for employees, and administration
by rule
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What are bureaucracies and
what are the common forms?
• Mechanistic type
– Emphasizes vertical specialization and control
– Stresses rules, policies, and procedures;
specifies techniques for decision making; and
use well-documented control systems
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What are bureaucracies and
what are the common forms?
• Benefits of the mechanistic type
– Efficiency.
• Limitations of the mechanistic type
– Employees dislike rigid designs, which makes work
motivation problematic
– Unions may further solidify rigid designs.
– Key employees may leave
– Hinders organization’s capacity to adjust to subtle
environmental changes or new technologies
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What are bureaucracies and
what are the common forms?
• Organic type
– Emphasizes horizontal specialization
– Procedures are minimal, and those that do
exist are not highly formalized
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What are bureaucracies and
what are the common forms?
• Benefits of the organic type
– Good for problem solving and serving individual
customer needs
– Centralized direction by senior management is
less intense
– Good at detecting external changes and
adjusting to new technologies
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What are bureaucracies and
what are the common forms?
• Limitations of the organic type
– Less efficient than mechanistic type
– Restricted capacity to respond to central
management direction
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What are bureaucracies and
what are the common forms?
• Common types of hybrid structures
– Divisional firm
• Composed of quasi-independent divisions so that
different divisions can be more or less organic or
mechanistic
– Conglomerate
• A single corporation that contains a number of
unrelated businesses
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