Chapter 11 - Organizational structures and processes Flashcards
Organizational Process
The collection of activities that transforms inputs into outputs that customers value.
Departmentalization
Subdividing work and workers into separate organizational units responsible for completing particular tasks.
Traditional Organizational Structures
5 types of departmentalization
- Functional Departmentalization
- Product Departmentalization
- Customer Departmentalization
- Geographic Departmentalization
- Matrix Departmentalization
Functional Departmentalization
Organizing work and workers into separate units responsible for particular business functions or areas of expertise.
Advantages of Functional Departmentalization
- allows work to be done by highly qualified specialists
- lowers costs by reducing duplication
- with everyone in the same department having similar work experience or training, communication and coordination are less problematic for department managers
Disadvantages of Functional Departmentalization
- cross-department coordination can be difficult
- managers and employees are more interested in doing what’s right for their function then what’s right for the entire organization
- as companies grow, functional departmentalization may also lead to slower decision-making and produce managers and workers with narrow experience and expertise
Product Departmentalization
Organizing work and workers into separate units responsible for producing particular products or services.
Advantages of Product Departmentalization
- it’s allows managers and employees to specialize in one area of expertise
- managers and workers develop a broader set of experiences and expertise related to an entire product line
- makes it easier for top managers to assess work-unit performance
- decision-making should be faster because there are fewer conflicts (compared to functional departmentalization
Disadvantages of Product Departmentalization
- duplication; as this often results in higher costs
- can be difficult to achieve coordination across the different product departments
Customer Departmentalization
Organizing work and workers into separate units responsible for particular kinds of customers
Organizational Structure
The vertical and horizontal configuration of departments, authority,and jobs within the company.
Advantages of Customer Departmentalization
- focuses the organization on customer needs rather than on products or business functions
- creating separate departments to serve specific kinds of customers allows companies to specialize and adapt their products and services to customer needs and problems
Disadvantages of Customer Departmentalization
- it leads to duplication of resources
- it can be difficult to achieve coordination across different customer departments
- the emphasis on meeting customers’ needs may lead workers to make decisions that please customers but hurt the business
Geographic Departmentalization
Organizing work and workers into separate units responsible for doing business in particular geographical areas.
Advantages of Geographic Departmentalization
- it helps companies respond to the demands of different markets
- can reduce costs by locating unique organizational resources closer to customers
Disadvantages of Geographic Departmentalization
- it can lead to duplication of resources
- it can be especially difficult to coordinate departments that are literally thousands of km’s from each other and whose managers have very limited contact with each other
Matrix Departmentalization
A hybrid organizational structure in which two or more forms of departmentalization, most often product and functional, are used together.
Distinguishing Features of Matrix Departmentalization
- most employees report to two bosses, a functional boss and a project or product boss
- leads to much more cross-functional interaction
- requires significant coordination between functional and project managers
Advantages of Matrix Departmentalization
- allows companies to efficiently manage and carry out large, complex tasks such as researching, developing, and marketing
- helps to avoid duplication
- matrix project managers have a much more diverse set of expertise and experience at their disposal
Disadvantages of Matrix Departmentalization
- the high level of coordination required to manage the complexity involved with running large, ongoing projects at various levels of completion
- are notorious for confusion and conflict between project bosses, or between project and functional bosses
- requires much more management skills
Three parts of organizational structure
- departmentalization
- organizational authority
- job design
Three parts of intraorganizational processes
- re-engineering
- empowerment
- behaviour informality
Authority
The right to give commands, take action, and make decisions to achieve organizational objectives.
Organizational Authority is characterized by: (4)
- chain of command
- line versus staff authority
- delegation of authority
- degree of centralization
Chain of Command
The vertical line of authority that clarifies who reports to whom throughout the organization.
Unity of Command
A management principle that workers should report to just one boss.
Span of Control
The number of people reporting to a specific supervisor.
Line Authority
The right to command immediate subordinates in the chain of command.
Staff Authority
The right to advise but not command others who are not subordinates in the chain of command.
Line Function
An activity that contributes directly to creating or selling the company’s products.
Staff Function
An activity that does not contribute directly to creating or selling the company’s products, but instead supports line activities.
Delegation of Authority
The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible.
When managers delegate work, three transfers must occur:
- transfers full responsibility for the assignment to the subordinate
- transfers full authority over the budget, resources, and personnel needed to do the job
- transfers accountability
Centralization of Authority
The location of most authority at the upper levels of management.
Decentralization
The location of a significant amount of authority in the lower levels of the organization.
Advantages of Decentralization
- develops employee capabilities throughout the company
- leads to faster decision-making
- more satisfied customers and employees
- company’s with a high degree of decentralization tend to outperform companies with a low degree of decentralization
Standardization
Solving problems by consistently applying the same rules, procedures, and processes.
Job Design
The number, kind, and variety of tasks that individual workers perform in doing their jobs.
Job Specialization
A job composed of a small part of a larger task or process.
Specialized Jobs are characterized by:
Simple, easy-to-learn steps, low variety, and high repetition.
Specialized Job Disadvantages
- quickly become boring
- low job satisfaction
- high absenteeism
- high employee turnover
Specialized Job Advantages
- economical
- takes little time to learn and master
- loses little productivity when replacing employees
Three methods used to improve specialized jobs
- job rotation
- job enlargement
- job enrichment
Job Rotation
Periodically moving workers from one specialized job to another to give them more variety and the opportunity to use different skills.
Job Enlargement
Increasing the number of different tasks that a worker performs within one particular job.
Job Enrichment
Increasing the number of tasks in a particular job and giving workers the authority and control to make meaningful decisions about their work.
Mechanistic Organizations
Organization characterized by specialized jobs and responsibilities; precisely defined, unchanging roles; and a rigid chain of command based on centralized authority and vertical communication.
Organic Organizations
Organization characterized by broadly defined jobs and responsibility; loosely defined, frequently changing roles; and decentralized authority and horizontal communication based on task knowledge.
Intraorganizational Process
The collection of activities that take place within an organization to transform inputs into outputs that customers value
Re-engineering
Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance, such as cost, quality, service and speed.
Task Interdependence
The extent to which collective action is required to complete an entire piece of work.
Pooled Interdependence
Work completed by having each job or department independently contribute to the whole.
Sequential Interdependence
Work completed in succession, with one group or job’s outputs becoming inputs for the next group or job.
Reciprocal Interdependence
Work completed by different jobs or groups working together in a back-and-forth manner.
Empowering Workers
Permanently passing decision-making authority and responsibility from managers to workers by giving them the information and resources they need to make and carry out good decisions.
Behavioural Informality
Workplace atmosphere characterized by spontaneity, casualness, and interpersonal familiarity.
Behavioural Formality
Workplace atmosphere characterized by routine and regimen, specific rules about how to behave, and interpersonal detachment.
Behavioural formality and informality are characterized by four factors:
- language usage
- conversational turn-taking and topic selection
- emotional and proxemic gestures
- physical and contextual cues
Open Office Systems
Offices in which the physical barriers that separate workers have been removed in order to increase communication and interaction.
Shared Spaces
Spaces used by and open to all employees.
Private Spaces
Spaces used by and open to just one employee.
Interorganizational Process
A collection of activities that take place among companies to transform inputs into outputs that customers value.
Modular Organization
An organization that outsources noncore business activities to outside companies, suppliers, specialists, or consultants.
Three types of interoganizational processes (organizations)
- modular organizations
- virtual organizations
- boundaryless organizations
Modular organization advantages:
- can cost significantly less to run than traditional businesses because they pay for goods or services when needed
- allows both modular companies and the outsourced company to focus on the core activities they do best
They need to work with vendors and suppliers they can trust in order to obtain these advantages.
Modular organizational disadvantages:
- loss of control when key business activities are outsourced
- may reduce competitive advantage
Virtual Organization
An organization that is part of a network in which many companies share skills, costs, capabilities, markets and customers to collectively solve customer problems or provide specific products or services.
Virtual organization advantages:
- they let companies share costs
- fast and flexible
- should provide better products and services in all respects
Virtual organization disadvantages:
- can be difficult to control the quality of work done by network partners
- requires tremendous managerial skills
Boundaryless Organizations
A speedy, responsive, and flexible organization in which vertical, horizontal, external, and geographic boundaries are removed or minimized.
Boundaryless organization advantages
- they make much better use of employee knowledge, skills and abilities
- they lead to closer relationships with the components of the company’s external environment
Boundaryless organization disadvantages
- managers and employees often find the transition to boundaryless organizations threatening
- there is no clear way to create a boundaryless organization
