Download - Ch 8 - Organizational Structure
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 1/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 1
Chapter
8 OrganizationStructure
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 2/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 2
Fundamentals Of Organizing
Organization chart
depicts the positions in the firm and how they are arranged
provides a picture of the reporting structure
conveys the following information the boxes represent different work
the titles in the boxes represent the work performed by each unit
reporting and authority relationships indicated by solid lines
showing superior-subordinate connections
levels of management indicated by the number of horizontal
layers in the chart
all persons or units that are on the same rank and report to the
same person are on one level
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 3/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 3
Personnel Finance
Manufacturing Sales
Personnel Finance
Manufacturing Sales
Finance R&D Marketing Personnel
Chemical
Products
Metal
Products
President
Conventional Organization Chart
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 4/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 4
Fundamentals Of Organizing (cont.)
Differentiation
means that the organization is comprised of many different
units that work on different kinds of tasks
aspect of the organization’s internal environment division of labor - assignment of different tasks to different
people or groups
specialization - process in which different individuals and units
perform different tasks
differentiation is high when there are many subunits and many
kinds of specialists who think differently
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 5/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 5
Fundamentals Of Organizing (cont.)
Integration
degree to which differentiated units work together and
coordinate their efforts
all the specialized tasks in an organization cannot be performed
completely independently
coordination - procedures that link the various parts of the
organization to achieve the organization’s overall mission
any job activity that links different work units performs an
integrative function
the more a firm is differentiated, the greater the need for
integration among the units
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 6/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 6
The Vertical Structure
Corporate governance
role of a corporation’s executive staff and board of directors in
ensuring that the firm’s activities meet the goals of the firm’s
stakeholders
Authority in organizations
authority - the legitimate right to make decisions and to tell
other people what to do
resides in positions rather than people in private business enterprises, owners have ultimate authority
traditionally authority has been the primary means of running an
organization
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 7/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 7
Authority in organizations (cont.)
board of directors - elected by the stockholders to run the
organization
led by a chair
performs three functions
selecting, assessing, rewarding, and perhaps replacing the CEO
determining the firm’s strategic direction and reviewing financial
performance
assuring ethical, socially responsible, and legal conduct inside directors - the firm’s top managers who sit on the board
outside directors - are likely run other companies
successful boards tend to be active, critical participants in
determining company strategies
The Vertical Structure (cont.)
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 8/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 8
The Vertical Structure (cont.)
Authority in organizations (cont.)
chief executive officer (CEO) - occupies the top of the
organizational pyramid
authority officially vested in the board of directors is assigned to
the CEO
CEO personally accountable to the board and owners
top management team - typically comprised of the CEO,
president, chief operating officer, chief financial officer, and
other key executives
frequently meet with the CEO to make important decisions
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 9/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 9
The Vertical Structure (cont.)
Hierarchical levels
hierarchy - the authority levels of the organizational
pyramid
top management - strategic managers in charge of the entire
organization
middle management - in charge of plants or departments
lowest levels - made up of lower management and workers
called the operational level of the organization
trend in the U.S. is to reduce the number of hierarchicallayers
subunits - subdivisions of an organization
subunits with fewer layers have higher operating efficiency
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 10/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 10
The Vertical Structure (cont.)
Span of control
the number of subordinates who report directly to a manager
narrow spans produce tall organizations
wide spans produce flat organizations
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 11/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 11
The Vertical Structure (cont.)
Delegation assignment of authority and responsibility to a subordinate
can occur between any two individuals in any type of
structure with regard to any task
responsibility - assignment of a task that an employee is
supposed to carry out
should delegate enough authority to complete the task
accountability - expectation that employees perform a job,
take corrective action when necessary, and report upward on
the status and quality of their performance
managers remain responsible and accountable for their own
actions and those of their subordinates
8 12
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 12/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 12
The Vertical Structure (cont.)
Delegation (cont.)
advantages of delegation
permits getting work done through others
manager saves time
manager frees herself/himself to devote energy to other
important, higher-level activities
provides subordinates with more important jobs
provides subordinates with the opportunity to develop new skills
and to demonstrate potential
from the organization’s perspective, jobs are done more
efficiently and cost-effectively
8 13
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 13/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 13
Schedule checkpoints for
reviewing progress
Follow through by discussing
progress at appropriate intervals
Give the subordinate the authority, time, and resources
(people, money,equipment) to perform the assignment
Define the goal succinctly
Select the person for the task
Solicit the subordinate’s view about suggested approaches
Steps In Effective Delegation
8 14
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 14/54 McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 14
The Vertical Structure (cont.)
Decentralization
result of the delegation of responsibility and authority
centralized organization - high-level executives make most
decisions and pass them down to lower levels for implementation
decentralized organization - lower-level managers make
important decisions
ideally, decision making should occur at the level of the
people who are most directly affected and have the most
intimate knowledge about the problem
most U.S. executives understand the importance of decentralizing
decision making to the point of the action
8 15
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 15/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 15
The Horizontal Structure
Basic concepts
departmentalization - subdividing the organization into
smaller subunits
line departments - have responsibility for the principle activities
of the firm
deal directly with the organization’s primary goods and services
line managers typically have:
substantial authority and power
ultimate responsibility for major operating decisions accountability for “bottom-line” results
staff departments - provide specialized support for line units
moving toward a role focused on strategic support and expert advice
8 16
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 16/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 16
The Horizontal Structure (cont.)
Functional organization
jobs (and departments) are specialized and grouped according
to business functions and the skills they require
e.g., production, marketing, R&D, human resources, and finance
at the most basic level, functional structure is organized
around the company’s value chain
value chain - sequence of activities that flow from raw materials
to the delivery of a product or service
common in both large and small organizations
may be most appropriate in rather simple, stable environments
8 17
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 17/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 - 17
Functional organization (cont.)
advantages of functional structure include:
economies of scale can be realized
effective environmental monitoring
performance standards are better maintained
greater opportunity for specialized training and in-depth skill
development
technical specialists are relatively free of administrative work
decision making and lines of communication are simple and
clearly understood
The Horizontal Structure (cont.)
8 - 18
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 18/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 18
The Horizontal Structure (cont.)
Functional organization (cont.) disadvantages of functional structure
people may care more about their own function than about the
company as a whole
may lose focus on overall product quality and customersatisfaction
managers do not develop knowledge of the other areas of the
business
become specialists, not generalists conflicts arise among functions and communications suffer
accordingly
high differentiation may create barriers to coordination across
functions
8 - 19
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 19/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 19
Inbound
logisticsOperations
Outbound
logistics
Marketing
and salesService
President
Line departments
Staff departments
Functional Structure
ProcurementHuman
resources
Informationtechnology
services
8 - 20
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 20/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
8 20
The Horizontal Structure (cont.)
Divisional organization
units grouped around products, customers, or geographic
regions
groups all functions into a single division
duplicates each function across all of the divisions
separate divisions may act almost as separate businesses
work autonomously to achieve the goals of the organization
several ways to create divisional structure
8 - 21 Examples Of Functional And
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 21/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Examples Of Functional And
Divisional Organizations
A central purchasing department
Separate companywide marketing,
production, design, and
engineering departments
A central-city health department
Plantwide inspection, maintenance,
and supply departments
A university statistics department
teaches statistics for the entire
university
Each division has its own purchasing unit
Each product group has experts in
marketing, design, production, and
engineering
The school district and the prison have
their own health units
Production Team Y does its own
inspection, maintenance, and supply
Each department hires statisticians to
teach its own students
Functional organization Divisional organization
8 - 22
Th H i l S ( )
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 22/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Divisional organization (cont.) product divisions - all functions that contribute to a given
product are organized under one manager
advantages
information needs are managed more easily
people have full-time commitment to a particular product line
task responsibilities are clear
people receive broader training
flexibility of structure better suits it for unstable environments disadvantages
difficult to coordinate across product lines
managers may not acquire depth of functional knowledge
duplication of effort is expensive
The Horizontal Structure (cont.)
8 - 23
Th H i l S ( )
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 23/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
The Horizontal Structure (cont.) Divisional organization (cont.)
customer and geographical divisions
build divisions around customer or geographical distinctions
advantages
can focus on customer needs
can provide faster and better service
disadvantage
duplication of activities across many customer groups and
geographic areas is expensive
8 - 24
G hi l O i i
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 24/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Generalmanagers for:
New York
Philadelphia
Boston
Generalmanagers for:
Cleveland
Chicago
St. Louis
Generalmanagers for:
Raleigh
Atlanta
Orlando
Generalmanagers for:
Seattle
San Francisco
Los Angeles
Generalmanagers for:
Dallas
Houston
Albuquerque
Northeast
regionalmanager
Midwest
regionalmanager
Southeast
regionalmanager
Pacific
regionalmanager
ChairmanCEO
Southwest
regionalmanager
Geographical Organization
8 - 25
Th H i t l St t ( t )
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 25/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
The Horizontal Structure (cont.)
Matrix organization
hybrid form of organization in which functional and divisional
forms overlap
have dual reporting relationships in which some managers
report to two superiors rather than a single line of command
advantages
higher degree of flexibility and adaptability
disadvantages violation of the unity of command principle
reporting to two superiors can create confusion
8 - 26
M t i O i ti l St t
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 26/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Production
group
Two-boss
manager
Engineering
group
Two-boss
manager
Personnel
group
Two-boss
manager
Accounting
group
Two-boss
manager
Matrix Organizational Structure
Production
group
Two-boss
manager
Engineering
group
Two-boss
manager
Personnel
group
Two-boss
manager
Accounting
group
Two-boss
manager
Accounting
Project
Manager
A
Project
Manager
B
Project
management Production
ChairmanCEO
Engineering PersonnelFunctional
managers
8 - 27
Th H i t l St t ( t )
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 27/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
The Horizontal Structure (cont.)
Matrix organization (cont.)
matrix survival skills
problems can be avoided if behavioral skills are learned
particular skills needed depend on position in the matrix
the matrix diamond illustrates needed skills
8 - 28
The Horizontal Structure (cont )
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 28/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
The Horizontal Structure (cont.)
Matrix organization (cont.)
matrix form today - resurgence based on:
pressures to consolidate costs and be faster to market
need for better coordination across functions in the business
need for coordination across countries in global business
understanding of the matrix has increased
matrix is not a structure, but a process
relationships allow information to flow through the organization
norms, values, and attitudes shape how people think
8 - 29
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 29/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Williamson’s Structures
Functional or U-form (Unitary) Design
Organizational members and units are grouped into
functional departments such as marketing and production
Coordination is required across all departments
Design approach resembles functional departmentalization in
its advantages and disadvantages
8 - 30
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 30/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Williamson’s StructuresU-Form
8 - 31
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 31/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Williamson’s Structures
Conglomerate or H-form (Holding) Design
Organization consists of a set of unrelated businesses with a
general manager for each business
Holding-company design is similar to product
departmentalization
Coordination is based on the allocation of resources across
companies in the portfolio
Design has produced only average to weak financial
performance; has been abandoned for other approaches
8 - 32
Willi ’ S
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 32/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Williamson’s StructuresH-Form
8 - 33
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 33/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Williamson’s Structures
Divisional or M-form (Multidivisional) Design An organizational arrangement based on multiple businesses in
related areas operating within a larger organizational framework
The design results from a strategy of related diversification
Some activities are extremely decentralized down to the divisionallevel; others are centralized at the corporate level
The largest advantages of the M-form design are the opportunities
for coordination and sharing of resources
Successful M-form organizations can out perform U-form and H-form organizations
8 - 34
Willi ’ St t
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 34/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Williamson’s StructuresM-Form
8 - 35
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 35/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Davis and Lawrence
Matrix Design An organizational arrangement based on two overlapping bases of
departmentalization (e.g., functional departments and productcategories)
A set of product groups or temporary departments aresuperimposed across the functional departments
Employees in the resulting matrix are members of both theirdepartments and a project team under a project manager
The matrix creates a multiple command structure in which an
employee reports to both departmental and project managers A matrix design is useful when
There is strong environmental pressure
There are large amounts of information to be processed
There is pressure for shared resources
8 - 36
D i d L
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 36/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Davis and LawrenceMatrix Design
8 - 37
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 37/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Davis and Lawrence
Matrix Design Advantages
Enhances organizational flexibility
Involvement creates high motivation and increased
organizational commitment
Team members have the opportunity to learn new skills
Provides an efficient way for the organization to use its
human resources
Team members serve as bridges to their departments for theteam
Useful as a vehicle for decentralization
8 - 38
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 38/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Davis and Lawrence
Matrix Design Disadvantages Employees are uncertain about reporting relationships
Managers may view design as an anarchy in which they have
unlimited freedom
The dynamics of group behavior may lead to slower decision
making, one-person domination, compromise decisions, or a
loss of focus
More time may be required for coordinating task-related
activities
8 - 39
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 39/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Hammer and Stanton
Hybrid Designs An organizational arrangement based on two or more
common forms of organization design
An organization may have a mixture of related divisions and
a single unrelated division
Most organizations use a modified form of organization
design that permits it to have sufficient flexibility to make
adjustments for strategic purposes
8 - 40
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 40/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
According to Henry Mintzberg the structural configurationof an organization can be differentiated by
Prime Coordinating Mechanism
Key Part of OrganizationType of Decentralization
8 - 41
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 41/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
Prime Coordinating Mechanism Direct Supervision
One individual is responsible for the work of others
Standardization of work processes
The content of the work is specified or programmed
Standardization of skills
Explicitly specifies the kind of training necessary to do the work
Standardization of outputs
Specifies the results, or output, of the work
Mutual adjustmentCoordinates activities through informal communications
8 - 42
i b ’ S
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 42/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
Key Part of Organization Strategic apex- Top management and its support staff
Technostructure- Analysts such as industrial engineers,
accountants, planners, and human resource managers
Operating core- Workers who actually carry out the organization’stasks
Middle line- Middle and lower-level management
Support staff- Units that provide support to the organization outside
of the operating workflow (for example, legal counsel, executivedining room staff, and consultants)
8 - 43
Mi b ’ S
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 43/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
Types of Decentralization Vertical and horizontal centralization
Limited horizontal decentralization
Vertical and horizontal decentralization Limited vertical decentralization
Selective decentralization
8 - 44
Mi b ’ S
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 44/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
The Simple Structure The simple structure uses direct supervision as its primary coordinating
mechanism, has as its most important part its strategic apex, and employs
vertical and horizontal centralization. Relatively small corporations controlled
by aggressive entrepreneurs, new government departments, and medium-sized
retail stores are all likely to exhibit a simple structure. These organizations tendto be relatively young. The CEO (often the owner) retains much of the
decision-making power. The organization is relatively flat and does not
emphasize specialization. Many smaller U-form organizations are structured in
this fashion. Trilogy Software would be an example of a firm using this
approach.
8 - 45
Mi t b ’ St t
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 45/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
The Machine Bureaucracy The machine bureaucracy uses standardization of work processes as its prime
coordinating mechanism; the technostructure is its most important part; and
limited horizontal decentralization is established. The machine bureaucracy is
quite similar to Burns and Stalker’s mechanistic design discussed in Chapter 12
of Griffin’s Management , Seventh Edition. Examples include McDonald’s andmost large branches of the U.S. government. This kind of organization is
generally mature in age, and its environment is usually stable and predictable.
A high level of task specialization and a rigid pattern of authority are also
typical. Spans of management are likely to be narrow, and the organization is
usually tall. Large U-form organizations are also likely to fall into thiscategory.
8 - 46
Mi t b ’ St t
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 46/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
The Professional Bureaucracy The third form of organization design suggested by Mintzberg is the professional
bureaucracy. Examples of this form of organization include universities,
general hospitals, and public accounting firms. The professional bureaucracy
uses standardization of skills as its prime coordinating mechanism, has the
operating core as its most important part, and practices both vertical andhorizontal decentralization. It has relatively few middle managers. Further, like
some staff managers, its members tend to identify more with their professions
than with the organization. Coordination problems are common.
8 - 47
Mi t b ’ St t
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 47/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
The Divisionalized Form The divisionalized form, Mintzberg’s fourth design, exhibits standardization of
output as its prime coordinating mechanism, the middle line as its most
important part, and limited vertical decentralization. This design is the same as
both the H-form and the M-form described earlier. Limited and Disney are
illustrative of this approach. Power is generally decentralized down to middlemanagement — but no further. Hence each division itself is relatively
centralized and tends to structure itself as a machine bureaucracy. As might be
expected, the primary reason for an organization to adopt this kind of design is
market diversity.
8 - 48
Mi t b ’ St t
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 48/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
The Adhocracy The adhocracy uses mutual adjustment as a means of coordination, has at its most important
part the support staff, and maintains selective patterns of decentralization. Most
organizations that use a fully-developed matrix design are adhocracies. An adhocracy
avoids specialization, formality, and unit of command. Even the term itself, derived from
“ad hoc,” suggests a lack of formality. Sun Microsystems is an excellent example of an
adhocracy.
8 - 49
Mintzberg’s Structures
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 49/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Mintzberg’s Structures
8 - 50
Organizational Integration
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 50/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Coordination by standardization standardization - establishing common rules and procedures
that apply uniformly to everyone
constrains actions
integrates various units by regulating what people do
formalization - reliance on rules and regulations to govern
how people interact
should apply to most (if not all) situations
most appropriate in relatively stable and unchanging situations
8 - 51
Organization Integration (cont.)
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 51/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Coordination by plan interdependent units are required to meet deadlines and
objectives that contribute to a common goal
does not require a high degree of stability and routinization
units free to modify their actions as long as they are able to meet
deadlines and targets required for working with others
Coordination by mutual adjustment
involves feedback and discussion to jointly determine how to
approach problems and devise mutually agreeable solutions
allows for flexible coordination to deal with novel problems
costly from the standpoint of time
8 - 52
Organization Integration (cont.)
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 52/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Coordination and communication substantial information flows to and from the environment
organizations need to develop structures for processing
information
option one: reducing the need for information
slack resources - extra resources that can be used “in a pinch”
e.g., inventory reduces the need for information about sales demand
creating self-contained tasks - change from a functional
organization to a product or project organization each unit has the resources needed to perform its task
communications flow within each team rather than among a complex
array of interdependent groups
8 - 53
Organization Integration (cont.)
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 53/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Coordination and communication option two: increasing information processing capability
invest in information systems - e.g., employing or expanding
computer systems
create horizontal relationships - foster coordination acrossdifferent units
horizontal processes include:
direct contact
liaison roles
task forces
teams
product, program, or project managers
matrix organization
8 - 54
Managing High Information-Processing
Demands
8/4/2019 Ch 8 - Organizational Structure
http://slidepdf.com/reader/full/ch-8-organizational-structure 54/54
McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill © 2003 The McGraw-Hill Companies, Inc. All rights reserved.
Highinformation
processing
demands
Createslack
resources
Create
self-contained
tasks
Invest in
information
systems
Create
horizontal
relationships
Reduce the
need for
information
Process
more
information
Demands