DW6
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DW6.docxYour Leader and Organizational Structure (Jack Ma)
This week, you will examine the organizational structure in which your leader currently operates or formerly operated. Using your research, apply applicable concepts from Chapter 15 and report on the organizational structure of your leader's organization. Based on your research, use the tools in Chapter 16 to characterize the culture of the leader's organization. What is your estimate on what kind of organizational cultural analysis result this leader's organization would see?
Learning Objectives
After studying this chapter, you should be able to:
1. 1 Identify seven elements of an organization’s structure.
4. 4 Describe the effects of downsizing on organizational structures and employees.
5. 5 Contrast the reasons for mechanistic and organic structural models.
6. 6 Analyze the behavioral implications of different organizational designs.
MyManagementLab ® Chapter Warm Up
If your professor has chosen to assign this, go to the Assignments section of mymanagementlab.com to complete the chapter warm up.
In the Flat Field
Startups often struggle to move from executing small, collaborative, local projects to becoming complex, organized, global organizations. Their leaders sometimes believe a hierarchy would create a bloated class of middle managers whose work would change into recording and administrating, rather than imagining and creating. As Craig Silverstein, Google’s first hire, says, entrepreneurs often ask, “Who needs managers? They never add any value.”
Remaining a perpetually entrepreneurial organization with an organic, flat structure may be appealing, but it’s not easy to achieve. Management’s core functions are to provide direction, resolve conflicts, and realize product potential in the market. Even if everyone gets along, good ideas may never be fully realized without some form of coordinating structure and a strategic business framework.
Large organizations can always restructure their units, but growing creates an orchestra of processes that need to be brought together. Each growth strategy exponentially increases the complexity of managing workers and information flow. Innovative organizations try to strike a balance between achieving the positive coordinating functions of management and avoiding a tight bureaucratic structure.
One way to stay entrepreneurial in an organizational structure is demonstrated at the video game company Valve. The company’s handbook notes, “We don’t have any management, and nobody ‘reports to’ anybody else.” This suggests that Valve’s organizational structure is completely flat, with everyone equal in the organization. Still, team leaders are assigned to positions of authority over specific projects. The key feature appears to be that this leadership role is temporary.
From the time of its founding by David Kelley in 1993, shown in the photo, the design firm IDEO has minimized a formal organizational structure by having employees focus on different levels of project accountability. Coordination of multiple projects is done at the “portfolio” level, whereas coordination of projects across the entire organization is done at the “enterprise” level. There is no formal hierarchy, again suggesting a flat organizational structure. Responsibility for decision making remains with the individual and his or her area of concentration.
Another approach is the use of virtual management that completely separates administration from core work tasks. For example, small biotech companies outsource lab work, financial management, and marketing so the scientist-entrepreneur can focus on what he or she does best. Some very small biotech firms share office space, allowing scientists working on very different projects to swap ideas while another set of individuals takes care of the management side of the business. Although multiple functions are being fulfilled, the formal organizational chart might just consist of one or two individuals at the top, and a loose, rather undefined network of collaborators who are accountable for the scope of work they are assigned to complete, but are self-managing.
The approaches successful companies have taken to structuring themselves during growth provide two major lessons. First, a vision is needed of how the increasingly complex organization can coordinate people around a common strategy. Second, management must ensure that organizational structures and reporting relationships don’t become so restrictive that they undermine the creative passions that made the company successful in the first place. As you can see, organizational structures set up a company for future success.
Sources: M. Hutson, “Espousing Equality, but Embracing a Hierarchy,” New York Times, June 22, 2014, http://www.nytimes.com/2014/06/22/business/espousing-equality-but-embracing-a-hierarchy.html?_r=0 ; J. Whalen, “Virtual Biotechs: No Lab Space, Few Employees,” Wall Street Journal, June 4, 2014, http://www.wsj.com/articles/virtual-biotechs-no-lab-space-few-employees-1401816867 ; and C. Huston, “He Failed on ‘Shark Tank’—But So What?” Wall Street Journal, March 10, 2014, http://www.wsj.com/articles/SB10001424052702303942404579361040224777748 .
Even for a startup with only a few employees, choosing an organizational structure requires far more than simply deciding who’s the boss and how many employees are needed. The organization’s structure will determine what relationships form, the formality of those relationships, and many work outcomes. The structure may also change as organizations grow and shrink, as management trends dictate, and as research uncovers better ways of maximizing productivity.
Structural decisions are arguably the most fundamental ones a leader has to make toward sustaining organizational growth. 1 In this chapter, we’ll explore how structure affects employee behavior and the organization as a whole.
