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What are the different types of organizational goals?

What are the hierarchical aspects of organizations?

How is work organized and coordinated?

What are bureaucracies and what are the common forms?

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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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Enable organizations to gain legitimacy, a social right to operate, and more discretion for their non-societal goals and operating practices.

A written statement of organizational purpose.

A good mission statement identifies the product or service, whom the firm will serve, and how it will go about accomplishing its societal purpose.

Mission statement

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A firm’s societal contribution is often part of its mission statement. Executives who link their firm to a desirable mission can lay claim to important motivational tools that are based on a shared sense of noble purpose.

Aflac “To combine innovative strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers.”

Harley-Davidson – “We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments.

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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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For some corporations, answering the question of which business they are in may yield a more detailed statement concerning their products and services. These product and service goals provide an important basis for judging the firm.

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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Systems goals provide short term organizational characteristics that higher-level managers wish to promote. The goals, however, must often be balanced against one another.

A focus on attaining market share through increased productivity may reduce the flexibility of an organization to respond if the economy slows and the demand for their product suddenly decreases.

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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To insure success, management must match decisions for attaining goals with appropriate choices in how to reach them.

Systems goals are important to a firm because they provide a road map that helps the firm link together various units of the organization to assure survival.

The formal structure is the foundation for managerial action

It shows the planned configuration of positions, job duties, and the lines of authority among different parts of the organization.

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Vertical specialization

A hierarchical division of labor that distributes formal authority and establishes where and how critical decisions are to be made.

Creates an arrangement of work positions in order of increasing authority.

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Top managers or senior executives plan the overall strategy of the organization and plot its long-term future.

They also act as final judges for internal disputes and certify promotions, reorganizations, and the like.

Middle managers guide the daily operations of the organization, help formulate policy, and translate top-management decisions into more specific guidelines for action.

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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While an organization chart may clearly indicate who reports to whom, it does not show how work is done, who exercises the most power over specific issues, or how the firm will respond to its environment.

When an organization is required to adapt quickly to evolving external and environmental changes, the organizational chart can become obsolete.

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The organizational chart is presented as a diagram, identifying the reporting relationships throughout the organization, and the lines of authority and communication.

Span of control

The number of individuals reporting directly to a supervisor.

New information technologies have made it possible for complex organizations to broaden span of control.

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Line units

Work groups that conduct the major business of the organization (production and marketing departments).

Staff units

Work groups that assist the line units by providing specialized expertise and services to the organization (accounting, public relations).

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Internal line units - Transform raw materials and information into products and services (production department).

External line units - Maintain outside linkages (marketing department).

Internal staff units - Assist the line units in performing their functions (accounting department).

External staff units - Assist the line units by linking the firm to its environment and in buffering internal operations (public relations).

In Figure 16.1, the Legislative Liaison unit is external staff, with a line relationship to the office of the VP for External Affairs.

Control

The set of mechanisms used to keep actions and outputs within predetermined limits.

Deals with:

Setting standards

Measuring results against standards

Instituting corrective action

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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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Output controls are popular because they promote flexibility and creativity as well as facilitate dialogue concerning corrective action. Reliance on outcome controls separates what is to be accomplished from how it is to be accomplished.

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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Rules, procedures, and policies are often employed as substitutes for direct managerial supervision, allowing the organization to specifically direct the activities of many individuals and across many work locations.

Policy

Outlines important objectives and broadly indicates how activities are to be carried out.

Procedures

Describes the best method for performing a task; shows which aspects of a task are most important.

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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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Policies, procedures, and rules are often used as substitutes for direct managerial supervision.

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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Written instructions allow individuals with less training to perform comparatively sophisticated tasks. Written procedures may also be available to ensure that a proper sequence of tasks is executed, even if this sequence is performed only occasionally.

Total Quality Management

Process approach to continual improvement based on statistical analyses of the firm’s operations.

Outlined by W. Edward Deming’s 14 points.

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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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Greater centralization is often adopted when the firm faces a single major threat to its survival.

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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Many people want to be involved in making decisions that affect their work. Participation results when a manager delegates some authority for such decision making to subordinates in order to include them in the choice process.

Horizontal specialization

A division of labor that establishes specific work units or groups within an organization.

Functional departmentalization

Grouping individuals by skill, knowledge, and action.

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With horizontal specialization, work is more project-focused and training in both technical and teamwork skills becomes more of a top priority.

However, whenever managers divide tasks and group similar types of skills and resources together, they must also be concerned with how each group’s individual efforts will integrate with others.

Functional departmentalization

Grouping individuals by skill, knowledge, and action.

Examples include marketing, finance, production, and human resources.

Most frequent form of horizontal specialization found in organizations.

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Divisional departments

Individuals and departments are grouped by products, territories, services, clients, or legal entities.

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Many larger, geographically dispersed organizations that sell to national and international markets may rely on departmentation by geography. The savings in time, effort, and travel can be substantial, and each territory can adjust to regional differences.

The major advantage is flexibility in adapting to external changes and demands.

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Matrix departmentalization

Uses both the functional and divisional forms simultaneously.

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Matrix structure work best for large, complex organizations, where precise integration and controls are needed across many sophisticated functional specialties and corporations.

This is often more than a functional or divisional structure can provide, for many firms do not want to trade the responsiveness of the divisional form for the technical emphasis provided by the functional form.

Coordination

The set of mechanisms that an organization uses to link the actions of its units into a consistent pattern.

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Within a unit, much of the coordination is handled by its manager.

Smaller organizations rely on management hierarchy for coordination. As the organization grows, more efficient and effective methods of coordination are required.

Unlike ‘control’ mechanisms which involve the vertical exercise of formal authority involving targets, measures, and corrective action, coordination stresses cooperative problem solving.

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 and committee memberships.

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Committees can be effective in communicating complex qualitative information and in aligning schedules, workloads, and assignments to increase productivity.

Impersonal methods of coordination

Produce synergy by stressing consistency and standardization so that individual pieces fit together.

Contemporary use of matrix departmentalization and management information systems for coordination.

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Management information systems, once used solely for process control of diverse subordinate units, are now evolving as strategic electronic networks, linking individuals throughout the organization.

Bureaucracy

Form of organization that emphasizes legal authority, logic, clear division of labor, promotion by merit, and administrative rule.

Mechanistic - emphasizes vertical specialization and control.

Organic – emphasizes horizontal specialization.

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Weber argued that the rational and logical idea of bureaucracy, like a ‘well oiled machine’, was superior to building a firm based on charisma or cultural tradition.

Since bureaucracy prizes efficiency and logic, he believed that it could be expected to be fair to employees than is allowed under a dictatorial structure.

Although charismatic leadership and cultural traditions are still important, the reality of today’s organizations point to the equal importance of rational, legal, and efficiency standards.

Mechanistic bureaucracy

Rigid, command-and-control structure.

Important when there is a need for uniform product quality, speedy service, and cleanliness

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McDonald’s is one example of a mechanistic bureaucracy .

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.

Can hinder organization’s ability to adapt.

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Often used by firms in pursuing strategy of becoming a low-cost leader. Using a machine bureaucracy can hinder an organization’s capacity to adjust to subtle external changes or new technologies.

Organic bureaucracy

Emphasizes horizontal specialization, lateral relations, and coordination.

Minimal use of formal procedures.

Considerable reliance on judgment of experts.

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Used to pursue strategies that emphasize product quality, quick response to customers, or innovation.

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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Limitations of the organic type

Less efficient than mechanistic type.

Restricted capacity to respond to central management direction.

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Control is enhanced by the standardization of professional skills and the adoption of professional routines, standards, and procedures.

Most universities are professional bureaucracies.

Common types of hybrid bureaucracies

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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While the divisions may be treated as separate businesses, they often share a similar mission and systems goals.

Conglomerates, on the other hand, are groups of unrelated businesses that have different products and different goals, but exist under a large umbrella organization. (For example, NBC, General Electric, states, and federal entities).