J&J

Chapter 15 Organizational Design and Structure

Organizational Design and Structure

 Chapter Introduction

 15-1Key Organizational Design Processes o 15-1aDifferentiation o 15-1bIntegration

 15-2Basic Design Dimensions

 15-3Five Structural Configurations o 15-3aSimple Structure o 15-3bMachine Bureaucracy o 15-3cProfessional Bureaucracy o 15-3dDivisionalized Form o 15-3eAdhocracy

 15-4Contextual Variables o 15-4aSize o 15-4bTechnology o 15-4cEnvironment o 15-4dStrategy and Goals

 15-5Forces Reshaping Organizations o 15-5aLife Cycles in Organizations o 15-5bGlobalization o 15-5cChanges in Information-Processing Technologies o 15-5dDemands on Organizational Processes

 15-6Emerging Organizational Structures

 15-7Factors that Can Adversely Affect Structure

 Chapter 15In Review o Learning Outcomes o Key Terms o What about You? Managers of Today and the Future o Test your knowledge

Chapter Introduction

Chapter Introduction

©Maksym Dykha/ Shutterstock.com

Differentiation and integration are the keys to successful organizational design.

Learning Outcomes

 15-1 Define differentiation and integration as organizational design processes.

 15-2 Discuss the basic design dimensions managers must consider in structuring an organization.

 15-3 Describe five structural configurations for organizations.

 15-4 Describe four contextual variables that influence organizational structure.

 15-5 Explain the forces reshaping organizations.

 15-6 Identify and describe emerging organizational structures.

 15-7 Identify factors that can adversely affect organizational structure.

Organizational designOrganizational designThe process of constructing and adjusting an organization’s structure to achieve its business strategy and goals.is the process of constructing and adjusting an organization’s structure to achieve its business strategy and goals. The design process begins with the organization’s goals. These goals are broken into tasks, or pieces of work, as the basis for jobs, as discussed in Chapter 14. Jobs are grouped into departments, and departments are linked to form the organizational structureorganizational structureThe linking of departments and jobs within an organization..

15-1 Key Organizational Design Processes

Differentiation, which will be defined in more detail shortly, can be described as the design process of breaking organizational goals into tasks. Integration, also defined in more detail shortly, can then be considered the design

process of linking the tasks together to form a structure that supports goal accomplishment. These two processes are the keys to successful organizational design. The organizational structure is designed to prevent chaos through an orderly set of reporting relationships and communication channels. Understanding the key design processes and organizational structure helps a person understand the larger working environment and may prevent confusion in the organization.

The organization chart is the most visible representation of the organization’s structure and underlying components. Figure 15.1 is the organizational chart for the World Trade Organization. Most organizations have a series of organization charts showing reporting relationships throughout the system. The underlying components are

 (1)

formal lines of authority and responsibility (the organizational structure designates reporting relationships by the way jobs and departments are grouped) and

 (2)

formal systems of communication, coordination, and integration (the organizational structure designates

the expected patterns of formal interaction among employees).

Figure 15.1Organization

WTO structure

All WTO members may participate in all councils, committees, etc., except Appellate Body, Dispute Settlement panels, Textiles Monitoring Body, and plurilateral committees.

SOURCE: WTO Organization Chart, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org2_e.htm.

15-1a Differentiation

DifferentiationDifferentiationThe process of deciding how to divide the work in an organization.is the

process of deciding how to divide the work in an organization. Differentiation ensures that all essential organizational tasks are assigned to one or more jobs and that the tasks receive the attention they need. Many dimensions of differentiation have been considered in organizations. Lawrence and Lorsch found four dimensions of differentiation in one study:

 (1)

manager’s goal orientation,

 (2)

time orientation,

 (3)

interpersonal orientation, and

 (4)

formality of structure.

Three different forms of differentiation are horizontal, vertical, and spatial.

Horizontal Differentiation

Horizontal differentiation is the degree of differentiation between organizational subunits and is based on employees’ specialized knowledge, education, or training. For example, two university professors who teach specialized subjects in different academic departments are subject to horizontal differentiation. Horizontal differentiation increases with specialization and departmentalization.

Specialization refers to the particular grouping of activities performed by an individual. The degree of specialization, or the division of labor, in the organization gives an indication of how much training is needed for various jobs, what the scope of various jobs is, and what individual characteristics are needed for job holders. Specialization can lead to the development of a specialized vocabulary, as well as other behavioral norms. As the two college professors specialize in their subjects, abbreviations or acronyms take on unique meanings. For example, OB means “organizational behavior” to a professor of management but “obstetrics” to a professor of medicine.

Usually, the more specialized the jobs within an organization, the more departments are differentiated within that organization (in other words, the greater is the departmentalization). Departmentalization can be by function, product, service, client, geography, process, or some combination of these. A large organization may departmentalize its structure using some or all of these methods at different levels of the organization. For example, the U.S. Army Reserve changed its departmentalization first from divisional to an operational strategic

reserve and then to an operational force structure.

FastFact

The pyramid of King Cheops of Egypt could not have been built without a well-conceived organization. The pyramid contains 2.3 million blocks of stone, each of which had to be quarried, cut to precise size and shape, cured (hardened in the sun), transported by boat for two to three days, moved onto the construction site, numbered to identify where it would be placed, and then shaped and smoothed so that it would fit perfectly into place. It took 20,000 workers twenty-three years to complete this pyramid; more than 8,000 were needed just to quarry the stones and transport them.

SOURCES: A. Erman, Life in Ancient Egypt (London: Macmillan & Co., 1984) ; C. Williams, Management (Mason, Ohio: Cengage Learning, 2008).

Vertical Differentiation

Vertical differentiation is the difference in authority and responsibility in the organizational hierarchy. Vertical differentiation occurs, for example, between a chief executive and a maintenance supervisor. Tall, narrow organizations have greater vertical differentiation, and flat, wide organizations have less vertical differentiation. The height of the organization is also influenced by level of horizontal differentiation and span of control. The span

of control refers to and defines the number of subordinates a manager can and should supervise.

Tall structures—those with narrow spans of control—tend to be characterized by closer supervision and tighter controls. In addition, the communication becomes more burdensome, since directives and information must be passed through more layers. The banking industry has often had tall structures. Flat structures—those with wider spans of control—have simpler communication chains and reduced promotion opportunities due to fewer levels of management. Sears is an example of an organization that has gone to a flat structure. With the loss of more than a million middle management positions, many organizations are now flatter. The degree of vertical differentiation

affects organizational effectiveness, but there is no strong evidence that flatter or taller organizations are better. Organizational size, type of jobs, skills and personal characteristics of employees, and degree of freedom must all be

considered in determining organizational effectiveness.

Spatial Differentiation

Spatial differentiation is the geographic dispersion of an organization’s offices, plants, and personnel. A salesperson who works in New York for a company based in Portland experiences spatial differentiation. An increase in the number of locations increases the complexity of organizational design because of spatial differentiation but may be necessary for organizational goal achievement or organizational protection. For example, if an organization wants to expand into a different country, it may be best to form a separate subsidiary that is partially owned and managed by citizens of that country. Few U.S. citizens think of Shell Oil Company as being a subsidiary of Royal Dutch/Shell Group, a company whose international headquarters is in the Netherlands. Spatial differentiation may give an organization political and legal advantages in a country because it is identified as a local company.

Implications of Differentiation

Horizontal, vertical, and spatial differentiation indicate the amount of width, height, and breadth an organizational structure needs. Just because an organization is highly differentiated along one of these dimensions does not mean it must be highly differentiated along the others. The university environment, for example, is generally characterized by great horizontal differentiation but relatively little vertical and spatial differentiation. By contrast, a company such as Coca-Cola is characterized by a great deal of all three types of differentiation.

The more structurally differentiated an organization is, the more complex it is. Complexity refers to the number of activities, subunits, or subsystems within the organization. Lawrence and Lorsch suggest that an organization’s complexity should mirror the complexity of its environment. As the complexity of an organization increases, its need for mechanisms to link and coordinate the differentiated parts also increases. If these links do not exist, the departments or differentiated parts of the organization can lose sight of the organization’s larger mission, and the organization runs the risk of chaos. Chaos is not inevitable, however, as research suggests that environmental complexity may be viewed as a “puzzle” that, if understood correctly, increases competence and increases

organizational learning.

GE Meets Bureaucracy

GE is a global icon of capitalism and leading provider of infrastructure. GE’s leadership emphasizes superior performance, not bureaucracy or rigidity. The organizational structures and forms employed by GE aim to be functional, flexible, and are designed to deliver results. Myanmar, known to many as Burma, is one of the world’s final frontiers for capitalism and a country in desperate need of lighting and power, railways and ports. However, it is a country organized and run by a very strong, rigid, and corrupt bureaucracy. GE’s organizational design and structure are not well suited to meet Myanmar’s bureaucratic way of doing business. Yet GE has precisely the

products that the country needs to grow and develop. This intractable misfit presents both a challenge and an opportunity for GE and for Myanmar.

SOURCE: S. Montlake, “General Electric’s Last Frontier,” Forbes 191 (July 15, 2013): 110.

15-1b Integration

To be effective, organizations must design and build linkage and coordination mechanisms. This process of coordinating the different parts of the organization is known as integrationintegrationThe process of coordinating the different parts of an organization.. Integration mechanisms are designed to achieve unity among individuals and groups in various jobs, departments, and divisions in the accomplishment of organizational

goals and tasks. Effective integration helps keep the organization in a state of dynamic equilibrium, a condition in which all the parts of the organization are interrelated and balanced.

To integrate activities up and down the organizational chain of command, a variety of structural devices can be used to achieve vertical linkages. These devices include hierarchical referral, rules and procedures, plans and

schedules, positions added to the structure of the organization, and management information systems. On an organization chart, the vertical lines indicate these vertical linkages, showing the lines of hierarchical referral up and down the organization. When employees do not know how to solve a problem, they can refer it upward for consideration and resolution. Work that needs to be assigned is usually delegated downward.

Rules and procedures, as well as plans and schedules, provide standing information for employees without direct communication. These vertical integrators, such as an employee handbook, communicate to employees standard information, or information that they can understand on their own. Such integrators allow managers to have wider spans of control because they do not have to inform each employee of what is expected and when it is expected. Vertical integrators encourage managers to use management by exception—to make decisions when employees bring problems up the hierarchy. Military organizations depend heavily on vertical linkages, having a well-defined chain of command. Certain duties are expected to be carried out, and proper paperwork is to be in place. In times of crisis, however, much more information is processed, and the proper paperwork becomes secondary to getting the job done. Vertical linkages help individuals understand their roles in the organization, especially in times of crisis.

Adding positions to the hierarchy is used as a vertical integrator when a manager becomes overloaded by hierarchical referral or problems arise in the chain of command. Positions such as “assistant to” may be added, or another level may be added. Such additions often reflect an organization’s growth and increasing complexity. This action tends to reduce the span of control, thus allowing more communication and closer supervision.

Generally, the taller the organization, the more vertical integration mechanisms are needed. This is because the chains of command and communication are longer. Additional length requires more linkages to minimize the potential for misunderstandings and miscommunications.

Horizontal integration mechanisms provide the communication and coordination that are necessary for links across jobs and departments in the organization. The need for horizontal integration mechanisms increases as the complexity of the organization increases. These linkages are built into the design of the organization by including liaison roles, task forces, integrator positions, and teams.

A liaison role is created when a person in one department or area of the organization has the responsibility for coordinating with another department (e.g., a liaison between the engineering and production departments). Task forces are temporary committees composed of representatives from multiple departments who assemble to

address a specific problem affecting these departments.

A stronger device for integration is to develop a person or department designed to be an integrator. In most organizations, the integrator has a good deal of responsibility but not much authority. Such an individual must have

the ability to get people together to resolve differences within the perspective of organizational goals.

The strongest method of horizontal integration is through teams. Horizontal teams cut across existing lines of organizational structure to create new entities that make organizational decisions. An example of this may occur in product development with the formation of a team that includes marketing, research, design, and production personnel. Ford used such a cross-functional team to develop the Taurus automobile, which was designed to restore the company’s market share in the United States. The information exchanged by such a product development team should lead to a product that is acceptable to a wider range of organizational groups, as well as

to customers.

The use of these linkage mechanisms varies from organization to organization, as well as within areas of the same organization. In general, the flatter the organization, the more necessary are horizontal integration mechanisms.

15-2 Basic Design Dimensions

Differentiation, then, is the process of dividing work in the organization, and integration is the process of coordinating work in the organization. From a structural perspective, every manager and organization looks for the best combination of differentiation and integration for accomplishing the goals of the organization. There are many ways to approach this process. One way is to establish a desired level of each structural dimension on a high-to-low continuum and then develop a structure that meets the desired configuration. These structural dimensions include the following:

1. FormalizationFormalizationThe degree to which the organization has official rules, regulations, and procedures.. The degree to which an employee’s role is defined by formal documentation (procedures, job descriptions, manuals, and regulations).

2. CentralizationCentralizationThe degree to which decisions are made at the top of the organization.. The extent to which decision-making authority has been delegated to lower levels of an organization. An organization is centralized if the decisions are made at the top of the organization and decentralized if decision making is pushed down to lower levels in the organization.

3. SpecializationSpecializationThe degree to which jobs are narrowly defined and depend on unique expertise.. The degree to which organizational tasks are subdivided into separate jobs. The division of labor and the degree to which formal job descriptions spell out job requirements indicate the level of specialization in the organization.

4. StandardizationStandardizationThe degree to which work activities are accomplished in a routine fashion.. The extent to which work activities are described and performed routinely in the same way. Highly standardized organizations have little variation in the defining of jobs.

5. ComplexityComplexityThe degree to which many different types of activities occur in the organization.. The number of activities within the organization and the amount of differentiation needed within the organization.

6. Hierarchy of authorityHierarchy of authorityThe degree of vertical differentiation across levels of management.. The degree of vertical differentiation through reporting relationships and the span of

control within the structure of the organization.

An organization that is high in formalization, centralization, specialization, standardization, and complexity and has a tall hierarchy of authority is said to be highly bureaucratic. Bureaucracies are not inherently bad; however, they are often tainted by abuse and red tape. There are cases, however, where centralized structures can be beneficial. For example, one study found that a more centralized structure is effective for increased job satisfaction when

perceptions of interactional and procedural justice are present.

An organization that is on the opposite end of each of these continua is very flexible and loose. Control is very hard to implement and maintain in such an organization, but at certain times such a structure is appropriate. The research and development departments in many organizations are often more flexible than other departments in order to stimulate creativity. An important organizational variable for such flexible structures is trust.

Another approach to the process of accomplishing organizational goals is to describe what is and is not important to the success of the organization rather than worry about specific characteristics. Henry Mintzberg argued that the

following questions can guide managers in designing formal structures that fit each organization’s unique set of circumstances:

1. How many tasks should a given position in the organization contain, and how specialized should each task be?

2. How standardized should the work content of each position be? 3. What skills, abilities, knowledge, and training should be required for each position? 4. What should be the basis for the grouping of positions within the organization into units, departments,

divisions, and so on? 5. How large should each unit be, and what should the span of control be (i.e., how many individuals should

report to each manager)? 6. How much standardization should be required in the output of each position? 7. What mechanisms should be established to help individuals in different positions and units adjust to the

needs of other individuals? 8. How centralized or decentralized should decision-making power be in the chain of authority? Should most

of the decisions be made at the top of the organization (centralized) or be made down in the chain of

authority (decentralized)?

The manager who can answer these questions has a good understanding of how the organization should implement the basic structural dimensions. These basic design dimensions act in combination with one another and are not entirely independent characteristics of an organization.

15-3 Five Structural Configurations

Differentiation, integration, and the basic design dimensions combine to yield various structural configurations. Very early organization structures were often either based on product or function. The matrix organization

structure merged these two ways of organizing. Mintzberg moved beyond these early approaches and proposed five structural configurations: the simple structure, the machine bureaucracy, the professional bureaucracy, the

divisionalized form, and the adhocracy. Table 15.1 shows the prime coordinating mechanism, the key part of the organization, and the type of decentralization for each of these structural configurations. The five basic parts of the organization, for Mintzberg, are the upper echelon, or strategic apex; the middle level, or middle line; the operating core, where work is accomplished; the technical staff, or technostructure; and the support staff. Figure 15.2 depicts these five basic parts with a small strategic apex, connected by a flaring middle line to a large, flat operating core. Each configuration affects people in the organization somewhat differently, and all organizational structures should support the firm’s strategic goals.

Table 15.1

Five Structural Configurations of Organizations

STRUCTURAL CONFIGURATION

PRIME COORDINATING MECHANISM

KEY PART OF ORGANIZATION

TYPE OF DECENTRALIZATION

Simple structure Direct supervision Upper echelon Centralization

Machine bureaucracy Standardization of work processes

Technical staff Limited horizontal decentralization

Professional bureaucracy Standardization of skills Operating level Vertical and horizontal decentralization

Divisionalized form Standardization of outputs Middle level Limited vertical decentralization

Adhocracy Mutual adjustment Support staff Selective decentralization

SOURCE: Mintzberg, Henry, Structuring of Organizations, 1st Edition, © 1979. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, N.J.

Figure 15.2Mintzberg’s Five Basic Parts of an Organization

SOURCE: From H. Mintzberg, The Structuring of Organizations (Upper Saddle River, N.J.: Pearson, 1979): 20. Reprinted by

permission of Pearson Education, Inc., Upper Saddle River, N.J.

15-3a Simple Structure

The simple structuresimple structureA centralized form of organization that emphasizes a small technical and support staff, strong centralization of decision making in the upper echelon, and a minimal middle level.is a centralized form of organization that emphasizes a small technical and support staff, strong centralization of decision making in the upper echelon, and a minimal middle level. This structure has a minimum of vertical differentiation of authority and minimal formalization. It achieves coordination through direct supervision, often by the chief executive in the upper echelon. An example of a simple structure is a small, independent landscape practice in which one or two landscape architects supervise the vast majority of work with no middle-level managers.

Hospitals exemplify professional bureaucracies; the expertise of doctors, nurses, and technicians is emphasized as the operating core of the organization.

©Carlos E. Santa Maria/ Shutterstock.com

15-3b Machine Bureaucracy

The machine bureaucracymachine bureaucracyA moderately decentralized form of organization that emphasizes support staff differentiated from the line operations of the organization, limited horizontal decentralization of decision making, and a well-defined hierarchy of authority.is a moderately decentralized form of organization that emphasizes a support staff differentiated from the line operations of the organization, limited horizontal decentralization of decision making, and a well-defined hierarchy of authority. The technical staff is powerful in a machine bureaucracy. There is strong formalization through policies, procedures, rules, and regulations. Coordination is achieved through the standardization of work processes. An example of a machine bureaucracy is an automobile assembly plant with routinized operating tasks. The strength of the machine bureaucracy is efficiency of operation in stable, unchanging environments. The weakness of the machine bureaucracy is its slow responsiveness to external changes and to individual employee preferences and ideas.

15-3c Professional Bureaucracy

The professional bureaucracyprofessional bureaucracyA decentralized form of organization that emphasizes the expertise of the professionals in the operating core of the organization.is a decentralized form of organization that emphasizes the expertise of the professionals in the operating core of the organization. The technical and support staffs serve the professionals. There is both vertical and horizontal differentiation in the professional bureaucracy. Coordination is achieved through the standardization of the professionals’ skills. Examples of organizations, where professional bureaucracies can be found, are hospitals and universities. The doctors, nurses, and professors are given wide latitude to pursue their work based on professional training and indoctrination through professional training programs. Large accounting firms may also fall into the category of professional bureaucracies.

15-3d Divisionalized Form

The divisionalized formdivisionalized formA loosely coupled, composite structural configuration composed of divisions, each of which may have its own structural configuration.is a loosely coupled, composite structural

configuration composed of divisions, each of which may have its own structural configuration. Each division is designed to respond to the market in which it operates. There is vertical decentralization from the upper echelon to the middle of the organization, and the middle level of management is the key part of the organization. This form of organization may have one division that is a machine bureaucracy, one that is an adhocracy (discussed next), and one that is a simple structure. The divisionalized organization uses standardization of outputs as its coordinating mechanism.

15-3e Adhocracy

The adhocracyadhocracyA selectively decentralized form of organization that emphasizes the support staff and mutual adjustment among people.is a selectively decentralized form of organization that emphasizes the support staff and mutual adjustment among people. It is designed to fuse interdisciplinary experts into smoothly functioning ad hoc project teams. Liaison devices are the primary mechanism for integrating the project teams through a process of mutual adjustment. There is a high degree of horizontal specialization based on formal training and expertise. Selective decentralization of the project teams occurs within the adhocracy. An example of this form of organization is the National Aeronautics and Space Administration (NASA), which is composed of many talented experts who work in small teams on a wide range of projects related to America’s space agenda. New high- technology businesses also often select an adhocracy design.

15-4 Contextual Variables

The basic design dimensions and the resulting structural configurations play out in the context of the organization’s internal and external environments. Four contextual variablescontextual variablesA set of four characteristics that influence the success of an organization’s design: size, technology, environment, and strategy and goals.influence the success of an organization’s design: size, technology, environment, and strategy and goals. These variables provide a manager with key considerations for the right organizational design, although they do not determine the structure. The amount of change in the contextual variables throughout the life of the

organization influences the amount of change needed in the basic dimensions of the organization’s structure. For example, competitive pressures in many industries have led to outsourcing, labeled one of the greatest shifts in

organization structure in a century.

15-4a Size

The total number of employees is the appropriate definition of size when discussing the design of organizational structure. This is logical because people and their interactions are the building blocks of structure. Other measures, such as net assets, production rates, and total sales, are usually highly correlated with the total number of employees. However, these may not reflect the actual number of interpersonal relationships that are necessary to effectively structure an organization.

Although there is some argument over the degree of influence that size has on organizational structure, there is no argument that it does influence design options. In one study, Meyer found the size of the organization to be the most important of all variables influencing the organization’s structure and design, whereas other researchers argue that the decision to expand the organization’s business causes an increase in size as the structure is adjusted

to accommodate the planned growth. Downsizing is a planned strategy to reduce the size of an organization, and

it is often accompanied by related restructuring and revitalization activities.

How much influence size exerts on the organization’s structure is not as important as the relationship between size and the design dimensions of structure. In other words, when exploring structural alternatives, the manager needs

to know certain facts about designing structures for large versus small organizations. For example, formalization, specialization, and standardization all tend to be greater in larger organizations because they are necessary to control activities within the organization. Larger organizations are more likely to use documentation, rules, written policies and procedures, and detailed job descriptions than to rely on personal observation by the manager. McDonald’s has several volumes of manuals that describe how to make all its products, how to greet customers, how to maintain facilities, and so on. This level of standardization, formalization, and specialization helps McDonald’s maintain the same quality of product no matter where a restaurant is located. In contrast, at a small, locally owned café, your hamburger and French fries may taste a little different every time you visit—evidence of a lack of standardization.

Formalization and specialization also help a large organization decentralize decision making. Because of the complexity and number of decisions in a large organization, formalization and specialization are used to set parameters for decision making at lower levels. Can you imagine the chaos if the president of the United States, commander-in-chief of all military forces, had to make operational-level decisions in the war on terrorism? By decentralizing decision making, a large organization adds horizontal and vertical complexity, but not necessarily spatial complexity. However, it is more common for a large organization to have more geographic dispersion. For example, the San Diego County Government in California created a regionalized structure to decentralize decision

making, share common resources and competencies, and meet its unique client needs.

Hierarchy of authority is another dimension of design related to complexity. As size increases, complexity increases; thus, more levels are added to the hierarchy of authority. This keeps the span of control from getting too large. However, there is a balancing force because formalization and specialization are added. The more formalized, standardized, and specialized the roles within the organization, the wider the span of control can be.

15-4b Technology

An organization’s technology is an important contextual variable in determining the organization’s structure. Technology is defined as the tools, techniques, and actions used by an organization to transform inputs into

outputs. The inputs of the organization include human resources, machines, materials, information, and money. The outputs are the products and services that the organization offers to the external environment. Determining the relationship between technology and structure is complicated because different departments may employ very different technologies. As organizations become larger, there is greater variation in technologies across units in the organization. Joan Woodward, Charles Perrow, and James Thompson have developed ways to understand traditional organizational technologies.

Woodward introduced one of the best-known classification schemes for technology, identifying three types: unit, mass, or process production. Unit technology is small-batch manufacturing technology and, sometimes, made-to- order production. Examples include the arms manufacturer Smith & Wesson and the production of fine furniture. Mass technology is large-batch manufacturing technology. Examples include automotive assembly lines and latex glove production. Process production is a continuous-production process. Examples include oil refining and beer making. Woodward classified unit technology as the least complex, mass technology as more complex, and process technology as the most complex. The more complex the organization’s technology, the more complex the administrative component or structure of the organization needs to be.

Does Size Matter?

Although some have argued that the future belongs to small, agile organizations, others argue that size continues to be an advantage. Yet, to take advantage of size, organizations must become “centerless” corporations with a global

core. These concepts were pioneered by Booz Allen Hamilton, based on its worldwide technology and management consulting. The global core provides strategic leadership, helps distribute and provide access to the company’s capabilities and knowledge, creates corporate identity, ensures access to low-cost capital, and exerts control over the enterprise as a whole.

Perrow proposed an alternative to Woodward’s scheme based on two variables: task variability and problem analyzability. Task variability considers the number of exceptions encountered in doing the tasks within a job. Problem analyzability examines the types of search procedures followed to find ways to respond to task exceptions. For example, for some exceptions encountered while doing a task, the appropriate response is easy to find. If you are driving down a street and see a sign that says, “Detour—Bridge Out,” it is very easy to respond to the task variability, so analyzability is low (i.e., limited analysis is needed). By contrast, when Thomas Edison was designing the first electric light bulb, the problem analyzability was very high for his task.

Technology is an important contextual variable in determining an organization’s structure.

© iStockphoto.com/Alvinburrows

Perrow went on further to identify the four key aspects of structure that could be modified to technology:

 (1)

the amount of discretion that an individual can exercise to complete a task,

 (2)

the power of groups to control the unit’s goals and strategies,

 (3)

the level of interdependence among groups, and

 (4)

the extent to which organizational units coordinate work using either feedback or planning.

Figure 15.3 summarizes Perrow’s findings about types of technology and basic design dimensions.

Figure 15.3Summary of Perrow’s Findings

SOURCE: Built from C. Perrow, “A Framework for the Comparative Analysis of Organizations,” American Sociological Review

(April 1967): 194–208.

Thompson offered yet another view of technology and its relationship to organizational design. This view is based on the concept of technological interdependencetechnological interdependenceThe degree of interrelatedness of the organization’s various technological elements., which is the degree of interrelatedness of the organization’s various technological elements, and the pattern of an organization’s work flows. Thompson’s research suggests that greater technological interdependence leads to greater organizational complexity and that

the problems of greater complexity may be offset by decentralized decision making.

The research of these three early scholars on the influence of technology on organizational design can be combined into one integrating concept—routineness in the process of changing inputs into outputs in an organization. This routineness has a very strong relationship with organizational structure. The more routine and repetitive the tasks of the organization, the higher the degree of formalization that is possible, the more centralized, specialized, and standardized the organization can be, and the more hierarchical levels with wider spans of control that are possible.

15-4c Environment

The third contextual variable for organizational design is environmentenvironmentAnything outside the boundaries of an organization.. The environment of an organization is most easily defined as anything outside

the boundaries of that organization. Different aspects of the environment have varying degrees of influence on the organization’s structure. In one study of 318 CEOs between 1996 and 2000, strategic decision speed was found to

moderate the relationship between the environment, the structure of an organization, and performance. The general environment includes all conditions that might have an impact on the organization, such as economic factors, political considerations, ecological changes, sociocultural demands, and governmental regulation.

Task Environment

When aspects of the general environment become more focused in areas of direct interest to the organization, those aspects become part of the task environmenttask environmentThe part of the environment that is directly relevant to the organization., or specific environment. The task environment is that part of the environment that is directly relevant to the organization. Typically, this level of environment includes stakeholders such as unions, customers, suppliers, competitors, government regulatory agencies, and trade associations. The domain of the organization refers to the area the organization claims for itself with respect to how it fits into its relevant environments. The domain is particularly important because it is defined by the organization, and it

influences how the organization perceives and acts within its environments. For example, Walmart and Neiman Marcus both sell clothing, but their domains are very different.

The organization’s perceptions of its environment and the actual environment may not be the same. The

environment that the manager perceives is the environment that the organization responds to and organizes for. Therefore, two organizations may be in relatively the same environment from an objective standpoint, but if the managers perceive differences, the organizations may enact very different structures to deal with this same environment. For example, one company may decentralize and use monetary incentives for managers that lead it to be competitively aggressive, while another company may centralize and use incentives for managers that lead it to

be less intense in its rivalry.

Environmental Uncertainty

Environmental uncertaintyEnvironmental uncertaintyThe amount and rate of change in the organization’s environment.is the amount and rate of change in the organization’s environment. The perceived level of environmental uncertainty is the environmental variable that most influences organizational design. Some organizations have relatively static environments with little uncertainty, whereas others are so dynamic that no one is sure what tomorrow may bring. Binney & Smith, for example, has made basically the same product for more than fifty years with very few changes in the product design or packaging. The environment for its Crayola products is relatively static. In fact, customers rebelled when the company tried to get rid of some old colors and add new ones. In contrast, in the last two decades, competitors in the airline industry have encountered deregulation, mergers, bankruptcies, changes in cost and price structures, changes in customer and employee demographics, and changes in global competition. In such uncertain conditions, fast-response organizations must use expertise

coordination practices to ensure that distributed expertise is managed and applied in a timely manner.

How to Determine Environmental Uncertainty

Dess and Beard identified three dimensions of environment that should be measured in assessing the degree of

uncertainty: capacity, volatility, and complexity. The capacity of the environment reflects the abundance or scarcity of resources. If resources abound, the environment supports expansion, mistakes, or both. In contrast, in times of scarcity, the environment demands survival of the fittest. Volatility is the degree of instability. The airline industry is in a volatile environment. This makes it difficult for managers to know what needs to be done. The complexity of the environment refers to the differences and variability among environmental elements.

To win the game, you need a reliable team, a solid strategy, and a clear path to score goals.

©David Lee/ Shutterstock.com

The amount of uncertainty in the environment influences the structural dimensions. Burns and Stalker labeled two structural extremes that are appropriate for the extremes of environmental uncertainty: mechanistic structuremechanistic structureAn organizational design that emphasizes structured activities, specialized tasks, and centralized decision making.and organic structureorganic structureAn organizational design

that emphasizes teamwork, open communication, and decentralized decision making.. The mechanistic and organic structures occupy opposite ends of a continuum of organizational design possibilities. Although the general premise of environmental uncertainty and structural dimensions has been upheld by research, the

organization must make adjustments for the realities of its perceived environment when designing its structure. Some research suggests that the type of structure, either mechanistic or organic, depends on a manager’s level of

organizational design experience and formal training.

If the organization’s environment is uncertain, dynamic, and complex and resources are scarce, the manager needs an organic structure that is better able to adapt to its environment. Such a structure allows the manager to monitor the environment from a number of internal perspectives, thus helping the organization maintain flexibility in

responding to environmental changes.

15-4d Strategy and Goals

Strategies and goals are the fourth contextual variable that influences how the design dimensions of structure should be enacted. Strategies and goals provide legitimacy to the organization, as well as employee direction,

decision guidelines, and criteria for performance. In addition, strategies and goals help the organization fit into its environment.

For example, when Apple introduced its line of personal computers to the market, its strategies were very innovative. The structure of the organization was relatively flat and very informal. Apple had Friday afternoon beer and popcorn discussion sessions, and eccentric behavior was easily accepted. As the personal computer market became more competitive, however, the structure of Apple changed to help it differentiate its products and to help control costs. The innovative strategies and structures devised by Steve Jobs, one of Apple’s founders, were no longer appropriate. So the board of directors recruited John Scully, a marketing expert from PepsiCo, to help Apple better compete in the market it had created. In 1996 and 1997, Apple reinvented itself again and brought back Jobs to try to restore its innovative edge. After his return, Apple became a major player in the digital music market with its introduction of several models of the iPod and the iPhone.

Limitations exist, however, on the extent to which strategies and goals influence structure. Because the structure of the organization includes the formal information-processing channels in the organization, it stands to reason that the need to change strategies might not be communicated throughout the organization without going through those formal channels. In such a case, the organization’s structure influences its strategic choice. Changing the organization’s structure might not unlock value but instead drive up costs and difficulties. Therefore, strategic

success may hinge on choosing an organization design that works reasonably well, then fine-tuning the structure

through a strategic system.

The inefficiency of the structure to perceive environmental changes can even lead to organizational failure. In the airline industry, several carriers failed to adjust quickly enough to deregulation and the highly competitive marketplace. Only those airlines that were generally viewed as lean structures with good information-processing systems have flourished in the turbulent years since deregulation. Examples of how different design dimensions can affect the strategic decision process are listed in Table 15.2.

Table 15.2

Examples of How Structure Affects the Strategic Decision Process

Formalization

As the level of formalization increases, so does the probability of the following:

1. The strategic decision process will become reactive to crisis rather than proactive through opportunities. 2. Strategic moves will be incremental and precise. 3. Differentiation in the organization will not be balanced with integrative mechanisms. 4. Only environmental crises that are in areas monitored by the formal organizational systems will be acted up-on.

Centralization

As the level of centralization increases, so does the probability of the following:

1. The strategic decision process will be initiated by only a few dominant individuals. 2. The decision process will be goal-oriented and rational. 3. The strategic process will be constrained by the limitations of top managers.

Complexity

As the level of complexity increases, so does the probability of the following:

1. The strategic decision process will become more politicized. 2. The organization will find it more difficult to recognize environmental opportunities and threats. 3. The constraints on good decision processes will be multiplied by the limitations of each individual within the

organization.

SOURCE: Republished with permission of Academy of Management, from “The Strategic Decision Process and Organizational Structure” (Table), J. Fredrickson, Academy of Management Review (1986): 284; permission conveyed through Copyright Clearance Center, Inc.

The four contextual variables—size, technology, environment, and strategy and goals—combine to influence the design process. However, the existing structure of the organization influences how the organization interprets and reacts to information about each of the variables. Each of the contextual variables has management researchers who claim that it is the most important variable in determining the best structural design. Because of the difficulty in studying the interactions of the four contextual dimensions and the complexity of organizational structures, the argument about which variable is most important continues.

What is apparent is that there must be some level of fit between the structure and the contextual dimensions of the organization. The better the fit, the more likely the organization will achieve its short-run goals. In addition, the better the fit, the more likely the organization will process information and design appropriate organizational roles for long-term prosperity, as indicated in Figure 15.4.

Figure 15.4The Relationship among Key Organizational Design Elements

©Cengage Learning 2013

15-5 Forces Reshaping Organizations

Managers and researchers traditionally examine organizational design and structure within the framework of basic design dimensions and contextual variables. In recent decades, though, several forces reshaping organizations are causing managers to go beyond the traditional frameworks to examine ways to make organizations more responsive to customer needs. Some of these forces include shorter organizational life cycles, globalization, and rapid changes in information technology. Together, these forces increase the demands on process capabilities within the organization and emerging organizational structures. Thus to retain their health and vitality,

organizations must function as open systems that are responsive to their task environment.

15-5a Life Cycles in Organizations

Organizations are dynamic entities. As such, they ebb and flow through different stages. Usually, researchers think of these stages as organizational life cyclesorganizational life cyclesThe differing stages of an organization’s life from birth to death.. The whole organization has a life cycle that begins at birth, moves through growth and

maturity to a stage of decline, and possibly experiences revival.

Organizational subunits may have very similar life cycles. Because of changes in technology and product design, many organizational subunits, especially those that are product based, are experiencing shorter life cycles. Hence, the subunits that compose the organization are changing more rapidly than in the past. These shorter life cycles enable the organization to respond quickly to external demands and changes.

When a new organization or subunit is born, the structure is organic and informal. If the organization or subunit is successful, it grows and matures. This usually leads to formalization, specialization, standardization, complexity, and a more mechanistic structure. If the environment changes, however, the organization must be able to respond. A mechanistic structure is not able to respond to a dynamic environment as well as an organic one. If the organization or subunit does respond, it becomes more organic and revives; if not, it declines and possibly dies. New research suggests that it may be wise to temporarily cycle through mechanistic and organic designs in order

to meet the often conflicting demands of organizations.

Shorter life cycles put more pressure on the organization to be both flexible and efficient at the same time. Further, as flexible organizations use design to their competitive advantage, discrete organizational life cycles may give way

to a kaleidoscope of continuously emerging, efficiency-seeking organizational designs. The manager’s challenge in this context becomes one of creating congruency among various organizational design dimensions to fit continuously changing markets and locations. Many fast-growing organizations face critical transition points through their life cycles that present growth and structural challenges. The organization should attempt to resolve

these before moving on to the next phase of growth and development.

15-5b Globalization

Another force that is reshaping organizations is the process of globalization, in which organizations operate worldwide rather than in just one country or region. One potential problem with globalization is that corporations can become pitted against sovereign nations when rules and laws conflict across national borders. Also, globalization makes spatial differentiation even more of a reality for organizations. Besides the obvious geographic differences, there may be deep cultural and value-system differences between the various countries that an organization operates in. This adds another type of complexity to the structural design process and necessitates the creation of integrating mechanisms so that people are able to understand and interpret one another, as well as coordinate with one another.

The choice of structure for managing an international business is generally based on choices concerning the following three factors:

1. The level of vertical differentiation. A hierarchy of authority must be created that clarifies the responsibilities of both domestic and foreign managers.

2. The level of horizontal differentiation. Foreign and domestic operations should be grouped in such a way that the company effectively serves the needs of all customers.

3. The degree of formalization, specialization, standardization, and centralization. The global structure must allow decisions to be made in the most appropriate area of the organization. However, controls must be in

place that reflect the strategies and goals of the parent firm.

15-5c Changes in Information-Processing Technologies

Many of the changes in information-processing technologies have allowed organizations to move into new product and market areas more quickly. However, just as shorter life cycles and globalization have caused new concerns for designing organizational structures, so has the increased availability of advanced information-processing technologies. New business technologies are increasingly changing and shaping future business processes,

initiatives, and organizational designs.

Organizational structures are already feeling the impact of advanced information-processing technologies. More integration and coordination are evident because managers worldwide can be connected through computerized networks. The basic design dimensions have also been affected as follows:

1. The hierarchy of authority has been flattened. 2. The basis of centralization has been changed. Now managers can use technology to acquire more

information and make more decisions, or they can use technology to push information and decision making lower in the hierarchy and thus decrease centralization.

3. Less specialization and standardization are needed because people using advanced information- processing technologies have more sophisticated jobs that require a broader understanding of how the

organization gets work done.

Advances in information processing are leading to knowledge-based organizations that incorporate virtual

enterprising, dynamic teaming, and knowledge networking.

Restructuring Avon

When Avon, one of the largest cosmetics and perfume companies in the world, needed to reverse decreases in sales and growing losses, it turned to a radical restructuring of its organization. Much of the company’s struggles were due to its failures in three key markets—Brazil, Russia, and China. Avon was hurt not only by inventory and supply issues in all three countries, but by allegations from the Chinese government that key company executives had tried to bribe government officials. To restore growth and profit, Avon overhauled its structure, going from six divisions to just two. One division, called the Developing Market Group, will focus on Avon’s activities in Latin America, Eastern Europe, Asia Pacific, and China, while the other division will focus its efforts on North America and Western Europe. Through the restructuring, Avon hopes that it will be able to reestablish itself as a strong presence in developing markets all over the world while at the same time stabilizing its growth in developed economies.

SOURCE: E. Byron and P. Ziobro, “Avon Shuffles Managers,” The Wall Street Journal (February 25, 2011), http://online.wsj.com/article/SB10001424052748703408604576164213797841714.html.

15-5d Demands on Organizational Processes

Because of the forces reshaping organizations, managers find themselves trying to meet what seem to be conflicting goals: an efficiency orientation that results in on-time delivery and a quality orientation that results in customized,

high-quality goods or services. Traditionally, managers have seen efficiency and customization as conflicting demands.

To meet these conflicting demands, organizations need to become “dynamically stable.” To do so, an organization must have managers who see their roles as architects who clearly understand the “how” of the organizing process. Thus, managers must combine long-term thinking with flexible and quick responses that help improve process and know-how. In addition, the organizational structure must help define, at least to some degree, roles for managers who hope to successfully address the conflicting demands of dynamic stability.

15-6 Emerging Organizational Structures

The demands placed on managers and on process capabilities in turn place demands on structures. Consequently, the emphasis in organizations is shifting to organizing around processes (see Table 15.3). For example, Procter & Gamble increased its level of innovation by creating teams dedicated to conducting market research, developing

technology, creating business plans, and testing assumptions for specific projects. This process orientation emerges from the combination of three streams of applied organizational design: high-performance, self-managed teams; managing processes rather than functions; and the evolution of information technology. Information technology and advanced communication systems have in turn led to internetworking. In a study of 469 firms, deeply internetworked firms were found to be more focused and specialized, less hierarchical, and more engaged in

external partnering. Three emerging organizational structures associated with these changes are network organizations, virtual organizations, and the circle organization. Virtuality in organizations is often broken down into four interlocking components: geographic dispersion, electronic interdependence, dynamic structure, and

national diversity.

Table 15.3

Structural Roles of Managers Today versus Managers of the Future

Roles of Managers Today 1. Strictly adhering to boss–employee relationships. 2. Getting things done by giving orders. 3. Carrying messages up and down the hierarchy. 4. Performing a prescribed set of tasks according to a job description. 5. Having a narrow functional focus. 6. Going through channels, one by one by one. 7. Controlling subordinates.

Roles of Future Managers 1. Having hierarchical relationships subordinated to functional and peer relationships. 2. Getting things done by negotiating. 3. Solving problems and making decisions. 4. Creating the job by developing entrepreneurial projects. 5. Having broad cross-functional collaboration. 6. Emphasizing speed and flexibility. 7. Coaching their workers.

SOURCE: T. R. Horton, and P. C. Reid (1991). “What Fate for Middle Managers?” Management Review, 80(1), 22. ©1991. Thomas R. Horton. American Management Association, New York. All rights reserved.

Network organizations are weblike structures that contract some or all of their operating functions to other organizations and then coordinate their activities through managers and other employees at their headquarters. Information technology is the basis for building the weblike structure of the network organization and business unit managers that are essential to the success of these systems. This type of organization has arisen in the age of electronic commerce and brought into practice transaction-cost economics, interorganizational collaborations, and

strategic alliances. Network organizations can be global in scope.

Virtual organizations are temporary network organizations consisting of independent enterprises. Many dot-coms are virtual organizations designed to come together swiftly to exploit an apparent market opportunity. They may

function much like a theatrical troupe that comes together for a “performance.” Trust—a complex phenomenon involving ethics, morals, emotions, values, and natural attitudes—can be particularly challenging for virtual organizations. However, trust and trustworthiness are important connective issues in virtual environments. Three key ingredients for the development of trust in virtual organizations are

 (1)

technology that can communicate emotion;

 (2)

a sharing of values, vision, and organizational identity; and

 (3)

a high standard of ethics.

The circle organization is a third emerging structure, crafted by Harley-Davidson in its drive to achieve teamwork

without teams. The three organizational parts, shown in Figure 15.5, are those that

 (1)

create demand,

 (2)

produce product, and

 (3)

provide support.

As the figure indicates, these three parts are linked by the leadership and strategy council (LSC). The circle organization is a more open system than most and an organic structure for customer responsiveness. One innovation in this organizational scheme is the so-called circle coach, who possesses acute communication, listening, and influencing skills so as to be highly respected by circle members and the company’s president.

Figure 15.5Harley-Davidson’s Circle Organization

© iStockphoto.com/Nikada SOURCE: Reprinted by permission of Harvard Business School Press from R. Teerlink and L. Ozley, More Than a Motorcycle: The Leadership Journey at Harley-Davidson (Boston, Mass.: Harvard Business School Press, 2000): 139.

Copyright ©2000 by the Harvard Business School Publishing Corporation; all rights reserved.

15-7 Factors that Can Adversely Affect Structure

This chapter has identified the purposes of structure, the processes of organizational design, and the dimensions and contexts that must be considered in structure. In addition, it has looked at forces and trends in organizational design. Two cautionary notes are important for the student of organizational behavior. First, an organizational structure may be weak or deficient if it is out of alignment with its contextual variables, in which case one or more of the following four symptoms appears:

 Decision making is delayed because the hierarchy is overloaded and too much information is being funneled through one or two channels.

 Decision making is of poor quality because information linkages are not providing the correct information to the right person in the right format.

 The organization does not respond innovatively to a changing environment, especially when coordinated effort is lacking across departments.

 A great deal of conflict is evident as some departments work against one another rather than for the strategies and goals of the organization as a whole; the structure is often at fault.

Second, the personality of the chief executive may adversely affect the structure of the organization. Managers’

personal, cognitive biases and political ideologies may affect their good judgment and decision making. Five dysfunctional combinations of personality and organization have been identified: the paranoid, the depressive, the

dramatic, the compulsive, and the schizoid. Each of these personality–organization constellations can create problems for the people who work in the organization. For example, in a paranoid constellation, people are suspicious of each other, hence distrust in working relationships may interfere with effective communication and task accomplishment. In a depressive constellation, people feel depressed and inhibited in their work activities, which can lead to low levels of productivity and task accomplishment.

Adhocracy Mutual adjustment Support staff Selective decentralization

SOURCE: Mintzberg, Henry, Structuring of Organizations, 1st Edition, © 1979. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, N.J.

15-3

Describe five structural configurations for organizations.

 Henry Mintzberg proposed five structural configurations: the simple structure, the machine bureaucracy, the professional bureaucracy, the divisionalized form, and the adhocracy. The five basic parts of the organization, for Mintzberg, are the upper echelon, and/or strategic apex; the middle level, or middle line; the operating core; the technical staff, or technostructure; and the support staff. The organization’s goals and levels of differentiation, integration, and formalization determine the structural configuration.

15-4

Describe four contextual variables that influence organizational structure.

 Four variables influence the success of an organization’s design: size, technology, environment, and strategy and goals. These variables provide a manager with key considerations for the right organizational design. The amount of change in the contextual variables throughout the life of the organization influences the amount of change needed in the basic dimensions of the organization’s structure.

15-5

Explain the forces reshaping organizations.

 Several forces reshaping organizations are causing managers to go beyond the traditional frameworks and to examine ways to make organizations more responsive to customer needs. Some of these forces include shorter organizational life cycles, globalization, and rapid changes in information technology. These forces together increase the demands on process capabilities within the organization and emerging organizational structures. To successfully retain their health and vitality, organizations must function as open systems that are responsive to their task environment.

15-6

Identify and describe emerging organizational structures.

 Network organizations are weblike structures that contract some or all of their operating functions to other organizations and then coordinate their activities through managers and other employees at their headquarters. Virtual organizations are temporary network organizations consisting of independent enterprises. The circle organization, crafted by Harley-Davidson in its drive to achieve teamwork without teams, is a more open system and an organic structure for customer responsiveness.

15-7

Identify factors that can adversely affect organizational structure.

 If organizational structure is out of alignment with its contextual variables, one or more of the following symptoms appears: delayed decision making, low-quality decision making, non-response to changing environment, and interdepartmental conflict. Also, managers’ personal cognitive biases and political ideologies affect their good judgment and decision-making abilities and may adversely affect the structure of the organization.

In Review

Key Terms

 organizational designorganizational designThe process of constructing and adjusting an organization’s structure to achieve its business strategy and goals.

 organizational structureorganizational structureThe linking of departments and jobs within an organization.

 differentiationdifferentiationThe process of deciding how to divide the work in an organization.

 integrationintegrationThe process of coordinating the different parts of an organization.

 formalizationformalizationThe degree to which the organization has official rules, regulations, and procedures.

 centralizationcentralizationThe degree to which decisions are made at the top of the organization.

 specializationspecializationThe degree to which jobs are narrowly defined and depend on unique expertise.

 standardizationstandardizationThe degree to which work activities are accomplished in a routine fashion.

 complexitycomplexityThe degree to which many different types of activities occur in the organization.

 hierarchy of authorityhierarchy of authorityThe degree of vertical differentiation across levels of management.

 simple structuresimple structureA centralized form of organization that emphasizes a small technical and support staff, strong centralization of decision making in the upper echelon, and a minimal middle level.

 machine bureaucracymachine bureaucracyA moderately decentralized form of organization that emphasizes a support staff differentiated from the line operations of the organization, limited horizontal decentralization of decision making, and a well-defined hierarchy of authority.

 professional bureaucracyprofessional bureaucracyA decentralized form of organization that emphasizes the expertise of the professionals in the operating core of the organization.

 divisionalized formdivisionalized formA loosely coupled, composite structural configuration composed of divisions, each of which may have its own structural configuration.

 adhocracyadhocracyA selectively decentralized form of organization that emphasizes the support staff and mutual adjustment among people.

 contextual variablescontextual variablesA set of four characteristics that influence the success of an organization’s design: size, technology, environment, and strategy and goals.

 technological interdependencetechnological interdependenceThe degree of interrelatedness of the organization’s various technological elements.

 environmentenvironmentAnything outside the boundaries of an organization.

 task environmenttask environmentThe part of the environment that is directly relevant to the organization.

 environmental uncertaintyenvironmental uncertaintyThe amount and rate of change in the organization’s environment.

 mechanistic structuremechanistic structureAn organizational design that emphasizes structured activities, specialized tasks, and centralized decision making.

 organic structureorganic structureAn organizational design that emphasizes teamwork, open communication, and decentralized decision making.

 organizational life cycleorganizational life cycle

In Review

What about You? Managers of Today and the Future

Are the roles for managers in your organization more oriented toward today or toward the future? (If you do not work, think of an organization where you have worked or talk with a friend about managerial roles in his or her organization.)

1. Step 1.

Reread Table 15.3 at the end of the chapter and check which orientation (today or future) predominates in your organization for each of the following seven characteristics:

Today Future

1. Boss–employee relationships.

2. Getting work accomplished.

3. Messenger versus problem solver.

4. Basis for task accomplishment.

5. Narrow versus broad functional focus.

6. Adherence to channels of authority.

7. Controlling versus coaching subordinates.

2. Step 2.

Examine the degree of consistency across all seven characteristics. Could the organization make one or two structural changes to achieve a better alignment of the manager’s role with today or with the future?

3. Step 3.

Identify one manager in your organization who fits very well into the organization’s ideal manager’s role. What does this manager do that creates a good person–role fit?

4. Step 4.

Identify one manager in your organization who does not fit very well into the organization’s ideal manager’s role. What does this manager do that creates a poor person–role fit?

In Review

Test your knowledge

1. Define differentiation and integration. 2. Describe the six basic dimensions of organizational design. 3. Identify four forces that are reshaping organizations today. 4. Discuss the nature of emerging organizational structures. 5. List four symptoms of structural weakness.