8/12/2019 Bands Chap 08

1/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 1

Chapter

8 OrganizationStructure

8/12/2019 Bands Chap 08

2/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 2

Fundamentals Of Organizing

Organization chart

depicts the positions in the firm and how they are arranged

provides a picture of the reporting structure

conveys the following information the boxes represent different work

the titles in the boxes represent the work performed by each unit

reporting and authority relationships indicated by solid lines

showing superior-subordinate connections

levels of management indicated by the number of horizontal

layers in the chart

all persons or units that are on the same rank and report to the

same person are on one level

8/12/2019 Bands Chap 08

3/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 3

Personnel Finance

Manufacturing Sales

Personnel Finance

Manufacturing Sales

Finance R&D Marketing Personnel

Chemical

Products

Metal

Products

President

Conventional Organization Chart

8/12/2019 Bands Chap 08

4/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 4

Fundamentals Of Organizing (cont.)

Differentiation

means that the organization is comprised of many different

units that work on different kinds of tasks

aspect of the organizations internal environment division of labor- assignment of different tasks to different

people or groups

specialization- process in which different individuals and units

perform different tasks

differentiation is high when there are many subunits and many

kinds of specialists who think differently

8/12/2019 Bands Chap 08

5/54

8/12/2019 Bands Chap 08

6/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 6

The Vertical Structure

Corporate governance

role of a corporations executive staff and board of directors in

ensuring that the firms activities meet the goals of the firms

stakeholders

Authority in organizations

authority- the legitimate right to make decisions and to tell

other people what to do

resides in positionsrather than people in private business enterprises, owners have ultimate authority

traditionally authority has been the primary means of running an

organization

8/12/2019 Bands Chap 08

7/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 7

Authority in organizations (cont.)

board of directors- elected by the stockholders to run the

organization

led by a chair

performs three functions

selecting, assessing, rewarding, and perhaps replacing the CEO

determining the firms strategic direction and reviewing financial

performance

assuring ethical, socially responsible, and legal conduct inside directors- the firms top managers who sit on the board

outside directors - are likely run other companies

successful boards tend to be active, critical participants in

determining company strategies

The Vertical Structure (cont.)

8/12/2019 Bands Chap 08

8/54

8/12/2019 Bands Chap 08

9/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 9

The Vertical Structure (cont.)

Hierarchical levels

hierarchy- the authority levels of the organizational

pyramid

top management - strategic managers in charge of the entire

organization

middle management - in charge of plants or departments

lowest levels - made up of lower management and workers

called the operational levelof the organization

trend in the U.S. is to reduce the number of hierarchicallayers

subunits- subdivisions of an organization

subunits with fewer layers have higher operating efficiency

8/12/2019 Bands Chap 08

10/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 10

The Vertical Structure (cont.)

Span of control the number of subordinates who report directly to a manager

narrow spans produce tall organizations

wide spans produce flat organizations

8/12/2019 Bands Chap 08

11/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 11

The Vertical Structure (cont.)

Delegation assignment of authority and responsibility to a subordinate

can occur between any two individuals in any type of

structure with regard to any task

responsibility - assignment of a task that an employee is

supposed to carry out

should delegate enough authority to complete the task

accountability- expectation that employees perform a job,

take corrective action when necessary, and report upward on

the status and quality of their performance

managers remain responsible and accountable for their own

actions and those of their subordinates

8 12

8/12/2019 Bands Chap 08

12/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 12

The Vertical Structure (cont.)

Delegation (cont.)

advantages of delegation

permits getting work done through others

manager saves time

manager frees herself/himself to devote energy to other

important, higher-level activities

provides subordinates with more important jobs

provides subordinates with the opportunity to develop new skills

and to demonstrate potential

from the organizations perspective, jobs are done more

efficiently and cost-effectively

8 13

8/12/2019 Bands Chap 08

13/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 13

Schedule checkpoints for

reviewing progress

Follow through by discussing

progress at appropriate intervals

Give the subordinate the authority, time, and resources

(people, money,equipment) to perform the assignment

Define the goal succinctly

Select the person for the task

Solicit the subordinates viewabout suggested approaches

Steps In Effective Delegation

8 14

8/12/2019 Bands Chap 08

14/54McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 14

The Vertical Structure (cont.)

Decentralization

result of the delegation of responsibility and authority

centralized organization- high-level executives make most

decisions and pass them down to lower levels for implementation

decentralized organization- lower-level managers make

important decisions

ideally, decision making should occur at the level of the

people who are most directly affected and have the most

intimate knowledge about the problem

most U.S. executives understand the importance of decentralizing

decision making to the point of the action

8 15

8/12/2019 Bands Chap 08

15/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 15

The Horizontal Structure

Basic concepts

departmentalization- subdividing the organization into

smaller subunits

l ine departments- have responsibility for the principle activities

of the firm

deal directly with the organizations primary goods and services

line managers typically have:

substantial authority and power

ultimate responsibility for major operating decisions accountability for bottom-line results

staff departments- provide specialized support for line units

moving toward a role focused on strategic support and expert advice

8 16

8/12/2019 Bands Chap 08

16/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 16

The Horizontal Structure (cont.)

Functional organization

jobs (and departments) are specialized and grouped according

to business functionsand the skills they require

e.g., production, marketing, R&D, human resources, and finance

at the most basic level, functional structure is organized

around the companys value chain

value chain- sequence of activities that flow from raw materials

to the delivery of a product or service

common in both large and small organizations

may be most appropriate in rather simple, stable environments

8 17

8/12/2019 Bands Chap 08

17/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 17

Functional organization (cont.)

advantages of functional structure include:

economies of scalecan be realized

effective environmental moni tor ing

performance standardsare better maintained

greater opportunity for special ized trainingand in-depth ski l l

development

technical specialists are relatively free of administrative work

decision makingand l ines of communicationare simple and

clearly understood

The Horizontal Structure (cont.)

8 - 18

8/12/2019 Bands Chap 08

18/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 - 18

The Horizontal Structure (cont.)

Functional organization (cont.) disadvantages of functional structure

people may care more about their own function than about the

company as a whole

may lose focus on overall product quality and customersatisfaction

managers do not develop knowledge of the other areas of the

business

become specialists, not generalists conflicts arise among functions and communications suffer

accordingly

high differentiation may create barriers to coordination across

functions

8 - 19

8/12/2019 Bands Chap 08

19/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 19

Inbound

logisticsOperations

Outbound

logistics

Marketing

and salesService

President

Line departments

Staff departments

Functional Structure

ProcurementHuman

resources

Informationtechnology

services

8 - 20

8/12/2019 Bands Chap 08

20/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

8 20

The Horizontal Structure (cont.)

Divisional organization

units grouped around products, customers, or geographic

regions

groups all functions into a single division

duplicates each function across all of the divisions

separate divisions may act almost as separate businesses

work autonomously to achieve the goals of the organization

several ways to create divisional structure

8 - 21Examples Of Functional And

8/12/2019 Bands Chap 08

21/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Examples Of Functional And

Divisional Organizations

A central purchasing department

Separate companywide marketing,

production, design, and

engineering departments

A central-city health department

Plantwide inspection, maintenance,

and supply departments

A university statistics department

teaches statistics for the entire

university

Each division has its own purchasing unit

Each product group has experts in

marketing, design, production, and

engineering

The school district and the prison have

their own health units

Production Team Y does its own

inspection, maintenance, and supply

Each department hires statisticians to

teach its own students

Functional organization Divisional organization

8 - 22

h i l S ( )

8/12/2019 Bands Chap 08

22/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Divisional organization (cont.) product divisions- all functions that contribute to a given

product are organized under one manager

advantages

inf ormation needs are managed more easily

people have ful l -time commitment to a parti cular product l ine

task responsibil i ties are clear

people receive broader training

flexibility of structure better suits it for unstable environments disadvantages

difficult to coordinate across product lines

managers may not acquire depth of functional knowledge

duplication of effort is expensive

The Horizontal Structure (cont.)

8 - 23

Th H i l S ( )

8/12/2019 Bands Chap 08

23/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

The Horizontal Structure (cont.) Divisional organization (cont.)

customer and geographical divisions

build divisions around customer or geographical distinctions

advantages

can focus on customer needs

can provide faster and better service

disadvantage

duplication of activities across many customer groups and

geographic areas is expensive

8 - 24

G hi l O i ti

8/12/2019 Bands Chap 08

24/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Generalmanagers for:

New York

Philadelphia

Boston

Generalmanagers for:

Cleveland

Chicago

St. Louis

Generalmanagers for:

Raleigh

Atlanta

Orlando

Generalmanagers for:

Seattle

San Francisco

Los Angeles

Generalmanagers for:

Dallas

Houston

Albuquerque

Northeast

regionalmanager

Midwest

regionalmanager

Southeast

regionalmanager

Pacific

regionalmanager

ChairmanCEO

Southwest

regionalmanager

Geographical Organization

8 - 25

Th H i t l St t ( t )

8/12/2019 Bands Chap 08

25/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

The Horizontal Structure (cont.)

Matrix organization

hybrid form of organization in which functional and divisional

forms overlap

have dual reporting relationships in which some managers

report to two superiors rather than a single line of command

advantages

higher degree of flexibility and adaptability

disadvantages violation of the uni ty of command principle

reporting to two superiors can create confusion

8 - 26

M t i O i ti l St t

8/12/2019 Bands Chap 08

26/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Production

group

Two-boss

manager

Engineering

group

Two-boss

manager

Personnel

group

Two-boss

manager

Accounting

group

Two-boss

manager

Matrix Organizational Structure

Production

group

Two-boss

manager

Engineering

group

Two-boss

manager

Personnel

group

Two-boss

manager

Accounting

group

Two-boss

manager

Accounting

Project

Manager

A

Project

Manager

B

Project

managementProduction

ChairmanCEO

Engineering PersonnelFunctional

managers

8 - 27

Th H i t l St t ( t )

8/12/2019 Bands Chap 08

27/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

The Horizontal Structure (cont.)

Matrix organization (cont.)

matrix survival ski l ls

problems can be avoided if behavioral skills are learned

particular skills needed depend on position in the matrix

the matrix diamond illustrates needed skills

8 - 28

The Horizontal Structure (cont )

8/12/2019 Bands Chap 08

28/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

The Horizontal Structure (cont.)

Matrix organization (cont.)

matrix form today- resurgence based on:

pressures to consolidate costs and be faster to market

need for better coordination across functions in the business

need for coordination across countries in global business

understanding of the matrix has increased

matrix is not a structure, but a process

relationships allow information to flow through the organization

norms, values, and attitudes shape how people think

8 - 29

8/12/2019 Bands Chap 08

29/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Williamsons Structures

Functional or U-form (Unitary) Design

Organizational members and units are grouped into

functional departments such as marketing and production

Coordination is required across all departments

Design approach resembles functional departmentalization in

its advantages and disadvantages

8 - 30

8/12/2019 Bands Chap 08

30/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Williamsons StructuresU-Form

8 - 31

8/12/2019 Bands Chap 08

31/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Williamsons Structures

Conglomerate or H-form (Holding) Design

Organization consists of a set of unrelated businesses with a

general manager for each business

Holding-company design is similar to product

departmentalization

Coordination is based on the allocation of resources across

companies in the portfolio

Design has produced only average to weak financial

performance; has been abandoned for other approaches

8 - 32

Willi S

8/12/2019 Bands Chap 08

32/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Williamsons StructuresH-Form

8 - 33

8/12/2019 Bands Chap 08

33/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Williamsons Structures

Divisional or M-form (Multidivisional) Design An organizational arrangement based on multiple businesses in

related areas operating within a larger organizational framework

The design results from a strategy of related diversification

Some activities are extremely decentralized down to the divisionallevel; others are centralized at the corporate level

The largest advantages of the M-form design are the opportunities

for coordination and sharing of resources

Successful M-form organizations can out perform U-form and H-form organizations

8 - 34

Willi St t

8/12/2019 Bands Chap 08

34/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Williamsons StructuresM-Form

8 - 35

8/12/2019 Bands Chap 08

35/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Davis and Lawrence

Matrix Design An organizational arrangement based on two overlapping bases of

departmentalization (e.g., functional departments and productcategories)

A set of product groups or temporary departments aresuperimposed across the functional departments

Employees in the resulting matrix are members of both theirdepartments and a project team under a project manager

The matrix creates a multiple command structurein which an

employee reports to both departmental and project managers A matrix design is useful when

There is strong environmental pressure

There are large amounts of information to be processed

There is pressure for shared resources

8/12/2019 Bands Chap 08

36/54

8 - 37

8/12/2019 Bands Chap 08

37/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Davis and Lawrence

Matrix Design Advantages Enhances organizational flexibility

Involvement creates high motivation and increased

organizational commitment

Team members have the opportunity to learn new skills

Provides an efficient way for the organization to use its

human resources

Team members serve as bridges to their departments for theteam

Useful as a vehicle for decentralization

8 - 38

8/12/2019 Bands Chap 08

38/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Davis and Lawrence

Matrix Design Disadvantages Employees are uncertain about reporting relationships

Managers may view design as an anarchy in which they have

unlimited freedom

The dynamics of group behavior may lead to slower decision

making, one-person domination, compromise decisions, or a

loss of focus

More time may be required for coordinating task-related

activities

8 - 39

8/12/2019 Bands Chap 08

39/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Hammer and Stanton

Hybrid Designs An organizational arrangement based on two or more

common forms of organization design

An organization may have a mixture of related divisions and

a single unrelated division

Most organizations use a modified form of organization

design that permits it to have sufficient flexibility to make

adjustments for strategic purposes

8/12/2019 Bands Chap 08

40/54

8/12/2019 Bands Chap 08

41/54

8 - 42

i b S

8/12/2019 Bands Chap 08

42/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

Key Part of Organization Strategic apex- Top management and its support staff

Technostructure- Analysts such as industrial engineers,

accountants, planners, and human resource managers

Operating core- Workers who actually carry out the organizationstasks

Middle line- Middle and lower-level management

Support staff- Units that provide support to the organization outside

of the operating workflow (for example, legal counsel, executivedining room staff, and consultants)

8 - 43

Mi b S

8/12/2019 Bands Chap 08

43/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

Types of Decentralization Vertical and horizontal centralization

Limited horizontal decentralization

Vertical and horizontal decentralization Limited vertical decentralization

Selective decentralization

8 - 44

Mi b S

8/12/2019 Bands Chap 08

44/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

The Simple StructureThe simple structureuses direct supervision as its primary coordinating

mechanism, has as its most important part its strategic apex, and employs

vertical and horizontal centralization. Relatively small corporations controlled

by aggressive entrepreneurs, new government departments, and medium-sized

retail stores are all likely to exhibit a simple structure. These organizations tendto be relatively young. The CEO (often the owner) retains much of the

decision-making power. The organization is relatively flat and does not

emphasize specialization. Many smaller U-form organizations are structured in

this fashion. Trilogy Software would be an example of a firm using this

approach.

8 - 45

Mi t b St t

8/12/2019 Bands Chap 08

45/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

The Machine BureaucracyThe machine bureaucracyuses standardization of work processes as its prime

coordinating mechanism; the technostructure is its most important part; and

limited horizontal decentralization is established. The machine bureaucracy is

quite similar to Burns and Stalkers mechanistic design discussed in Chapter 12

of GriffinsManagement, Seventh Edition. Examples include McDonalds andmost large branches of the U.S. government. This kind of organization is

generally mature in age, and its environment is usually stable and predictable.

A high level of task specialization and a rigid pattern of authority are also

typical. Spans of management are likely to be narrow, and the organization is

usually tall. Large U-form organizations are also likely to fall into thiscategory.

8 - 46

Mi t b St t

8/12/2019 Bands Chap 08

46/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

The Professional BureaucracyThe third form of organization design suggested by Mintzberg is the professional

bureaucracy. Examples of this form of organization include universities,

general hospitals, and public accounting firms. The professional bureaucracy

uses standardization of skills as its prime coordinating mechanism, has the

operating core as its most important part, and practices both vertical andhorizontal decentralization. It has relatively few middle managers. Further, like

some staff managers, its members tend to identify more with their professions

than with the organization. Coordination problems are common.

8 - 47

Mi t b St t

8/12/2019 Bands Chap 08

47/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

The Divisionalized FormThe divisionalized form, Mintzbergs fourth design, exhibits standardization of

output as its prime coordinating mechanism, the middle line as its most

important part, and limited vertical decentralization. This design is the same as

both the H-form and the M-form described earlier. Limited and Disney are

illustrative of this approach. Power is generally decentralized down to middlemanagementbut no further. Hence each division itself is relatively

centralized and tends to structure itself as a machine bureaucracy. As might be

expected, the primary reason for an organization to adopt this kind of design is

market diversity.

8 - 48

Mi t b St t

8/12/2019 Bands Chap 08

48/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

The AdhocracyThe adhocracyuses mutual adjustment as a means of coordination, has at its most important

part the support staff, and maintains selective patterns of decentralization. Most

organizations that use a fully-developed matrix design are adhocracies. An adhocracy

avoids specialization, formality, and unit of command. Even the term itself, derived from

ad hoc, suggests a lack of formality. Sun Microsystems is an excellent example of an

adhocracy.

8 - 49

Mintzbergs Structures

8/12/2019 Bands Chap 08

49/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Mintzbergs Structures

8 - 50

Organizational Integration

8/12/2019 Bands Chap 08

50/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Coordination by standardization standardization- establishing common rules and procedures

that apply uniformly to everyone

constrains actions

integrates various units by regulating what people do

formalization- reliance on rules and regulations to govern

how people interact

should apply to most (if not all) situations

most appropriate in relatively stable and unchanging situations

8 - 51

Organization Integration (cont.)

8/12/2019 Bands Chap 08

51/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Coordination by plan interdependent units are required to meet deadlines and

objectives that contribute to a common goal

does not require a high degree of stability and routinization

units free to modify their actions as long as they are able to meet

deadlines and targets required for working with others

Coordination by mutual adjustment

involves feedback and discussion to jointly determine how to

approach problems and devise mutually agreeable solutions

allows for flexible coordination to deal with novel problems

costly from the standpoint of time

8 - 52

Organization Integration (cont.)

8/12/2019 Bands Chap 08

52/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Coordination and communication substantial information flows to and from the environment

organizations need to develop structures for processing

information

option one: reducing the need for information

slack resources- extra resources that can be used in a pinch

e.g., inventory reduces the need for information about sales demand

creating self-contained tasks- change from a functional

organization to a product or project organization each unit has the resources needed to perform its task

communications flow within each team rather than among a complex

array of interdependent groups

8 - 53

Organization Integration (cont.)

8/12/2019 Bands Chap 08

53/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Coordination and communication option two: increasing information processing capabil i ty

invest in information systems- e.g., employing or expanding

computer systems

create hor izontal relationships- foster coordination acrossdifferent units

horizontal processes include:

dir ect contact

l iaison roles

task forces

teams

product, program, or project managers

matrix organization

8 - 54

Managing High Information-Processing

Demands

8/12/2019 Bands Chap 08

54/54

McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill 2003 The McGraw-Hill Companies, Inc. All rights reserved.

Highinformation

processing

demands

Createslack

resources

Create

self-contained

tasks

Invest in

information

systems

Create

horizontal

relationships

Reduce the

need for

information

Process

more

information

Demands