CH-15 Organizational Design and Structure – Organizational Behavior: Science, The Real World, and You : Book Guide

15. ORGANIZATIONAL DESIGN AND STRUCTURE REVIEW QUESTIONS: suggested answers Define the processes of differentiation and integration. Answer: Differentiation is the process of deciding how to divide the work in an organization. Integration coordinates the different parts of an organization. Describe the six basic dimensions of organizational design. Answer: Formalization is the degree to which the organization has official rules, regulations, and procedures. Centralization is the degree to which decisions are made at the top of the organization. An organization is specialized if the jobs are narrowly defined and require specific, unique expertise. If tasks are fairly routine, the organization structure is considered standardized. If the organization has multiple types of activities occurring, it is a complex organization. Hierarchy of authority is the degree of vertical differentiation across levels of management. The six basic dimensions of organizational design are: 1. Hierarchy: Defines the levels of authority and reporting relationships. 2. Specialization: Refers to the degree of task division and expertise within roles. 3. Formalization: Indicates the extent to which rules and procedures are standardized. 4. Centralization: Describes the concentration of decision-making authority. 5. Complexity: Relates to the number and variety of organizational activities and structures. 6. Integration: Concerns how different departments and functions coordinate and collaborate. Discuss five structural configurations from the chapter. Answer: The five configurations are from Mintzberg's research. A simple structure is centralized, having direct supervision and the dominant impact from upper management. Most small organizations adopt this structure, or early organizations before their growth phase. The machine bureaucracy has a specialized technical staff with limited decentralization. Professional bureaucracy organizations are highly skilled, and have vertical and horizontal decentralization in the organization. Divisionalized forms key on the middle level, and are standardized in their outputs. Adhocracy organizations emphasize support staff and practice selective decentralization. Discuss the effects of the four contextual variables on the basic design dimensions. Answer: The four variables are size, technology, environment, and strategy and goals. As these elements change, so will the design of the organization. In general, large organizations are more formalized, specialized, standardized, and complex than smaller ones. They also have taller hierarchies and lower centralization. Determining the relationship between technologies and basic dimensions is more complicated. Thompson suggested that greater technological interdependence produces greater complexity and the need for more decentralized decision making. One way of looking at the environment is to use Burns's and Stalker's perspective. If the environment is complex, an organic structure is better. The relationship between strategy and goals and the basic design dimensions is summarized in Table 15.5. Identify four forces that are reshaping organizations today. Answer: Organizational life cycles refer to the differing stages in an organization’s life from birth to death. Advances in technology and product design continue to shorten organizational life cycles, creating pressure for both flexibility and efficiency. Increasing globalization forces changes in differentiation, formalization, specialization, standardization, and centralization. Changes in information-processing technologies require increased integration and coordination. Demands on organizational processes require organizations to develop structures compatible with dynamic stability in order to focus simultaneously on efficiency and quality. Discuss the nature of emerging organizational structures. Answer: One of the key ideas in total quality management is organizing around processes. New structures will be characterized by this type of organizing, along with an emphasis on self-managed teams. Emerging organizational structures include network organizations (weblike structures that contract functions to other organizations), virtual organizations (temporary network organizations), and circle organizations (an open system, organic structure focused on customer responsiveness). Emerging organizational structures are characterized by increased flexibility and adaptability compared to traditional models. Key features include: 1. Flat Hierarchies: Reduced levels of management to promote faster decision-making and closer communication. 2. Networked Teams: Emphasis on cross-functional, project-based teams rather than rigid departmental structures. 3. Decentralization: Greater distribution of decision-making authority to empower local teams and enhance responsiveness. 4. Dynamic Roles: Fluid job roles and responsibilities to adapt to changing needs and foster innovation. 5. Technology Integration: Use of digital tools and platforms to facilitate remote work and global collaboration. These structures aim to improve agility, employee engagement, and adaptability in a rapidly changing business environment. List four symptoms of structural weakness and five unhealthy personality–organization combinations. Answer: Symptoms of structural weakness include: (1) delayed decision making because the hierarchy is overloaded; (2) poor quality decisions because information linkages are not effective; (3) lack of innovative responses to changing environments because of poor coordination; and (4) conflict among departments because of a lack of shared strategies and goals. Five dysfunctional combinations of executive personality and organization are paranoid, depressive, dramatic, compulsive, and schizoid. DISCUSSION AND COMMUNICATION QUESTIONS: suggested answers How would you describe the organization you work for (or your college) on each of the basic design dimensions? For example, is it a very formal organization or an informal organization? Answer: Most students will see their organization as formal, particularly university structures. In describing my college: 1. Hierarchy: Generally flat, with a focus on collaborative decision-making among faculty and administration. 2. Specialization: High, with distinct departments and specialized roles for faculty and staff. 3. Formalization: Moderate, with established policies and procedures but flexibility in day-to-day operations. 4. Centralization: Decentralized, allowing departments significant autonomy in decision-making. 5. Complexity: High, due to diverse academic programs and administrative functions. The structure promotes collaboration and adaptability while maintaining clear roles and procedures. Do the size, technology, and mission of your organization directly affect you? How? Answer: Students typically relate to the size and technology aspects of this question, rather than the strategy and goals, which are harder to ascertain. Yes, the size, technology, and mission of my college directly affect me in several ways: 1. Size: The large size of the college influences the variety of resources and opportunities available, as well as the complexity of navigating administrative processes. 2. Technology: Advances in technology impact my learning experience, access to online resources, and communication with faculty and peers. 3. Mission: The college’s mission to provide a broad and inclusive education shapes the curriculum and learning environment, aligning with my academic and career goals. These factors collectively influence my educational experience, opportunities for growth, and overall engagement with the college community. Who are your organization’s competitors? What changes do you see in IT where you work? Answer: Students are likely to identify competitors in the local market, and may need to be reminded of global competition. The geographic range of competition will, of course, vary depending on the type of industry. Students will readily identify changes such as increased computerization and the use of email and the Internet. Some workplaces, of course, may have more advanced technologies. My college's competitors are other educational institutions offering similar programs and degrees, including nearby universities and online education platforms. In terms of IT changes, there is a noticeable increase in the adoption of advanced learning management systems and online collaboration tools. The integration of AI and data analytics is enhancing personalized learning experiences and streamlining administrative processes. Additionally, there is a growing emphasis on cybersecurity measures to protect sensitive student and faculty information. Does your company show any one or more of the four symptoms of structural deficiency discussed at the end of the chapter? Answer: Students should be prompted to think about why these deficiencies occur, and how they can be altered. Yes, my college exhibits some symptoms of structural deficiency: 1. Lack of Coordination: Occasionally, there are challenges in coordinating between departments, leading to overlapping efforts or miscommunication. 2. Rigid Hierarchy: Some administrative processes can be slow due to hierarchical layers, impacting responsiveness. 3. Limited Innovation: There can be resistance to change, affecting the adoption of new technologies or teaching methods. 4. Employee Dissatisfaction: In some cases, faculty and staff express concerns about workload and support, reflecting potential issues in organizational structure and resource allocation. These symptoms suggest areas where structural improvements could enhance efficiency and satisfaction. Write a memo classifying and describing the structural configuration of your university based on the five choices in Table 15.2. Do you need more information than you have to be comfortable with your classification and description? Where could you get the information? Answer: Students should give specific examples and characteristics of the university to support their choices. Memo: Classification and Description of University Structural Configuration Subject: Structural Configuration Classification Overview: Based on Table 15.2, my university’s structural configuration can be classified as follows: 1. Functional Structure: Departments are organized by academic disciplines (e.g., Sciences, Humanities), focusing on specialized functions. 2. Divisional Structure: Different schools or colleges operate semi-independently, each with its own administrative support and resources. 3. Matrix Structure: Some projects or initiatives involve cross-departmental teams, reflecting a mix of functional and divisional elements. 4. Network Structure: Increasing use of partnerships and online platforms demonstrates a networked approach to extend learning opportunities beyond campus. Additional Information Needed: To refine this classification, more details on internal decision-making processes, inter-departmental collaboration, and the extent of decentralized operations would be useful. Sources for Additional Information: • Organizational charts and internal reports • Interviews with administrative staff and department heads • Review of strategic plans and operational documents Gathering this information would provide a clearer picture of the university’s structural dynamics. Interview an administrator in your college or university about possible changes in size (Will the college or university get bigger? Smaller?) and technology (Is the college or university making a significant investment in IT?). What effects does the administrator anticipate from these changes? Be prepared to present your results orally to the class. Answer: It would be a good idea to coordinate student interviews in class so that a wide variety of administrators are approached. Class discussion can then focus on similarities and differences in the responses and how each administrator’s frame of reference influences his or her perspective on these issues. Interview Summary: Changes in Size and Technology Subject: Anticipated Changes in Size and Technology at [University/College Name] Interviewee: [Administrator's Name], [Title] Summary: 1. Size: • Anticipated Change: The college is planning to expand its size by increasing student enrollment and adding new academic programs. • Expected Effects: This growth is expected to enhance the institution’s reputation and increase revenue. However, it may also lead to greater administrative complexity and a need for additional resources and facilities. 2. Technology: • Anticipated Change: The college is making a significant investment in IT, including upgrading learning management systems, expanding online course offerings, and implementing advanced data analytics. • Expected Effects: These changes aim to improve the quality of education, streamline administrative processes, and support remote learning. The investment is expected to enhance student engagement and faculty efficiency, though it may require ongoing training and adaptation. Presentation Notes: • Emphasize how these changes align with the college’s strategic goals. • Discuss potential challenges and opportunities resulting from the expansion and technology upgrades. • Highlight the administrator’s insights on managing these transitions effectively. ETHICal dilemma Cecily’s options are to keep the current structure that is causing her company to lag behind her competitors or to eliminate managers who have been with the company a long time in order to streamline the company’s structure and regain its competitive position in the market. Using the consequential, rule-based, and character theories, evaluate Cecily’s options. Answer: Consequential – If Cecily keeps the older, loyal managers on, the company will continue to fall farther and farther behind its competitors and will eventually go out of business, causing everyone including the older managers to have to find new jobs. If she eliminates the top executives, they will need to find new jobs, but her company will have a much better chance at regaining its competitive position in the market and she will be able to save everyone else’s jobs. Rule-based – Cecily’s primary obligation is to do whatever is necessary to help her company regain its competitive position in the market. She also appears to have a self-imposed obligation to take care of the top executives who have been loyal to her company. Character – Cecily is concerned about how the restructuring will impact top executives who have been loyal to her company, but she is adamant about not letting the company go under. Assuming there is no middle ground or other solution, it appears her stronger value is keeping the company alive. What should Cecily do? Why? Answer: There really isn’t much of a choice in this case. Cecily can either eliminate some jobs (i.e. top executives) or sacrifice all of her employees’ jobs. If she eliminates the top executives’ jobs, she hurts them but saves the company, fulfills her primary obligation to help the company regain its competitive position in the market, and remains true to her strongest value – that of not letting the company go under. EXPERIENTIAL EXERCISES 15.1 Words-In-Sentences Company The purpose of this exercise is to understand issues of organizational design. Because the students are given a fairly easy and innocuous assignment, it is not difficult to see how the design issues of the various groups influence the success of the outcome. It is better to have several groups, so if the class is smaller, then assign groups to have only six members. By having several groups, it is possible to compare later which design worked best for this type of task. If you can, assign one observer per group so that the debrief will be richer. Using observers to “float” is highly beneficial to learning. They still have their “home” group, but they freely move throughout the various groups. This gives them much more insight and ability to give more meaningful feedback later. You should give each group the raw material words, preferably on a note card or a piece of paper, so that each group gets a note card. Some possibilities include: organic and mechanic Lawrence and Lorsch task and design Woodward on technology Using raw materials related to the concepts of this exercise seems to reinforce the learning. During the debrief, spend a lot of time on what the groups learned from Production Run #1 to Production Run #2. If they reorganized, how so and why? Some groups reorganize, but it is senseless. What information did they get from #1 that led them to the changes in #2? Was the outcome better? SOURCE: Dorothy Marcic, Organizational Behavior Experiences and Cases, 4th Ed. (St. Paul: West, 1995), 303-305. 15.2 Design and Build a Castle Instructor's Notes This exercise is intended to give students an opportunity to design an organization and produce a product. Students are in groups (of 6-8 members) of one of three product-development teams working within the research and development division of the General Turret and Moat Corporation. Each of the three teams designs a castle for the company to produce and sell. Given limited resources, the company cannot put more than one design on the market. Therefore, the company will have to decide which of the three designs it will use and discard the others. Students are given 45 minutes to complete the project. Exercise Schedule (5 minutes) Each group is designated #1, #2, or #3. Members read only one memorandum, the appropriate one for their group. One (or two for larger groups) observers are selected for each group. Observers read their materials. (10 minutes) Groups design their organization in order to complete the goal. (15-20 minutes) Each group designs its own castle and draws it on newsprint. (5-10 minutes) “Typical consumers” (may be observers or others) tour building locations and hear sales pitches. Judges caucus to determine the winner. (10-15 minutes) Groups meet again and write up the central goal statement of the group. Also, write the organization chart on newsprint with the goal written beneath. These are posted around the room. (5-15 minutes) Instructor leads a class discussion on how the different memos affected organization design. Which design seemed most effective for this task? Option 2 If there is time, have students actually build the castles. To build the castles, you may give students: Sheets of plain/scratch paper and tape, or Sheets of colored construction paper, staples and tape, or Paper, sheets of cardboard or tag board, staples and tape, or Paper, staples, tape plus handfuls of shredded paper (from a paper shredder) Discussion Questions What do you think made one “castle” “win” over the others? Answer: The winning castle likely stood out due to a combination of innovative design, practical functionality, and effective presentation. The team's ability to use resources efficiently and present a compelling sales pitch also played a crucial role. A clear and well-executed design that met consumer needs or preferences likely gave the winning team an edge. Additionally, the group’s organizational structure and how well they collaborated may have contributed to their success. How much difference did the “sales pitch” make? Answer: The sales pitch significantly influenced the outcome by showcasing the design’s unique features and benefits. A persuasive pitch could effectively communicate the value of the design and sway judges or consumers. Even a well-designed product might not succeed if it isn’t presented compellingly. Therefore, a strong pitch can enhance the perceived value of the design and impact the decision-making process. Is one group’s organizing structure better than another’s? Are others more useful in different “Castle Companies” or different situations? Answer: One organizing structure may be better suited for specific tasks or contexts. For instance, a hierarchical structure might be effective for clear task delegation and authority, while a more collaborative structure could foster creativity and shared decision-making. Different situations, such as rapid development or complex projects, may require varying approaches. The effectiveness of each structure depends on the nature of the task and the team dynamics. Was communication influenced by any particular structure? Answer: Yes, communication was likely influenced by the chosen organizational structure. A hierarchical structure might lead to formal communication channels and clear directives, while a flat or team-based structure could encourage open dialogue and brainstorming. Effective communication is critical for successful collaboration and problem-solving. The structure can either facilitate or hinder the flow of information within the group. What other dynamics of your group seemed to be important and influenced your final product? Answer: Group dynamics such as teamwork, leadership, and conflict resolution significantly influenced the final product. Effective collaboration, clear roles, and mutual respect facilitated smoother execution and better outcomes. The group’s ability to integrate diverse ideas and manage resources efficiently also played a role. Additionally, how well the team adapted to feedback and incorporated suggestions affected the final design. CASTLE BUILDING MEMORANDUM TO: PROJECT TEAM #1 FROM: Edward Grimsbsy Bullhouse, III Chief Executive Officer General Turret and Moat Corporation SUBJECT: Development of new castle product In order to perform effectively and to develop a useful product for our firm, I have decided that will serve as manager of product-development team #1. It is responsibility to see that the team develops a useful and feasible product, and I hope that all of you will cooperate with in this effort.
CASTLE BUILDING MEMORANDUM TO: PROJECT TEAM #2 FROM: Edward Grimsbsy Bullhouse, III Chief Executive Officer General Turret and Moat Corporation SUBJECT: Development of new castle product In order to perform effectively and to develop a useful product for our firm, I am asking that you select one of your team to serve as manager of product-development team #2. I trust that you will also determine and select any committees, task forces, subgroups, etc., that are needed in order to perform your job. CASTLE BUILDING MEMORANDUM TO: PROJECT TEAM #3 FROM: Edward Grimsbsy Bullhouse, III Chief Executive Officer General Turret and Moat Corporation SUBJECT: Development of new castle product In order to perform effectively and to develop a useful product for our firm, I am asking that each of you put forth your maximum effort. I trust that you will provide us with a worthwhile product that can contribute to the profits of the firm. CASTLE BUILDING Observer’s Guide During the course of the building period, observe what is happening within your particular group. Specifically, you should look for the following things. What was the reaction of the group to the memorandum? What was the basic structure of the group? To what degree did people specialize and work on the same particular part of the overall task? How did this specialization come about? Who was (were) the leader(s) of the group? How was leadership determined? How effective was the leadership in helping the group to perform its task? Were there any specific patterns of communication among members of the group, or did everyone talk with everyone else? How were important decisions made? Did you see conflicts or were decisions made cooperatively and with compromise? Other general observations After the session, be prepared to discuss your observation with the entire group. Alternative Experiential Exercise The Glitch That Lost Krista Instructor's Notes: This excerpt is a true story. The episode is followed by legal and human resource experts who briefly suggest how to cope with this colorful character. Many employees are overlooked and treated as if they don't exist. With little attention and feedback, they become bored and complacent. This management problem may have encouraged Krista to "play dumb and stay lost." Any time a company undergoes reorganization, it should include a personal meeting with every employee to explain or discuss the impact on the employee's job. Despite the fact that the agency did not handle the reorganization appropriately, it has the right to hold Krista responsible for her actions. She should have received discipline for being AWOL. This story demonstrates an often-overlooked point. Employees have no obligation to seek out work. Whether private or public, it is management's obligation and legal right to insist that employees perform assigned duties in a satisfactory manner. This seems obvious, but many employers are reluctant to exercise their basic right to tell employees to go back to work when such situations arise. * SOURCE: Elizabeth N. Fried, Outrageous Acts of Behavior, Intermediaries Press, Dublin Ohio, 1990. The glitch that lost krista Chase was quite pleased. He was instrumental in redesigning the organization and implementing the communication program. He arranged for small-group meetings so that employees could understand the need for reorganization. The process took him nearly a month of continuous meetings, but the response was favorable. The employees cooperated and helped make the transition very smooth. After six weeks, the first productivity report showed a fifteen percent decrease in expenses, and morale seemed stable. The agency had plans to administer a work-climate study after twelve months. Chase was immersed in the glowing productivity report when his assistant, Suzanne, walked in his office. "Here they are, fresh off the presses, our first run since the reorganization," Suzanne chirped. Chase looked up from his desk puzzled, "What?" "The performance review reminders," Suzanne responded. "You know, every month we get a printout for those employees due for their annual performance review. They have little computer-generated postcards that we send out to the managers." "Oh, right, right. Go ahead and send them out," Chase said, still preoccupied with his productivity report. Several days later he got a call from Gordon Fishman, the information officer. "Say, Chase," Gordon began, "I just got the computer reminder to give Krista Reed, one of my former clerks, her performance review. Since we reorganized, Krista doesn't work for me anymore." Krista was fairly far down in the organization, so her name would not show up on the major charts. Chase remembered hiring her about three years ago for a simple, routine clerk job. She was rather plain, not very bright, but quite pleasant. When her performance reviews had crossed his desk, there was nothing unusual. They were mostly peppered with satisfactories. She had received only one promotion in three years and tended to blend right into the agency. "Well, what happened to her?" Chase asked. "I'm not really sure, but I think she's reporting to Bill Acton in Administration. Try him" Gordon responded. Chase looked up Bill's extension. "Say, Bill, this is Chase Vidmar. We have a performance appraisal due on Krista Reed, and I understand she reports to you now." "Krista Reed: Nope, not me. I think she was shipped over to Tracy Karras after the reorganization. Give Tracy a call," Bill suggested. Chase tapped out Tracy's four-digit extension. "Ms. Karras's office, Jane speaking." "Hi, Jane, this is Chase Vidmar. Is Tracy available?" "Sorry, Mr. Vidmar, but Tracy is out of the office at a meeting with one of our vendors." "Oh,” he paused, "well, maybe you can help me. Does Krista Reed report to your section?" "That name doesn't sound familiar, but I'll check. Can you hold?" "Sure." Chase waited while he scanned his own personnel computer runs. There was Krista Reed's name all right. She still retained Gordon Fishman's budget code, but the section reassignment code was blank. That's why the performance appraisal reminder defaulted to Gordon. "Where the hell could she be?" he thought. Jane returned to the line. "Sorry, Mr. Vidmar, but we don't have her here." "Thanks, Jane." Chase rang off and sat at his desk bewildered. The agency had over two thousand people and he wasn't about to send out a missing-rewards memo on Krista. She was getting her paycheck. That must be a clue. "Rats," he thought, after he checked with payroll. "My luck, she has her pay direct-deposited, with the confirmation mailed to her home. "Her home," he thought, "maybe she's at home. I'll try there." For an entire week Chase periodically called Krista's number - no answer or busy. He was getting very frustrated. Chase usually worked through his lunch, grabbing some junk food from the vending machine. Today he felt especially hungry for some reason, so he ventured into the employee cafeteria. He filled his tray from the deli bar and passed through the register. Seated a few tables from the register was Krista Reed! Chase couldn't believe his eyes. His surprise almost caused him to set his Coke off balance. He regained control and casually sauntered over to Krista, who was seated with some other women. There was an available seat across from her. "Mind if I join you?" Chase asked politely. "Sure, no problem," Krista smiled. "So, Krista, it's been a long time since we've talked. How have you been?" "Pretty good." "So where are you working now that we've reorganized?" he asked. "I'm glad you asked," she responded sincerely. "When everyone got their printout of where to be reassigned, the section for me was blank. My boss was tied up in meetings that day, so I didn't get to discuss it with him. Even though the move wasn't scheduled for two weeks, I wasn't able to get to him because I left that Friday for my two-week vacation. So, when I returned, everyone was in his or her new offices, and my boss, as you know, was shipped over to Building G across the complex. My section was split three ways, so I didn't even know which group to follow and haven't known what to do. I've felt really lost and kind of upset that the agency has forgotten about me. So I just came to work and visited with friends in the various break rooms, and then I'd sit through all three lunch sessions. That part has been a lot of fun, but to tell the truth, I've been getting kinda bored." "That's terrible, Krista," Chase feigned sympathetically. "And not only that," she added, "with all these lunches I've eaten over the past several weeks, I've gained nearly eight pounds!" Chase was astounded. He knew Krista wasn't a rocket scientist, but how could she spend over a month occupying her day having one long lunch, just hoping someone might notice? Incredibly, no one did notice, and Krista appeared deadly serious and wholly sincere. Rather than embarrass himself and the whole agency for the major snafu, Chase politely suggested to Krista that she return with him to his office. He reviewed the organizational design study and determined where Krista should logically be located. Chase contacted the section manager and notified him that he was sending Krista on up. Then he put a change action through to the computer to ensure that the elusive Krista would once again have a home. Discussion Questions: 1. What type of organizational structure is this most likely to have occurred in? Answer: Organizational Structure: This situation is most likely to have occurred in a functional structure, where specialized departments operate in silos, leading to coordination issues. 2. What organizational response should have taken place to prevent this situation? Answer: Organizational Response: To prevent this situation, the organization should have implemented cross-functional teams or matrix structures to improve communication and collaboration across departments. 3. Do you believe this could happen in a restructuring company? Answer: Restructuring Company: Yes, such issues can occur in a restructuring company if changes are not carefully managed. Effective communication and integration strategies are crucial during transitions to avoid similar problems. EXTRA EXPERIENTIAL EXERCISES The following alternative exercise to supplement the material in the textbook can be obtained from: Marcic, Dorothy, Seltzer, Joseph, & Vaill, Peter. Organizational Behavior: Experiences and Cases, 6th Ed. South-Western College Publishing Company, 2001. The Four Frames Model: Analyzing a Hospital Department Consolidation. p. 195-199. Time: 40-50 minutes. Purpose: To introduce and provide an example of the use of Bolman and Deal's Four Frames Model. The Honda Case: Designing for Quality. p. 201-206. Time: 40 minutes or more. Purpose: To explore a Japanese approach to designing an organization for quality. TAKE 2 BIZ FLIX: Rendition PPT Slide 37 Organizations Discussed: Central Intelligence Agency; United States Senate U.S. government operatives suddenly take Anwar El-Ibrahimi (Omar Metwally) from his flight from Cape Town, South Africa, after it arrives in Washington, D.C. He is a suspected terrorist whom the government sends to North Africa for torture and interrogation (extraordinary rendition). Douglas Freeman (Jake Gyllenhaal), a CIA analyst, becomes involved. He reacts negatively to the torture techniques and urges El-Ibrahimi’s release. The story has other complications in the form of El-Ibrahimi’s pregnant wife at home who desperately works for her husband’s safe return. Organizational Structure: A Simple Look This scene opens with a night shot of the Washington Monument. It follows Kahlid’s (Moa Khouas) discussion with Hamadi (Hassam Ghancy), the leader of the terrorist bomb group. Congressional aide Alan Smith’s (Peter Sarsgaard) voice-over says, “She called you?” The scene ends after Senator Hawkins (Alan Arkin) tells Alan to back off. The film cuts to a panning shot of a market area and Douglas Freeman drinking. Alan Smith’s question, “She called you?” refers to Corrine Whitman (Meryl Streep), head of U.S. intelligence. She authorized the extraordinary rendition of El-Ibrahimi. Alan Smith, earlier in the film, pressed her for El-Ibrahimi’s release and his return to the United States. Whitman lied about El-Ibrahimi’s existence. This scene does not explicitly discuss organizational structure, but you can infer several aspects of structure from the scene. What to Watch for and Ask Yourself PPT Slide 41 Review the earlier section, “Basic Design Dimensions.” Which dimensions does this scene show or imply? Answer: Alan Smith has given himself the task of asking Corrine Whitman some questions (specialization). He is trying to help El-Ibrahimi’s wife, Isabella (Reese Witherspoon), get information about her husband’s location and condition. Corrine Whitman will not cooperate because she feels she cannot. Senator Hawkins position and the circumstances prevent him from helping Alan Smith. The end of the scene clearly shows Alan Smith’s subordinate position in the organizational structure of Senator Hawkins’ office (formalization and centralization). All these factors come together to emphasize the mechanistic management practices of Senator Hawkins’ office. Those practices dramatically appear in Hawkins’ final statement—“Back off!” Can you sense the division of labor represented by Senator Hawkins and Alan Smith? Corrine Whitman does not appear in this scene but is also part of a division of labor. Answer: The scene presents a clear division of labor between Senator Hawkins and Alan Smith. Senator Hawkins has specific duties as a U.S. Senator and those duties differ from those of Alan Smith, his assistant. Corrine Whitman also as specific duties and they are separate from those of the Senator because her organization is outside the U.S. Senate. Review the five structural configurations described earlier in this chapter. Which of those configurations best describes the likely structure of Senator Hawkins’ office? Which configurations do not apply? Why? Answer: This scene shows a functional organizational structure with line authority between Senator Hawkins and Alan Smith. You can infer this structure and authority relationship from the behavior shown by each party. Hawkins barks orders, clearly describing Smith’s boundaries (“Back off!”). Corrine Whitman is in a separate organizational structure that does not connect directly to the U.S. Senate. It is likely a functional organizational structure with its own elements of line authority. WORKPLACE VIDEO: Modern Shed Video Case Synopsis If anyone knows about structural designs that are sturdy, contemporary, and adaptive, it’s Ryan Smith, the owner and founder of Modern Shed, a small Seattle company that builds modernized space-saving dwellings. In 2003, Smith stumbled upon a very little big idea: after setting up a small temporary work shed while working on a home restoration project, a client remarked that he really liked Smith’s tiny structure. A light bulb went on inside Smith’s mind, and the enterprising builder determined that the kit could be decked out with modern living features and sold for a range of uses. Today, Smith’s company builds small paneled dwellings for use as studio spaces, home offices, pool houses, project sheds, guesthouses, and more. Like his stylish sheds, Smith’s company is built to be adaptive, scalable, and suited to the needs of the environment. Modern Shed counts only 12 to 14 full time employees in the firm’s Seattle office; however, at times the company’s output rivals that of a large builder, due to close collaboration with a network of 35 independent contractors who specialize in everything from construction to sales. According to Smith, partnering with outside specialists is the most efficient, effective, and flexible way to run a startup company. “If you need to create a business organization, and you bring it all in house,” says Smith, “you need to have the accounting position, the organizing position, the person who is going to answer the phones, and the people who are going to make the things—and you just can't do that when you start a company. It doesn't make sense.” Small, flexible, responsive—these are the qualities that have enabled Modern Shed to thrive even during an economic recession. Smith says that the logical process of building sheds from smaller scale structures to larger ones is a metaphor for how modern organizations should be built. “You can use the analogy for organizations and people as well as structures,” the builder states. “If you go too big you don't understand it; you have to start small.” Discussion Questions and Solutions How did Ryan Smith determine whether his company needed a mechanistic structure with a tall vertical hierarchy or an organic one involving free-flowing partnerships? Answer: A firm’s organizational structure is determined by the company’s contextual variables, including size, technology, environment, and business strategy. Modern Shed designs innovative and customizable dwellings for a rapidly changing niche market, and the company’s virtual network allows for greater innovation, flexibility, and differentiation in an uncertain, dynamic environment. Moreover, Modern Shed’s size—less than 20 full time employees—is another factor in Smith’s choice of organizational design. Whereas large manufacturers have the personnel and equipment to create and assemble products in house, Modern Shed has few resources. The company’s small size and limited resources force owner Ryan Smith to outsource many business processes. What are the advantages and disadvantages of Modern Shed’s organizational structure? Answer: Two advantages of Modern Shed’s organizational structure include responsiveness to market needs and access to highly skilled personnel, without the high payroll costs. Disadvantages include lack of control over outside supply chain partners, high task demands for managers, and uncertain loyalty from independent contractors. As discussed in the video, Modern Shed’s marketing and sales activities are outsourced to independent marketing consultants. Likewise the company’s manufacturing process involves close collaboration with dozens of outside vendors who specialize in the creation and delivery of components used in the sheds—everything from paneling and electric to hardware and transport. The contractors coordinate through monthly conference calls, and they come together to build projects and product lines as planned by managers at Modern Shed’s Seattle office. Give an example of how Modern Shed’s structure enables fast response to rapidly changing market opportunities. Answer: Answers will vary. In the video, Modern Shed sales consultant Scott Pearl details how the company’s structure allows owner Ryan Smith to respond quickly to opportunities in the market. “We were recently approached by a nationally recognized home-and-garden expert who wanted us to create an entirely new product line of Modern Shed,” said Pearl. “The fact that Ryan can just drop everything and focus on this, get the team focused on it, and actually come up with a brand new product in under eight weeks is phenomenal. It could not be done unless the organization was nimble like we are.” Modern Shed’s structure likely uses a flat organizational structure with minimal hierarchical levels, allowing for quicker decision-making and adaptability. For example, with fewer layers of management, team leaders and employees can rapidly assess market trends and implement changes or new ideas without waiting for lengthy approval processes. This agility enables Modern Shed to quickly seize emerging opportunities, such as adapting product lines or launching new marketing campaigns in response to shifting customer preferences. The streamlined communication within this structure fosters faster innovation and responsiveness to market demands. CASE SOLUTION: Alan Mulally’s Restructuring of Ford Motor Company Linkage of Case to Chapter Material The case describes the organization structure challenges that Alan Mulally faced when he became President and CEO of Ford Motor Company. He was hired by William Clay Ford, Jr., the Board Chairman of Ford Motor Company and great-grandson of Henry Ford, the company’s founder, to oversee the restructuring of the company. Numerous challenges faced Mulally, including but not limited to the following: entrenched institutional work habits where managers were more concerned about their own careers than about meeting customers’ needs and desires; a management team that would not admit mistakes, share information, cooperate across divisions, or work together; a depleted pool of managerial talent; and different platforms and different product and supply chains being used for Ford cars produced in America and in Europe. Mulally took several steps to address these challenges, culminating in the formulation and implementation of the One Ford plan that focused on “[p]eople working together as a lean, global enterprise for automotive leadership, as measured by: customer, employee, dealer, investor, supplier, union/council, and community satisfaction.” In restructuring Ford Motor Company, Alan Mulally had to deal with the fundamental organization design processes of differentiation and integration. In making choices regarding how to best restructure the company to transform it and return it to profitability, Mulally considered appropriate contextual factorsespecially the external environment and strategy and goals. In moving the structure from a more mechanistic form to a more organic form, Mulally and his executive team had to consider the basic organization design dimensions of formalization, centralization, specialization, standardization, complexity, and hierarchy of authority. Suggested Answers for Discussion Questions What are the key structural issues that Alan Mulally encountered as the incoming President and CEO of Ford Motor Company? Answer: When Alan Mulally took over as President and CEO of Ford Motor Company, he had to address the following structural issues: Entrenched institutional work habits where managers were more concerned about their own careers than about meeting customers’ needs and desires. A management team that would not admit mistakes, share information, cooperate across divisions, or work together. A depleted pool of managerial talent. Ford cars produced for Europe were entirely different from U.S. cars  they used different platforms and different product and supply chains. Severe pressures on product mix, product prices, and sales volume. Slow product development. An out-of-control cost structure and large cash-burn rates. Relentless competition. How has Alan Mulally addressed the structural issues identified in the previous question? Answer: Mulally’s approach to addressing the structural issues are captured in his June 2007 interview with a reporter from Institutional Investor magazine. Mulally said, “[w]e want to aggressively restructure the entire business to be profitable in the face of lower demand and a changing model mix. That means accelerating the development of products and services that customers really want, especially smaller and more fuel-efficient vehicles. We’ve secured financing that will help us achieve those goals, and we are further developing relationships with our dealer and supplier network. The whole value chain needs to be restructured in the same way and be prepared for the new products and services.” These various efforts are pulled together under Mulally’s One Ford plan which, among other things, sets forth Ford’s strategic goalswhich is the focus of the next discussion question. Explain the context that Ford’s strategic goals provide for the design of its organization structure. Answer: Insight into Ford’s strategic goals can be gained from the company’s One Ford plan. A key planning premise of One Ford is “[p]eople working together as a lean, global enterprise for automotive leadership, as measured by: customer, employee, dealer, investor, supplier, union/council, and community satisfaction.” The One Ford plan is intended to overcome the hyper-competitive atmosphere at the corporate level. The plan requires people to become more collaborative to be successful. The plan also requires the company to work toward building a high level of flexibility into its assembly operationsa level of flexibility that is based on global car platforms and the capability of plants to quickly switch model mixes to better react to customer preferences. Explain the context that Ford’s external environment provides for both its strategic goals and the design of its organization structure. Answer: The external environment is one of the contextual variables that influence an organization’s choices about strategic goals and the structure that is best suited to enabling the organization to achieve those goals. Ford operates in a highly competitive environment, with numerous foreign and domestic manufacturers vying to lure the car- and truck-buying public to purchase their vehicles. Numerous suppliers exist within the United States and around the world. The dealership network is far-flung and complex. Perhaps most importantly, the customers are increasingly demanding more fuel-efficient vehicles as well as vehicles that are of higher quality and still have a reasonable cost. These contextual factors create greater environmental uncertainty, which in turn influence Ford’s choice of strategic goals and the design of its organization structure. The intent of effectively responding to increasing environmental uncertainty is manifested in the strategic goals that derive from the One Ford planning premise of “[p]eople working together as a lean, global enterprise for automotive leadership, as measured by: customer, employee, dealer, investor, supplier, union/council, and community satisfaction.” Building flexibility into the company’s operating structure and promoting collaboration is a move toward a more organic organization structurean organization form that better positions Ford to cope with increased environmental uncertainty. Would a network (or lattice) organization be a viable structural alternative for Ford Motor Company? Explain your answer. Answer: A network organization performs only certain core functions and outsources the remaining functions to other companies (or organizational units). Consequently, the network organization is able to focus on its core competenciesdoing what it does best. The network organization is able to maintain greater flexibility in responding to environmental demands and challenges. A fairly common type of network organization arrangement is for the network company to focus on designing and marketing a product, and to contract with other companies for the manufacturing and/or distribution of the product. Increasingly, network companies are outsourcing more and more elements of operating and managing the entire supply chain in order to concentrate on their core competencies. The network organization differs from more traditional organizations in the performance of critical organizational functions. In a traditional organization, these critical functions are performed in-house rather than being outsourced to other companies. Thus, organizations with more traditional structures design them to accomplish differentiation and integration within the boundaries of the firm (or organizational unit) itself. In network organizations, differentiation and integration transcend the boundaries of the firm (or organizational unit) in the partnering alliance. Although Ford Motor Company has long had a traditional organizational structure, there is evidence that it is moving rapidly in the direction of becoming more like a network (or lattice) organization. Among the evidence that could be cited in support of this is the effort Ford is putting into developing the dealer and supplier network, and in restructuring the whole value chain to be prepared for new products and services. Another evidentiary element is the key One Ford planning premise of “[p]eople working together as a lean, global enterprise for automotive leadership, as measured by: customer, employee, dealer, investor, supplier, union/council, and community satisfaction.” In addition, network organizations have come into being for at least three major reasons: advancing technology, environmental uncertainty, and the need to utilize resources more productively. Each of these factors substantially affects Ford as it seeks to be successful in the highly competitive environment in which it operates. SOURCE: This case solution was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal Chair of Christian Business Ethics and Professor of Management, College of Business, Valparaiso University. Solution Manual for Organizational Behavior: Science, The Real World, and You Debra L. Nelson, James Campbell Quick 9781111825867