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CHAPTER 11 Basic Elements of Organizing END OF CHAPTER QUESTIONS Questions for Review 1. Describe the five alternatives to job specialization. What is the advantage of each, as compared to specialization? Job rotation occurs when employees move systematically from one job to the next. This offers workers some variety in their tasks. Job enlargement involves increasing the total number of tasks, again giving workers some additional variety in the jobs. Job enrichment increases both the number of tasks and the worker’s control over their own work. This tends to increase variety and the worker’s need for achievement and growth. The job characteristics approach improves several aspects of job design in an effort to increase meaningfulness, responsibility, and control. Work teams provide an alternative to job specialization, and they allow the group to design and assign tasks. Work teams increase job variety and autonomy. 2. What is meant by unity of command? By the scalar principle? Can an organization have one without the other? Explain. Unity of command is an organization design principle that states that every worker should report to exactly one superior. The scalar principle states that there must be a clear and unbroken chain of authority from every worker to the top manager in the firm. It is possible to have one without the other. For example, a firm may use a matrix design in which the scalar principle holds but the unity of command principle is violated because each worker reports to two superiors. 3. Describe the organizational structure that results from each of the different bases of departmentalization. What implications does each of these structures have with regard to the distribution of authority within the organization? Functional departmentalization results in an organization in which workers who perform similar tasks are grouped together. In this type of organization, authority is given to leaders who are experts in each of the necessary functions. Product departmentalization results in groupings of employees who all work on the same products. Product experts become leaders. Customer departmentalization results in groupings of employees who all work with the same customer groups. Customer experts become leaders. Under location departmentalization, employees are grouped based on their geographic site. Authority resides in a leader who supervises all the work done at one site. 4. Explain the differences between line and staff positions. What are the advantages and disadvantages of high versus low administrative intensity? Line positions are filled by workers and managers who are in the direct chain of command related to the achievement of the organization’s goals. Staff workers and managers provide support and advice to those in line positions. If an organization has many staff positions relative to the number of line positions, the administrative intensity is high. When administrative intensity is high, costs tend to be high and production is inefficient. Most firms prefer low administrative intensity whenever possible to reduce costs. Questions for Analysis 5. Some people have claimed that the increasing technological sophistication required by many of today’s corporations has led to a return to job specialization. In your opinion, what would be the consequences of a sharp increase in job specialization? Consider both positive and negative outcomes in your answer. Many jobs devoted to information technology require specialization of skills and knowledge—for example, computer programmers, systems engineers, and web site designers. Positive outcomes of specialization include efficiency, the development of specialized expertise, and ease in training and replacing workers. Disadvantages include worker boredom, lack of creativity, and difficulty in coordinating the work of many diverse specialists. 6. Try to develop a different way to departmentalize your college or university, a local fast food restaurant, a manufacturing firm, or some other organization. What might be the advantages of your form of organization? One example follows: “Our business department has two units—the accounting unit and a unit for other subjects. This can be improved by merging accounting with finance to offer a single accounting and finance degree. The other unit can offer a degree that combines marketing and management. Finance students already take accounting courses, while accountants should learn about finance. Likewise, marketing can learn from management and vice versa.” 7. Consider the list of jobs below. In your opinion, what is the appropriate span of management for each? Describe the factors you considered in reaching your conclusion. A physician practices medicine in a privately-owned clinic, while also supervising a number of professional nurses and office staff. An owner/manager of an auto body shop deals with customers and directs several experienced mechanics and also trains and oversees the work of some unskilled laborers. A manager in an international advertising agency directs a team of professionals who are located in offices around the world. The appropriate span of management for each of these jobs depends on various factors, including the nature of the work, the level of expertise and autonomy of the employees, the geographical dispersion of the workforce, and the complexity of coordination and communication required. Here's an analysis for each scenario: 1. Physician in a privately-owned clinic: • Appropriate span of management: Narrow • Factors considered: In this scenario, the physician not only practices medicine but also supervises a number of professional nurses and office staff. Given the specialized nature of healthcare services and the need for close supervision and oversight, a narrow span of management is appropriate. The physician must ensure quality patient care, compliance with regulations, and coordination among the healthcare team. With a narrow span of management, the physician can provide sufficient attention, guidance, and support to each staff member, ensuring effective performance and patient outcomes. 2. Owner/manager of an auto body shop: • Appropriate span of management: Moderate to wide • Factors considered: The owner/manager of an auto body shop deals with customers, directs experienced mechanics, and trains and oversees the work of unskilled laborers. The nature of the work in an auto body shop may involve both specialized tasks that require experienced mechanics and more routine tasks that can be performed by unskilled laborers with proper training and supervision. Depending on the size and complexity of the operation, a moderate to wide span of management may be appropriate. The owner/manager must balance providing direction and support to skilled employees while also efficiently managing and training unskilled laborers to ensure productivity and quality of work. 3. Manager in an international advertising agency: • Appropriate span of management: Wide • Factors considered: In an international advertising agency, the manager directs a team of professionals located in offices around the world. The geographical dispersion of the workforce and the need for collaboration and coordination across different time zones and cultural contexts require a wide span of management. The manager must effectively communicate goals, allocate resources, and provide guidance and support to team members dispersed across various locations. With a wide span of management, the manager can oversee the global operations of the agency, foster collaboration and innovation, and ensure alignment with organizational objectives. In summary, the appropriate span of management for each scenario depends on the unique characteristics and requirements of the job, including the nature of the work, the level of expertise and autonomy of the employees, and the complexity of coordination and communication needed to achieve organizational goals. A narrow span of management may be suitable for roles involving specialized tasks and close supervision, while a moderate to wide span of management may be necessary for roles involving diverse tasks, dispersed teams, and global operations. Questions for Application 8. Consider a job you have held. (Or, if you have not held a job, interview a worker.) Using the job characteristics approach, assess that job’s core dimensions. Then describe how the core dimensions led to critical psychological states and, ultimately, to personal and work outcomes. Let's consider a job as a customer service representative in a call center. Using the job characteristics approach, we can assess the core dimensions of this job: 1. Skill variety: The job involves handling a variety of customer inquiries, resolving issues, and providing assistance, requiring a range of skills such as communication, problem-solving, and product knowledge. 2. Task identity: Customer service representatives typically handle end-to-end customer interactions, from initial inquiry to resolution, allowing them to see the results of their efforts and the impact of their work on customer satisfaction. 3. Task significance: The job involves directly impacting customer satisfaction and loyalty by providing timely and effective assistance, resolving issues, and ensuring a positive customer experience. 4. Autonomy: Customer service representatives may have some autonomy in managing their workload, handling customer inquiries, and making decisions within established guidelines and procedures. 5. Feedback: Feedback on performance may come from various sources, including customer feedback, quality assurance evaluations, and performance metrics such as call resolution times and customer satisfaction scores. These core dimensions can lead to critical psychological states among customer service representatives: 1. Experienced meaningfulness of work: Customer service representatives may perceive their work as meaningful due to its variety, significance, and direct impact on customer satisfaction. They understand the importance of their role in helping customers resolve issues and achieve their goals. 2. Experienced responsibility for outcomes: Customer service representatives may feel a sense of responsibility for the outcomes of their interactions with customers, recognizing their role in shaping the customer experience and influencing customer perceptions of the company. 3. Knowledge of results: Customer service representatives receive feedback on their performance through various channels, allowing them to track their progress, identify areas for improvement, and adjust their approach accordingly. These psychological states can influence personal and work outcomes for customer service representatives: 1. Job satisfaction: Feeling that their work is meaningful, and having a sense of responsibility and autonomy can contribute to job satisfaction among customer service representatives. Seeing the positive impact of their efforts on customer satisfaction and receiving feedback on their performance can further enhance job satisfaction. 2. Employee engagement: Customer service representatives who experience meaningfulness, responsibility, and autonomy in their work are more likely to be engaged and committed to their roles and the organization. They are motivated to provide excellent service and go the extra mile to meet customer needs. 3. Performance: The experienced responsibility for outcomes and knowledge of results can drive performance improvements among customer service representatives. They are motivated to deliver high-quality service, resolve issues efficiently, and achieve performance targets. 4. Retention: Job satisfaction, engagement, and performance contribute to employee retention and turnover intentions among customer service representatives. Satisfied and engaged employees are more likely to stay with the organization, reducing turnover costs and ensuring continuity in customer service delivery. In summary, the core dimensions of a job, as assessed through the job characteristics approach, can influence critical psychological states and ultimately impact personal and work outcomes for employees such as customer service representatives. Providing meaningful work, opportunities for autonomy, feedback on performance, and a sense of responsibility can enhance job satisfaction, engagement, performance, and retention among employees. 9. Use the Internet to locate organization charts for five different organizations. (Or use data from the Internet to draw the organization charts yourself.) Look for similarities and differences among them and try to account for what you find. Many organizations do not publish their organization charts, but often, a look at the senior management team can give significant clues to the organization structure. For example, if the top mangers hold titles like Vice President of North American Operations then one can assume that the firm is using location departmentalization. Students will note similarities in the makeup of the structures such as a member of the top management team to represent each of the departments. Differences will primarily be related to the bases of departmentalization and to different spans of control. The common characteristics and variations found in organization charts based on typical organizational structures. 1. Hierarchical Structure: • Similarities: Many organization charts follow a hierarchical structure, with clear lines of authority and reporting relationships. At the top of the chart is the CEO or President, followed by senior management, middle management, and then frontline employees. • Differences: The differences may lie in the number of hierarchical levels, the titles of specific positions, and the width of spans of control. Some organizations may have taller hierarchies with more levels of management, while others may have flatter structures with fewer levels and broader spans of control. 2. Matrix Structure: • Similarities: Matrix organizations have a more complex structure, with employees reporting to both functional managers and project managers. The organization chart reflects this dual reporting relationship, often using dotted lines or dual reporting lines to indicate the matrix. • Differences: Differences may arise in the extent of matrix integration, the clarity of reporting relationships, and the balance between functional and project responsibilities. Some organizations may have stronger matrix structures with more equal emphasis on functional and project roles, while others may have weaker matrices with clearer functional hierarchies. 3. Functional Structure: • Similarities: In functional organizations, employees are grouped based on their functional areas, such as marketing, finance, or operations. The organization chart reflects these functional groupings, with departments or divisions arranged vertically. • Differences: Variations may occur in the number and size of functional departments, the level of centralization or decentralization, and the degree of cross-functional collaboration. Some organizations may have highly centralized functional structures with strong departmental silos, while others may have decentralized structures with more cross-functional integration. 4. Flat Structure: • Similarities: Flat organizations have few hierarchical levels and a wide span of control, resulting in a more horizontal organization chart with fewer layers of management. • Differences: Differences may be observed in the degree of decentralization, the level of employee empowerment, and the emphasis on collaboration and teamwork. Some flat organizations may empower employees with greater decision-making authority and autonomy, while others may maintain tighter control and supervision. 5. Network Structure: • Similarities: Network organizations are characterized by fluid, dynamic relationships among individuals and entities, both within and outside the organization. The organization chart may represent this interconnectedness through a network diagram or map. • Differences: Variations may exist in the extent of network integration, the nature of partnerships and alliances, and the level of formality in relationships. Some network organizations may have more formalized partnerships and alliances, while others may operate in a more decentralized and informal manner. Overall, while organization charts may exhibit similarities in terms of basic structural elements, such as hierarchy or functional groupings, differences arise based on the unique characteristics, strategies, and cultures of each organization. These differences reflect variations in organizational design, management philosophy, and the nature of work within each organization. 10. Contact two very different local organizations (retailing firm, manufacturing firm, church, civic club, and so on) and interview top managers to develop organization charts for each organization. How do you account for the similarities and differences between them? Interesting similarities should become evident among the civic organizations and the retail store. Service orientation will differentiate these organizations from manufacturing firms. The main different in the latter case may be in the production function. If one of the students chooses a restaurant, which may be considered a service, discuss the production function. Likewise, if there is an assembly plant that does not actually manufacture component parts, discuss how it differs from a restaurant. There will be many avenues to explore in the different types of organizations. END OF CHAPTER EXERCISES Building Effective Conceptual Skills I. Purpose This exercise develops students’ conceptual skills through an investigation of span of control. II. Format The exercise must be done outside of class and can be effectively completed by an individual or by a small group of students. Answers to the follow-up questions should be written outside of class. The time required will vary, depending on how long each interview lasts. If you want to shorten the exercise, reduce the number of workers to be surveyed. III. Follow-Up A. First, survey ten workers and managers about the span of management in their respective workplaces. B. Now, choose one of these individuals for further investigation. Interview this person to get a better idea about the type of work that he or she does, the amount of required interaction with supervisors, the skill levels expected of workers, and other factors that may enter into the determination of optimal span of management. (See Table 11.1 for guidance.) C. Given the information that you gathered in performing task 2, does the span of management in the workplace make sense? Why or why not? Students will have varying answers, depending on what they learn in their interviews. In order to answer Question 3, students should refer to the section of text entitled “Determining the Appropriate Span.” D. If the span of management seems to be appropriate, what are some of the likely outcomes that the organization can expect? What are some likely outcomes if it seems inappropriate? Appropriate spans of management will help to ensure adequate but not overbearing supervision, which should increase worker satisfaction and job performance, while keeping costs to a minimum. Firms that have too narrow of a span will tend to have dissatisfied workers, lower job performance, and overly high costs. Firms that have too broad of a span will have lower job performance, including a lot of worker errors. Building Effective Diagnostic Skills I. Purpose This exercise is designed to help students develop their diagnostic skills through the analysis of a very real problem that should also be relevant and interesting to them. II. Format This diagnostic skills exercise can be done by individual students or students working together in groups. The estimated time for completion of the exercise is about 20 minutes. III. Follow-Up A. For Scenario A, list the major barriers to decentralization that you foresee. B. For Scenario B, list the major barriers to centralization that you foresee. There will be some variation in answers to Questions 1 and 2, but students should mention items such as resistance to change, changing perceptions of risk, communication barriers, and power conflicts. C. In your opinion, which scenario would be easier to implement in reality? In other words, is it probably easier to move from centralization to decentralization or vice versa? Whatever your opinion in the matter, be ready to explain it. Students will probably recognize that the move from centralization to decentralization reduces power for the fewest people, the top managers. At the same time, the move empowers many people within the organization who have not had decision-making authority in the past. This will be a popular move for most employees. In contrast, the change from decentralization to centralization will reduce power for most employees and therefore is likely to meet more resistance. D. Given a choice of starting your career in a firm that’s either highly centralized or high decentralized, which would you prefer? Why? The choice between starting my career in a highly centralized or highly decentralized firm would depend on various factors, including my personal preferences, career goals, and the nature of the work environment. Here's how I would approach the decision: Starting in a Highly Centralized Firm: 1. Structured Environment: A highly centralized firm typically has a clear chain of command and centralized decision-making authority. This structured environment can provide a sense of stability and direction, especially for individuals who prefer clear guidance and oversight in their work. 2. Opportunities for Learning: Centralized firms often have established processes, policies, and procedures in place, which can offer valuable opportunities for learning and skill development. Working within a structured framework can help new employees gain a solid foundation of knowledge and expertise in their field. 3. Career Progression: In a centralized firm, career progression paths may be more clearly defined, with opportunities for advancement based on merit and performance. Employees may have access to formal training programs, mentorship opportunities, and career development resources to support their professional growth. 4. Consistency and Standardization: Centralized decision-making can lead to consistency and standardization in processes, products, and services, which may be advantageous in industries where quality control and regulatory compliance are critical. Starting in a Highly Decentralized Firm: 1. Autonomy and Empowerment: In a highly decentralized firm, employees typically have more autonomy and decision-making authority in their roles. This can foster a sense of ownership, empowerment, and creativity, allowing individuals to take initiative and drive innovation in their work. 2. Flexibility and Adaptability: Decentralized firms are often more agile and adaptable to change, as decision-making authority is distributed across various levels of the organization. Employees may have the flexibility to experiment with new ideas, respond quickly to market dynamics, and adapt to evolving customer needs. 3. Entrepreneurial Culture: Decentralized firms may have a more entrepreneurial culture, with a focus on risk-taking, innovation, and collaboration. Employees may have the opportunity to work closely with cross-functional teams, explore new opportunities, and contribute to the growth and success of the organization. 4. Learning Through Experience: In a decentralized environment, employees may learn through hands-on experience, experimentation, and problem-solving. This experiential learning approach can be valuable for individuals who thrive in dynamic and challenging work environments, as it encourages continuous learning and personal development. Ultimately, my preference would depend on my individual strengths, career aspirations, and work style. If I value structure, guidance, and stability, I may be more inclined to start my career in a highly centralized firm. On the other hand, if I thrive in autonomy, innovation, and flexibility, I may prefer to begin my career in a highly decentralized firm. Regardless of the choice, I would prioritize finding an organization that aligns with my values, offers opportunities for growth and development, and provides a supportive and collaborative work environment. who governs the governing authority? who governs the governing authority? This case points out the importance of ethics officers in organizations and details best practices in how such a position should be organized for maximum effectiveness. A key guideline is to ensure that the ethics officer reports to the highest position in the organization. As an example, the ethics officer at American arbitration association reports to the CEO and is part of every meeting where key decisions are discussed. Management Update: The American Arbitration Association is based in New York City and its website is www.adr.org. 1. Case Question 1: Explain the role of an ethics officer as a specialized managerial position. In your opinion, what are the benefits to an organization of specialization in performing the job of an ethics officer? What are the limitations? An ethics officer develops ethics-related policy for the organization, administers ethics training, and oversees ethics investigations. It should be clear that these are very specialized tasks that require specialized skills. This means that the organization should hire a person skilled in these areas to be its ethics officer. The limitation could possibly be that a specially trained ethics person may not know the industry or organizational context that may be an important factor in ethical matters. 2. Case Question 2: In a traditional setting, is an ethics officer more likely to hold a line position or a staff position? Could the position be either a line position or a staff position? How about both? In all of your answers, be sure to consider the nature of the authority that is – or ought to be – attached to the position. If one looks at the five core responsibilities of an ethics officer identified by Ethics Resource Center (listed in the case), it is clear that the ethics officer’s role is akin to that of a HR head. In other words, this person plays an advisory role and hence it is a staff position. The authority that a HR person has is the authority to advise, set policy, and ensure that the organization adheres to the policies. That’s what an ethics officer does and so it is a staff position and not a line position. 3. Case Question 3: Who’s the ethics officer for student affairs at your school? At the University of Vermont (UVM), for example, it’s the Dean of Students, who can hand out various “sanctions,” such as warnings, probation, or dismissal. What kind of authority does the comparable officer have at your school? UVM also publishes a Code of Student Rights and Responsibilities, which “reaffirms the principle of student freedom coupled with personal responsibility and accountability for individual action.” Does your school have a student ethics code? If so, what does it have to say about your “responsibility and accountability” as a student? These details would vary depending on the institution. However, many universities and colleges do have codes of conduct or ethics that outline students' rights and responsibilities, as well as procedures for addressing ethical violations. Typically, the authority and responsibilities of an ethics officer or a comparable officer at a school may include: 1. Enforcing Ethical Standards: The officer is responsible for upholding ethical standards and promoting integrity within the student body. They may investigate reports of ethical misconduct, educate students about ethical behavior, and implement sanctions for violations. 2. Student Support and Guidance: The officer may provide guidance and support to students facing ethical dilemmas or challenges. They may offer resources, counseling, or mediation services to help students navigate ethical issues and make responsible decisions. 3. Policy Development and Implementation: The officer may be involved in developing, revising, and implementing policies related to student ethics and conduct. They may collaborate with stakeholders to ensure that policies align with the institution's values and promote a positive campus culture. 4. Conflict Resolution: The officer may facilitate conflict resolution processes for students involved in ethical disputes or conflicts. They may mediate discussions, facilitate dialogue, and help students reach mutually agreeable resolutions. Regarding a student ethics code, many schools have codes of conduct or codes of ethics that outline students' rights, responsibilities, and expectations for behavior. These codes typically emphasize principles of integrity, honesty, respect, and accountability. Students are generally expected to adhere to these principles and conduct themselves in a manner consistent with the values of the institution. The specifics of a student ethics code can vary widely depending on the school. Some codes may include provisions addressing academic integrity, respect for diversity and inclusion, responsible use of resources, and standards of behavior both on and off campus. Students are typically expected to familiarize themselves with the code, uphold its principles, and accept responsibility for their actions as members of the academic community. For information about the specific student ethics code and the role of an ethics officer at a particular school, it would be necessary to consult the school's official policies, website, or contact the relevant administrative office. CHAPTER 12 Managing Organization Design END OF CHAPTER QUESTIONS Questions for Review 1. Describe the three forms of core technology. Tell about the differences in organizational structure that occur in firms with each of the three types. Unit or small-batch technology is used by organizations when custom products are made in small quantities. These organizations typically use an organic structure that is flexible, decentralized, and participative. Organizations that function primarily as an assembly use large-batch or mass-production technology and often have organization structures that are rather mechanistic and bureaucratic. Continuous-process technology is employed by organizations where inputs undergo a series of transformations into a completely changed form of output, such as occurs in an oil refinery. These organizations typically use an organic structure. 2. List the changes that occur as an organization grows in size. List the changes that occur as an organization ages over time. Are the two lists the same? Explain any differences you find. As organizations grow, they add employees and facilities, and they typically sell more products, obtain more revenues, and increase the complexity of both tasks and structure. As organizations age, they typically increase in both size and complexity. There are two reasons why growth and age are not synonymous. (1) A few organizations do not have growth as a significant goal, and therefore they may not grow as they age. (2) For organizations that do have growth as a significant goal, some are not successful in achieving that goal and may also fail to grow as they age. 3. Describe the basic forms of organization design. What are the advantages and disadvantages of each? The U-form design is a functional approach that breaks the firm into specialties such as marketing, production, and accounting. This design is simple and clear, but it may not be adequate for controlling a large, complex organization. H-form designs combine a set of smaller unrelated businesses to form a holding company. Holding companies are very flexible and may be able to reduce overhead expenses. However, H-form firms can be difficult to manage because management may lack expertise in each unrelated industry. M-form organizations are based on multiple businesses operating in related areas. This allows some activities to be decentralized and others to be centralized. The M-form provides a good balance of competition between units and cooperation for shared resources. The matrix design combines the functional department by creating product groups or temporary departments. Matrix designs allow firms to experience “the best of both worlds.” This design allows specialization, while also enhancing horizontal communication and giving management enhanced control. However, matrix designs may be confusing for workers who must report to two superiors. 4. Compare and contrast the matrix organization and the team organization telling about any similarities and differences. The matrix organization and the team organization are both attempts to improve the flexibility of an organization’s structure. Both form groups of workers as required by the various projects they undertake. However, the primary difference is that the team organization does away with functional structure altogether. This is shown by the fact that, in the matrix organization, workers are assigned to both a functional and a project supervisor. In the team organization, workers are assigned to a team leader. Questions for Analysis 5. The business world today is increasingly complex and variable, in virtually every country and industry. Thus organizations must become more organic. What are some of the outcomes that companies will experience as they become more organic and less mechanistic? Be sure to include both positive and negative outcomes. An organic organization is most effective in responding to environments that are complex and variable, thus, the observed increase in the use of organic structures in recent years. Organic structures succeed in these difficult environments because they are flexible, participative, and decentralized. However, the use of organic structures can also present problems for an organization, notably how to coordinate and control the work of diverse, autonomous units. 6. Each of the organization designs is appropriate for some firms but not for others. Describe the characteristics that a firm using the U-Form should have. Then do the same for the H-Form, the M-Form, and the matrix design. For each item, explain the relationship between that set of characteristics and the choice of organization design. U-Form organization structure is best suited for organizations that uses functional departmentalization, such as small or new firms or firms that manufacture a single product. H-Form is most appropriate for firms pursuing unrelated diversification, where each unit may act without coordinating with the other units. The M-Form is best for firms pursuing related diversification because it enhances coordination between the units. Matrix designs work well for organizations that work on discrete projects, such as engineering, consulting, or accounting firms. Firms using the matrix design need functional expertise, but they also need flexibility and coordination across functions. 7. What are the benefits of using the learning organization approach to design? Now consider that, in order to learn, organizations must be willing to tolerate many mistakes because it is only through the effort of understanding mistakes that learning can occur. With this statement in mind, what are some of the potential problems with the use of the learning organization approach? Benefits include a well-trained and satisfied workforce, flexibility, improved quality and efficiency, and continuous improvement. However, managers must balance the competing demands of learning and perfection. In order to facilitate learning, managers must tolerate mistakes. But too many mistakes can lead to a breakdown in performance and distract attention from goal achievement. Intel managers have developed a unique approach to handling this problem. They first develop the optimal plant design, a process that involves lots of mistakes and lots of opportunities for learning. Then, they “copy exactly” that plant design as they build future plants. In other words, once the design is perfected, it is then reproduced over and over again. This achieves a balance between learning and efficiency. Questions for Application 8. Consider an organization (such as your workplace, a club or society, a sorority or fraternity, a church, and so on) of which you are a member. Describe some structural elements of that organization that reflect the bureaucratic model. Describe some elements that reflect the behavioral model. In your opinion, is that organization more bureaucratic or more behavioral in its structure? Why? Let's consider a hypothetical workplace organization for this analysis: Structural Elements Reflecting the Bureaucratic Model: 1. Hierarchical Structure: The organization has a clear hierarchy with defined levels of authority, including top management, middle management, and frontline employees. 2. Division of Labor: Tasks and responsibilities are divided among employees based on their roles, job titles, and areas of expertise. Each employee has specific duties and functions within the organization. 3. Formal Rules and Procedures: The organization has established formal rules, policies, and procedures governing various aspects of operations, such as decision-making, communication, and performance evaluation. 4. Specialization: Employees specialize in specific roles or functions within the organization, focusing on tasks that align with their skills, knowledge, and expertise. 5. Centralization of Authority: Decision-making authority is centralized at the top levels of management, with key decisions being made by senior leaders or executives. Structural Elements Reflecting the Behavioral Model: 1. Informal Communication Networks: In addition to formal channels of communication, there are informal networks through which information and ideas flow among employees. These informal networks facilitate collaboration, relationship-building, and the exchange of knowledge. 2. Employee Participation: Employees are encouraged to participate in decision-making processes and contribute their ideas and feedback. There are mechanisms in place for soliciting employee input, such as suggestion boxes, team meetings, and employee surveys. 3. Teamwork and Collaboration: The organization emphasizes teamwork and collaboration, with employees working together in cross-functional teams or project groups to achieve common goals and objectives. 4. Emphasis on Employee Well-being: The organization prioritizes employee well-being and satisfaction, offering programs and initiatives to support work-life balance, health and wellness, and professional development. 5. Flexibility and Adaptability: The organization is responsive to change and encourages flexibility and adaptability among employees. There is a willingness to experiment with new approaches, embrace innovation, and learn from failures. In my opinion, this hypothetical workplace organization exhibits elements of both the bureaucratic and behavioral models, but it leans more towards the behavioral model. While it has a hierarchical structure and formal rules and procedures characteristic of the bureaucratic model, it also places a strong emphasis on employee participation, teamwork, collaboration, and flexibility. The organization values employee input, encourages innovation, and prioritizes employee well-being, reflecting a more people-centered and adaptable approach to management. Overall, this balance between structure and flexibility fosters a positive work environment and contributes to the organization's effectiveness and success. 9. Use the Internet or library to investigate a corporation’s strategy. Then use the Internet or library to obtain a description of the firm’s organization design. Can you identify any links between the company’s strategy and structure? Share your findings with the class. Let's consider the strategy and organizational design of Apple Inc. as an example: Strategy: Apple's strategy is characterized by innovation, differentiation, and premium pricing. The company focuses on developing high-quality, innovative products and services that differentiate it from competitors and command premium prices in the market. Apple's product portfolio includes the iPhone, iPad, Mac, Apple Watch, and various software and services such as iTunes, iCloud, and Apple Music. The company also emphasizes ecosystem integration, with seamless connectivity and interoperability among its hardware, software, and services offerings. Organizational Design: Apple's organizational design is known for its functional structure, with clear lines of authority and specialization. The company is organized into functional departments, such as design, engineering, marketing, operations, and retail. Each department is led by a senior executive who oversees the functions and activities within their respective areas. Apple's organizational structure also features a strong emphasis on product-focused teams, with cross-functional collaboration among engineering, design, and marketing teams to develop and launch new products. Links between Strategy and Structure: 1. Innovation and Product Development: Apple's strategy of innovation and differentiation is reflected in its organizational structure, which fosters collaboration and communication among functional departments and product-focused teams. The functional structure allows the company to leverage the expertise and specialization of its employees in design, engineering, and marketing to develop groundbreaking products and services that meet customer needs and preferences. 2. Ecosystem Integration: Apple's strategy of ecosystem integration is supported by its organizational structure, which facilitates coordination and alignment across different product lines and services. The functional departments work together to ensure seamless integration and interoperability among hardware, software, and services offerings, enhancing the overall user experience and driving customer loyalty. 3. Customer Focus: Apple's strategy of premium pricing and customer experience is reinforced by its organizational structure, which prioritizes customer-centricity and cross-functional collaboration. Departments such as design and marketing are closely aligned to understand customer needs, preferences, and feedback, ensuring that products and services meet high standards of quality, usability, and aesthetic appeal. 4. Speed and Agility: Apple's strategy of rapid innovation and product launches is enabled by its organizational structure, which emphasizes flexibility, adaptability, and speed-to-market. The company's product-focused teams have the autonomy and resources to quickly iterate, prototype, and bring new ideas to market, allowing Apple to stay ahead of competitors and respond effectively to changing market dynamics. Overall, there is a clear alignment between Apple's strategy and organizational structure, with the functional structure supporting the company's focus on innovation, differentiation, ecosystem integration, customer experience, and agility. This strategic alignment contributes to Apple's success as a leading innovator and market leader in the technology industry. 10. What form of organization does your university or college use? What form does your city or town government use? What form do other organizations with which you are familiar use? What similarities and differences do you see? Explain your answers. The college or university is most likely utilizing some form of functional design. Departmentalization by specialty area for specialization of study is expected. When considering the city or town government, students will often suggest the functional form because of the specialization of areas such as police, fire, and public works departments. There may be many similarities between the city or town government and the university or college. Both institutions are quite diverse with leaders that are likely to have diverse forms of specialization. END OF CHAPTER EXERCISES Building Effective Conceptual Skills I. Purpose This exercise develops students’ conceptual skills by asking them to analyze a firm’s structure and then draw an appropriate organization chart. II. Format This exercise is best done outside of class, either individually or in a small group. It should take about 30 minutes to complete. III. Follow-Up A. Alone or with a partner, go online to research a publicly traded U.S. firm in which you’re interested. Focus on information that will help you understand the company’s structure. If you research Ford Motor Company, for example, you should look for information about different types of vehicles, different regions in which Ford products are sold, and different functions that the company performs. (Hint: The firm’s annual report is usually available online and typically contains a great deal of helpful information. In particular, take a look at the section containing an editorial message from the chairman or CEO and the section summarizing financial information. Note: In many cases, “segment” data reveal a lot about divisional structure.) B. Draw an organization chart based on your research. C. Share your results with another group or with the class as a whole. Be prepared to explain and justify the decisions that you made in determining the firm’s structure. Clearly, answers will vary. Ask students whether they consider they design to be a U-Form, H-Form, M-Form, matrix, or some other design. Investigate the reasons behind their choices. Building Effective Technical Skills I. Purpose This exercise uses the development of an organizational structure under various circumstances as a way to build the students’ technical skills. II. Format Students must investigate the Segway technology outside of class using the Internet. Alternatively, you can provide information to them about the Segway. The follow-up questions may be done in or out of class, individually, or in a small group. III. Follow-Up A. Your corporate-level strategy calls for continued production of a limited line of similar products for sale in the United States. What would be the most appropriate organization structure for your firm? Most students will recommend the U-Form design because of the simple, functional nature of a company that produces a modest number of identical products. B. Your corporate-level strategy calls for continued production of a limited line of similar products for sale in the United States. What would be the most appropriate organization structure for your firm? Students may continue to recommend the U-Form, or they may suggest a switch to an M-Form based on location departmentalization. C. Your corporate-level strategy calls for you to move into areas related to your core product, integrating the design innovations that you developed for that product into several other products. What would be the most appropriate organization structure for your firm? Most students will recommend the M-Form design because that is most appropriate for a firm pursuing related diversification. D. Your corporate-level strategy calls for you to exploit your expertise in personal ground transportation in order to move into other areas, such as personal air or personal water transport. What would be the most appropriate organization structure for your firm? M-Form design is best when a firm is diversified, although students who see the new areas as being unrelated to the original area may suggest the U-Form. E. Your corporate-level strategy calls for you to invest the revenue generated by core-product sales in industries unrelated to that product. What would be the most appropriate organization structure for your firm? The U-Form design is most appropriate for firms that are pursuing unrelated diversification. F. Review your responses to each of the five strategies listed above. Explain precisely how a given strategy influenced your choice of a given organization design. Reasons are given above. You can emphasize to students how this exercise shows the impact that a change in strategy can have on organization design. management at work There are three major airline alliances – Star Alliance, SkyTeam, and Oneworld. Alliances allow airlines to offer codesharing – allowing passengers to book a destination not covered by an airline but covered by an alliance partner. The case looks at the predicament of American Airlines which, though a member of the Oneworld alliance, is vulnerable because its alliance is not the biggest and its major competitors have grown bigger through acquisitions. Management Update: For fiscal year 2010, AMR (the parent of American Airlines) reported revenues of $23.08 billion and net income of $(-) 677 million. In early September 2009, the company had a market capitalization of $1.1 billion. 1. Case Question 1: Take a situational view of organizational design. What roles have technology and environment played in the development of alliances and virtual organizations in the airline industry? In what ways does the corporate-level strategy of joining an alliance affect an airline’s organizational functions? Technology in the form of the Internet allows airlines to pool their reservation systems. This enables implementation of code sharing agreements, an important benefit of alliances. The competitive environment in the airline industry is one of intense competition and declining prices. Both these call for alliances to positively affect profitability. Joining an alliance is a corporate-level decision. This could affect the way the organizational functions of operations and marketing are organized because alliances call for working jointly with other airlines. 2. Case Question 2: In what ways might the divisional (m-form) designs of most airlines lend themselves to the requirements of alliance membership? In what ways might they be compatible with the organizational needs of the alliances themselves? If, for example, an airline has the following divisions: North America, Latin America, Europe, and Asia. It would be easier in this case to attract alliance members or be an attractive candidate to join an alliance because one can see the markets covered and those not covered by this airline. Alliance members may be looking for an alliance partner with, say, strong Latin American routes, thereby facilitating alliance formation. 3. Case Question 3: According to one industry analyst, “in a scale business … size does matter.” What does he mean by “a scale business?” Why is the airline industry “a scale business?” Once you’ve thought about these two questions, how would you describe the “specific opportunity” which, as virtual organizations, airline alliances are designed to exploit? A scale business is one where efficiencies come into play when a certain volume (or activity) threshold is reached. The airline industry is a scale business because there is a significant amount of fixed expenses involved in operating such a business. These expenses include the cost of the ground and flight staff, the cost of operating the aircraft, and the cost of accessing the airport facilities. These costs are incurred no matter how many passengers fly on a specific flight. This means that those airlines that can operate at or close to capacity can offset these costs easily and make profits. Airlines alliances allow for sharing expensive facilities and also attract more passengers – both factors are important in the business. 4. Case Question 4: Have you ever been on a flight that involved a code sharing arrangement? Did you notice – or do you realize now – that there were advantages to the practice of code sharing? Based on what you know about airline travel, list a few of the possible advantages of code sharing for passengers. I can provide insights into the advantages of code sharing for passengers based on what I know about airline travel: 1. Expanded Route Networks: Code sharing allows airlines to offer passengers access to a more extensive network of destinations by partnering with other airlines. Passengers benefit from a wider selection of routes and flights, including to destinations that may not be served directly by the operating airline. 2. Increased Flight Options: Code sharing provides passengers with increased flexibility in terms of flight schedules and timings. By code sharing with partner airlines, passengers have access to a greater number of flight options throughout the day, allowing them to choose flights that best suit their travel preferences and schedules. 3. Seamless Connectivity: Codesharing agreements often include coordinated schedules and seamless connectivity between flights operated by partner airlines. Passengers can easily transfer between connecting flights without the hassle of rebooking or rechecking baggage, enhancing the overall travel experience and reducing travel time. 4. Shared Benefits and Loyalty Programs: Passengers participating in frequent flyer programs or loyalty programs with one airline may accrue miles or points when traveling on codeshare flights operated by partner airlines. This allows passengers to earn and redeem rewards across a broader network of airlines, maximizing the value of their loyalty program membership. 5. Enhanced Service and Amenities: Codeshare flights may offer passengers access to enhanced services and amenities, such as lounge access, priority boarding, and premium cabin upgrades, consistent with the standards of the operating airline. Passengers can enjoy a consistent level of service and comfort, regardless of the airline operating the flight. 6. Streamlined Ticketing and Check-in: Passengers booking codeshare flights can often benefit from streamlined ticketing and check-in processes, as they can book and check in for their entire journey through the operating airline's website or mobile app. This simplifies travel logistics and reduces the need for multiple bookings and check-ins. Overall, codesharing arrangements offer numerous advantages for passengers, including expanded route networks, increased flight options, seamless connectivity, shared benefits and loyalty programs, enhanced service and amenities, and streamlined ticketing and check-in processes. These benefits contribute to a more convenient, flexible, and rewarding travel experience for passengers flying on codeshare flights. Solution Manual for Management Ricky W. Griffin, 9781111969714
