October 4th-6th Notes
October 4th-6th Notes MNGT 3100- 004
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This 5 page Class Notes was uploaded by Callisa Ruschmeyer on Thursday October 6, 2016. The Class Notes belongs to MNGT 3100- 004 at Auburn University taught by Joel Carnevale in Fall 2016. Since its upload, it has received 3 views. For similar materials see Principles of Management in Business at Auburn University.
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Date Created: 10/06/16
October 4 -6 Notes Chapter 7 What is Organizational Structure? The informal and formal means by which work is coordinated between individuals and teams within an organization Refers to how work is coordinated between individuals and teams within an organization o Explains reporting relationships (who reports to whom) o Describes formal and informal communication channels o Sets the foundation for the type of decision-making used Building Blocks of Structure Centralization Formalization Departmentalization Hierarchical levels Centralization vs. Decentralization Centralization- formal decision making authority is held by a few people, usually at the top Decentralization- Decision making authority is dispersed throughout the organization Disadvantages to centralization o Example- Caterpillar's inflexibility --> caused them to decentralize a bit more Advantages to centralization o Example- Home Depot's struggle with finding balance --> changed to be more centralized Had an entrepreneurial culture Wouldn't sell same inventory; pricing became negotiable However, many believe Home Depot's centralization went too far, leading to the loss of their service oriented culture Formalization The extent to which an organization's policies, procedures, job description, and rules are written and explicitly articulated Written rules + explicit regulations = formulation Highly formalized- decision making is largely concerned with application of the appropriate predetermined rule, policy, procedure, or criteria o Example- store policy on returns; assembly line products o Example of something that is not formalized- professor's autonomy on how and what to teach in class Advantages o Makes employee behavior predictable o Reduces ambiguity o Provides direction to employees Disadvantages o May reduce innovation o Employee motivation o Job satisfaction October 4 -6 Notes Hierarchical levels Tall o Bottom level- relatively narrow span of control o Several layers of management between frontline employees and the top level o Fewer employees report to each manager o Greater opportunities for managers to supervise and monitor employee activities Flat o Bottom level- relatively wide span of control o Few management layers o Larger number of employees reporting to each manager o Can lead to greater levels of freedom for each employee o Disadvantages Greater levels of role ambiguity May not satisfy job security needs of employees Limited advancement opportunities Maslow's Hierarchy of Needs o Bottom Physiological Safety Love/belonging Esteem Self-actualization o Top Departmentalization Organizational structure is the way the work is coordinated between individuals, teams, etc Functional o A design that groups people together on the basis of their common expertise and experience or because they share the same resources o Organizations using functional structures group jobs based on similarity in functions Marketing Manufacturing Finance Accounting Human resources Information technology o Advantages Best for a company that does not have a large number of products and services requiring special attention Perform better in stable environments Employees are specialists (an employee whose job is to handle the market research of all products) o Example: CEO --> Marketing; CEO --> Human Resources October 4 -6 Notes Divisional o A design that groups each organizational function into a division. These divisions can correspond to either products or geographies o Unlike functional areas, divisions are more autonomous, each with its own top executive- often a vice president- and typically manage their own hiring, budgeting, and advertising o In organizations using divisional structures, departments represent the unique products, services, customers, or geographic locations the company is serving Each unique product or service the company is producing will have its own department o Advantages More agile Perform better in turbulent environments Employees are generalists (an employee how handles the event planning, market research, coordinate relations with agencies, and other responsibilities associated with a product) o Example: CEO --> Medical Devices; CEO --> Diabetic Drugs Auburn University is a mix of both- divisional because of each different college offering a slightly different service, but functional because of positions like VP of development Matrix Structure o A structure in which people and resources are grouped in two ways simultaneously by function and by project or product o Cross between functional and divisional Two Configurations: Mechanistic and Organic Structure The four building blocks of organizational structure often coexist- two types of organizational structures, depending on how the elements are arranged Mechanistic o Resemble a bureaucracy and are highly formalized and centralized o Job descriptions are pretty rigid o Normally follow both functional and divisional departmentalization o Traditional Unsuitable for innovativeness and limit individual autonomy and self- determination o Operate in stable environments o Maximizes efficiency and cost o Most organizations o Example: McDonalds Organic o Flexible and decentralized with low levels of formalization where communication lines are more fluid and flexible o Low levels of formalization o Communication lines are fluid and flexible o Employee job descriptions are broader o Related to higher levels of job satisfaction o Conducive to entrepreneurial behavior and innovativeness October 4 -6 Notes Organizational Change The movement of an organization from one form to another Organizational change can take many forms o Company structure o Strategy o Policies o Procedures o Technology o Culture Why do organizations change? o Workplace demographics Organizational change is often a response to changes in the environment EX: Baby Boomers nearing retirement age- how do we keep them? Preference in type of benefits may change Healthcare and pension costs increase Retirement may result in loss of workforce o Technology Sometimes change is motivated by rapid changes in technology EX: the music industry and video rental industry Also, higher education? Will classes ever be all online? o Globalization o Changes in market conditions Market changes may also create internal changes as companies struggle to adjust EX: changes in health consciousness affecting the fast food industry and tobacco industry o Growth Companies that are growing must change… or they will not grow into any type of success o Poor performance EX: Apple being dangerously close to bankruptcy- change occurred New management with new direction/vision Formed an alliance with Microsoft Cut unsuccessful projects What percentage of organization change efforts fail? 70% What are the primary reasons why organizational change fails? Employee resistance Active resistance- the most negative reaction to proposed change attempt o Defiant; not actively participating in the change Passive resistance- being disturbed by changes without necessarily voicing these opinions o Fail to play along; do not 'bad mouth' changes, but sit quietly and not participate in the change Compliance- going along with proposed changes with little enthusiasm o You do what you are o told with a bad attitude October 4 -6 Notes Enthusiastic support- defenders of the new way and those who actually encourage others to give support to the change effort Why people resist change Disrupted habits Personality Feelings of uncertainty Fear of failure Personal impact of change Prevalence of change Perceived loss of power Two other reasons o Exhaustion (self-control depletion) It takes self- control to be okay with change; but self-control can be depleted, leaving you exhausted o Cognitive dissonance An experience when individuals tend to become psychologically uncomfortable and are motivated to attempt to reduce this dissonance Inconsistency with what you think