Organization, Teamwork, and Communication Topic 6 (Chapter 7)

Organizational Culture
A firm’s shared values, beliefs, traditions, philosophies, rules, and role models for behavior
• Formal culture
• Mission statement
• Codes of ethics
• Memos, manuals, and ceremonies
• Informal culture
• Dress codes and work habits
• Extracurricular activities and stories
• Discussions with co-workers
• Organizational culture helps ensure that all members of a company share values and suggests rules for how to behave and
deal with problems within the organization.
Developing Organizational Structure
Organizational structure
• The arrangement of positions within an organization
• Structure is developed when:
• Managers assign work tasks to specific individuals or groups
• Coordinate activities to reach the firm’s objectives
• Organizational Charts
• Visual display of the organization’s structure
Assigning Tasks
 Specialization
• Divides labor into small, specific tasks
• Assigns employees to do a single task
• Reasons to specialize:
• Efficiency
• Workers do not waste time shifting from one job to another
• Training is easier
• Overspecialization can have negative effects
 Departmentalization
• Groups jobs into working units called departments, units, groups, or divisions
• Common ways to departmentalize:
o Functional Departmentalization ~~ the grouping of jobs that perform similar functional activities, such as
finance, manufacturing, marketing, and human resources.
o Product Departmentalization ~~The organization of jobs in relation to the products of the firm
o Geographic Departmentalization ~~ the grouping of jobs according to geographic location, such as state,
rejoin, country, or continent.
o Customer Departmentalization ~~ the grouping of jobs around the needs of various types of customers.
Assigning Responsibility

Delegation of Authority

• Not only giving tasks to employees, but empowering them to do whatever is necessary to carry out those tasks

• Also gives Responsibility – obligation (duty), to employees to carry out assigned tasks satisfactorily and holds them
accountable for the proper execution of their assigned work.

• The principle of accountability means that employees who accept an assignment and the authority to carry it out
are answerable to a superior for the outcome.

Delegation of authority means not only giving tasks to employees, but also empowering them to make commitments, use
resources, and take whatever actions are necessary to carry out those tasks.

Delegation also gives a responsibility, or obligation, to employees to carry out assigned tasks satisfactorily and holds them
accountable for the proper execution of their assigned work. The principle of accountability means that employees who
accept an assignment and the authority to carry it out are answerable to a superior for the outcome.

Degree of Centralization

• Extent to which authority is delegated throughout an organization

• Centralized organizations

• Authority is concentrated at the top; little decision-making delegated to lower levels

• Decentralized organizations

• Decision-making authority delegated as far down the chain of command as possible

Span of Management

• The number of subordinates who report to a particular manager

• A wide span of management exists when a manager directly supervises a very large number of employees

• A narrow span of management exists when a manager directly supervises only a few subordinates

How many subordinates should a manager manage? There is no simple answer.

Span of management (also called span of control) refers to the number of subordinates who report to a particular manager. A
wide span of management or control exists when a manager directly supervises a very large number of employees. A narrow
span of management or control exists when a manager directly supervises only a few subordinates.

Organizational Layers

• The levels of management in an organization

• A company with many layers is considered tall ---Span of management is narrow

• A company with few layers is considered flat ---Span of management is wide

Forms of Organizational Structure

Line Structure

• Simplest organizational structure

• Direct lines of authority extend from top management to employees at the lowest levels

Line-and-Staff Structure
 • Traditional line relationship between superiors and subordinates

• Specialized managers assist line managers

Multidivisional Structure

• Organizes departments into larger groups called divisions

• Permits delegation of decision-making authority

• Inevitably creates work duplication

Matrix Structure

• Sets up teams from different departments; creates two or more intersecting lines of authority

• Provides flexibility, enhanced cooperation, creativity

• Generally expensive and complex

Forms of Organizational Structure (EXPLAINATION)

Along with assigning tasks and the responsibility for carrying them out, managers must consider how to structure their authority relationships
—that is, what structure the organization itself will have and how it will appear on the organizational chart. Common forms of organization
include line structure, line-and-staff structure, multidivisional structure, and matrix structure.

The simplest organizational structure, line structure, has direct lines of authority that extend from the top manager to employees at the
lowest level of the organization.

The line-and-staff structure has a traditional line relationship between superiors and subordinates, and specialized managers—called staff
managers—are available to assist line managers. Line managers can focus on their area of expertise in the operation of the business, while
staff managers provide advice and support to line departments on specialized matters such as finance, engineering, human resources, and the
law. Staff managers do not have direct authority over line managers or over the line manager’s subordinates, but they do have direct authority
over subordinates in their own departments.

As companies grow and diversify, they may need to restructure, or change the basic structure of an organization. Growing firms tend to
restructure into the divisionalized form. A multidivisional structure organizes departments into larger groups called divisions. Multidivisional
structures permit delegation of decision-making authority, allowing divisional and department managers to specialize. They allow those closest
to the action to make the decisions that will affect them. However, the divisional structure inevitably creates work duplication, which makes it
more difficult to realize the economies of scale that result from grouping functions together.

Another structure that attempts to address issues that arise with growth, diversification, productivity, and competitiveness, is the matrix. A
matrix structure, also called a project management structure, sets up teams from different departments, thereby creating two or more
intersecting lines of authority. Matrix structures provide flexibility, enhanced cooperation, and creativity, and they enable the company to
respond quickly to changes in the environment by giving special attention to specific projects or problems. However, they are generally
expensive and quite complex, and employees may be confused as to whose authority has priority—the project manager’s or the immediate
supervisor’s.