Managing

Organizational
Structure
and Culture
chapter ten

Learning Objectives
1.
2.
3.

4.

5.

Identify the factors that influence managers choice of an

organizational structure.
Explain how managers group tasks into jobs that are
motivating and satisfying for employees.
Describe the types of organizational structures managers
can design, and explain why they choose one structure over
another.
Explain why managers must coordinate jobs, functions, and
divisions using the hierarchy of authority and integrating
mechanisms
List the four sources of organizational culture, and explain
why and how a companys culture can lead to competitive
advantage.
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Organizational Structure
Organizational Architecture
The organizational structure, control systems,
culture, and human resource management
systems that together determine how
efficiently and
effectively
organizational
resources are used.

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Designing Organizational Structure

Organizing
The process by which managers establish working
relationships among employees to achieve goals.

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Designing Organizational Structure

Organizational
Structure
formal system of task
and reporting
relationships that
coordinates and
motivates
organizational
members so they work
together to achieve
organizational goals.
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Factors Affecting Organizational

Structure

Figure 10.1

Designing Organizational Structure

Organizational design
The process by which managers create a specific
type of organizational structure and culture so
that a company can operate in the most efficient
and effective way

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Designing Organizational Structure

The way an organizations structure works
depends on the choices managers make
about:
1. How to group tasks into individual jobs
2. How to group jobs into functions and
divisions
3. How to allocate authority and coordinate
functions and divisions
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Grouping Tasks into Jobs:

Job Design
Job Design
The process by which managers decide how to
divide tasks into specific jobs.
The appropriate division of labor results in an
effective and efficient workforce.

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Job Design
Job Simplification
The process of reducing the tasks each worker
performs.

Job Enlargement
Increasing the number of different tasks in a given job
by changing the division of labor

Job Enrichment
Increasing the degree of responsibility a worker has
over a job
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Job Enrichment
1. Empowering workers to experiment to find
new or better ways of doing the job
2. Encouraging workers to develop new skills
3. Allowing workers to decide how to do the
work
4. Allowing workers to monitor and measure
their own performance

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The Job Characteristics Model

Figure 10.2

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Grouping Jobs into Functions

Functional Structure
An organizational
structure composed of
all the departments
that an organization
requires to produce its
goods or services.

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Functional Structure
Advantages
Encourages learning from others doing similar
jobs.
Easy for managers to monitor and evaluate
workers.
Allows managers to create the set of functions
they need in order to scan and monitor the
competitive environment

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Example A.C. Moore Arts & Crafts

A.C. Moore is organized with a functional
structure
Examples of divisions are Marketing &
Merchandising, Stores & Loss Prevention,
Store Operations, Merchandise
Administration, Real Estate, and Legal

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Functional Structure
Disadvantages
Difficult for departments to communicate with
others.
Preoccupation with own department and losing
sight of organizational goals.

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Divisional Structures
Divisional Structure
An organizational structure composed of separate
business units within which are the functions that
work together to produce a specific product for a
specific customer.
Product, market, geographic

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Product, Market, and Geographic

Structures

Figure 10.4
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Types of Divisional Structures

Product Structure
Managers place each distinct product line or
business in its own self-contained division
Divisional managers have the responsibility for
devising an appropriate business-level strategy to
allow the division to compete effectively in its
industry

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Product Structure
Allows functional managers to specialize in
one product area
Division managers become experts in their
area
Removes need for direct supervision of
division by corporate managers
Divisional management improves the use of
resources
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Types of Divisional Structures

Geographic Structure
Divisions are broken down by geographic location

Global geographic structure

Managers locate different divisions in each of the
world regions where the organization operates.
Generally, occurs when managers are
pursuing a multi-domestic strategy

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Types of Divisional Structures

Market Structure
Groups divisions according to the particular kinds
of customers they serve
Allows managers to be responsive to the needs of
their customers and act flexibly in making
decisions in response to customers changing
needs

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Matrix Design Structure

Matrix Structure
An organizational structure that simultaneously
groups people and resources by function and
product.
The structure is very flexible and can respond
rapidly to the need for change.
Each employee has two bosses

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Matrix Structure

Figure 10.6

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Product Team Design Structure

Product Team Structure
Does away with dual reporting relationships and
two-boss managers
Functional employees are permanently assigned
to a cross-functional team that is empowered to
bring a new or redesigned product to work

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Product Team Structure

Cross-functional team
A group of managers brought together from
different departments to perform organizational
tasks.

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Product Team Structure

Figure 10.6

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Allocating Authority
Authority
power to hold people accountable for their
actions and to make decisions concerning the use
of organizational resources.

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Allocating Authority
Line Manager
Someone in the direct
line or chain of
command who has
formal authority over
people and resources

Staff Manager
Managers who are
functional-area
specialists that give
advice to line
managers.

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Tall and Flat Organizations

Tall structures have many levels of authority
and narrow spans of control.
As hierarchy levels increase, communication gets
difficult creating delays in the time being taken to
implement decisions.
Communications can also become distorted as it
is repeated through the firm.
Can become expensive

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Tall Organizations

Figure 10.8

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Tall and Flat Organizations

Flat structures have fewer levels and wide
spans of control.
Structure results in quick communications but can
lead to overworked managers.

Figure 10.8

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Centralization and Decentralization

of Authority
Decentralizing authority
giving lower-level managers and non-managerial
employees the right to make important decisions
about how to use organizational resources

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Integrating Mechanisms

Figure 10.9

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Sources of an Organizations
Culture

Figure 10.10

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Employment Relationship
Human resource policies:
Can influence how hard employees will work to
achieve the organizations goals,
How attached they will be to it
Whether or not they will buy into its values and
norms

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Organizational Structure
In a centralized organization:
people have little autonomy
norms that focus on being cautious, obeying
authority, and respecting traditions emerge
predictability and stability are desired goals

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Organizational Structure
In a flat, decentralized structure:
people have more freedom to choose and control
their own activities
norms that focus on being creative and
courageous and taking risks appear
gives rise to a culture in which innovation and
flexibility are desired goals.

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Strong, Adaptive Cultures Versus

Weak, Inert Cultures
Adaptive cultures
values and norms help
an organization to
build momentum and
to grow and change as
needed to achieve its
goals and be
effective

Inert cultures
Those that lead to
values and norms that
fail to motivate or
inspire employees
Lead to stagnation and
often failure over time

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Video Case: Making Changes in New

Orleans Most Troubled Schools
How would you rate teaching according to the
five characteristics that determine how
motivating a job is?
Does establishing organizational culture in a
school present any different challenges than
establishing culture in other types of
organizations?

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