Ch17

Organizational Organizational Behavior, 9/EBehavior, 9/E

Schermerhorn, Hunt, and Schermerhorn, Hunt, and OsbornOsborn

Prepared byMichael K. McCuddyValparaiso University

John Wiley & Sons, Inc.

Organizational Behavior: Chapter 17 2

Chapter 17 Study QuestionsWhat is strategy and how is it linked to

different types of organizational goals?What are the basic attributes of

organizations?How is work organized and coordinated?What are bureaucracies and what are the

common structures?


Study Question 1: What is strategy and how is it linked to different types of organizational goals?Strategy.

– The process of positioning the organization in the competitive environment and implementing actions to compete successfully.

– A pattern in a stream of decisions.• Choices regarding goals and the way the firm

organizes to accomplish them.


Study Question 1: What is strategy and how is it linked to different types of organizational goals?

Elements of conventional strategy decisions.– Choosing the types of contributions the firm

intends to make to society.– Precisely whom the firm will serve.– Exactly what the firm will provide to others.


Study Question 1: What is strategy and how is it linked to different types of organizational goals? Societal goals.

– Reflect an organization’s intended contributions to the broader society.

– Enable organizations to gain legitimacy, a social right to operate, and more discretion for their non-societal goals and operating practices.

– Enable organizations to make legitimate claims over resources, individuals, markets, and products.


Study Question 1: What is strategy and how is it linked to different types of organizational goals?Societal contributions and mission

statements.– A firm’s societal contribution is often part of

its mission statement.• A written statement of organizational purpose.

– A good mission statement identifies whom the firm will serve and how it will go about accomplishing its societal purpose.


Study Question 1: What is strategy and how is it linked to different types of organizational goals?

Output goals.– Define the type of business the organization is

pursuing.

– Provide some substance to the more general aspects of mission statements.


Study Question 1: What is strategy and how is it linked to different types of organizational goals? Systems goals.

– Concerned with the conditions within the organization that are expected to increase the organization’s survival potential.

– Typical systems goals include growth, productivity, stability, harmony, flexibility, prestige, and human resource maintenance.

– Systems goals must often be balanced against one another.


Study Question 1: What is strategy and how is it linked to different types of organizational goals?Well-defined systems goals can:

– Focus managers’ attention on what needs to be done.

– Provide flexibility in devising ways to meet important targets.

– Be used to balance the demands, constraints, and opportunities facing the firm.

– Form a basis for dividing the work of the firm.


Study Question 2: What are the basic attributes of organizations?

Successful organizations develop a structure consistent with the pattern of goals established by senior management.

The formal structure shows the planned configuration of positions, job duties, and the lines of authority among different parts of the organization.

The formal structure of the firm is also known as the division of labor.


Study Question 2: What are the basic attributes of organizations? Vertical specialization.

– A hierarchical division of labor that distributes formal authority and establishes where and how critical decisions are to be made.

– Creates a hierarchy of authority.• An arrangement of work positions in order of increasing

authority.

– Organization charts are diagrams that depict the formal structures of organizations.





Chain of command.– A listing of who reports to whom up and down the

organization. Unity of command.

– Each person has only one boss and each unit one leader.

Span of control.– The number individuals reporting to a supervisor.



Line units.– Work groups that conduct the major business

of the organization.Staff units.

– Work groups that assist the line units by providing specialized expertise and services to the organization.


Study Question 2: What are the basic attributes of organizations? Internal versus external units.

– Internal line units.• Transform raw materials and information into products and

services.– External line units.

• Maintain outside linkages.– Internal staff units.

• Assist the line units in performing their functions.– External staff units.

• Assist the line units with outside linkages and act to buffer internal operations.




Study Question 2: What are the basic attributes of organizations? Some firms are outsourcing many of their staff

functions. Use of information technology to streamline

operations and reduce staff. Most organizations use a variety of means to

specialize the vertical division of labor. Best pattern of vertical specialization depends on

environment, size, technology, and goals.



Control.– The set of mechanisms used to keep actions or

outputs within predetermined limits.

– Deals with:• Setting standards.• Measuring results against standards.• Instituting corrective action.



Output controls.– Focus on desired targets and allow managers

to use their own methods to reach defined targets.

– Part of overall method of managing by exception.

– Promote flexibility and creativity.



Process controls.– Specify the manner in which tasks are

accomplished.

– Types of process controls.• Policies, procedures, and rules.• Formalization and standardization.• Total quality management controls.



Policies, procedures, and rules.– Policies.

• Guidelines for action that outline important objectives and broadly indicate how activities are to be carried out.

– Procedures.• Identify the best method for performing a task,

show which aspects of a task are most important, or outline how an individual is to be rewarded.



Policies, procedures, and rules (cont.).– Rules.

• Describe in detail how a task or a series of tasks is to be performed, or indicate what cannot be done.

– Policies, procedures, and rules are often used as substitutes for direct managerial supervision.


Study Question 2: What are the basic attributes of organizations?Formalization.

– The written documentation of policies, procedures, and rules to guide behavior and decision making.

Standardization.– The degree to which the range of allowable

actions in a job or series of jobs is limited so that uniform actions occur.


Study Question 2: What are the basic attributes of organizations? Deming’s 14 points for achieving total quality

management.– Create a consistency of purpose in the company to

innovate; put resources into research and education, and into maintaining equipment and new production aids.

– Learn a new philosophy of quality to improve every system.

– Require statistical evidence of process control and eliminate financial controls on production.



management (cont.).– Require statistical evidence of control in purchasing

parts.– Use statistical methods to isolate the sources of trouble.– Institute modern on-the-job training.– Improve supervision to develop inspired leaders.– Drive out fear and instill learning.– Break down barriers between departments.



management (cont.).– Eliminate numerical goals and slogans.– Constantly revamp work methods.– Institute massive training programs for employees in

statistical methods.– Retrain people in new skills.– Create a structure that will push, every day, on the

above 13 points.



Centralization and decentralization.– Centralization.

• Degree to which the authority to make decisions is restricted to higher levels of management.

– Decentralization.• Degree to which the authority to make decisions is

given to lower levels in an organization’s hierarchy.



Benefits of decentralization.– Higher subordinate satisfaction.– Quicker response to a series of unrelated

problems.– Assists in on-the-job training of subordinates

for higher-level positions– Encourages participation in decision making.


Study Question 3: How is work organized and coordinated?Horizontal specialization.

– A division of labor that establishes specific work units or groups within an organization.

– Often referred to as departmentation.– Whenever managers divide tasks and group

similar types of skills and resources together, they must also be concerned with coordination.


Study Question 3: How is work organized and coordinated?






Study Question 3: How is work organized and coordinated?Coordination.

– The set of mechanisms that an organization uses to link the actions of its units into a consistent pattern.

– Within a unit, much of the coordination is handled by its manager.

– Smaller organizations rely on management hierarchy for coordination.

– As the organization grows, more efficient and effective methods of coordination are required.



Personal methods of coordination.– Produce synergy by promoting dialogue, discussion,

innovation, creativity, and learning, both within and across units.

– Common personal methods of coordination are direct contact between and among organizational members and committee memberships.

– Mix of personal coordination methods should be tailored to subordinates, skills, abilities, and experiences.


Study Question 3: How is work organized and coordinated? Impersonal methods of coordination.

– Produce synergy by stressing consistency and standardization so that individual pieces fit together.

– Often are refinements and extensions of process controls.

– Historical use of specialized departments to coordinate across units.

– Contemporary use of matrix departmentation and management information systems for coordination.


Study Question 4: What are bureaucracies and what are the common structures?

Bureaucracy.– An ideal form of organization, the

characteristics of which were defined by the German sociologist Max Weber.

– Relies on a division of labor, hierarchical control, promotion by merit with career opportunities for employees, and administration by rule.





Mechanistic type of bureaucracy (machine bureaucracy).– Emphasizes vertical specialization and control.– Stresses rules, policies, and procedures;

specifies techniques for decision making; and use well-documented control systems.

– Often used with a low cost leader strategy.



Benefits of the mechanistic type.– Efficiency.

Limitations of the mechanistic type.– Employees dislike rigid designs, which makes work

motivation problematic.– Unions may further solidify rigid designs.– Key employees may leave.– Hinders organization’s capacity to adjust to subtle

environmental changes or new technologies.



Organic type of bureaucracy (professional bureaucracy).– Horizontal specialization.

– Procedures are minimal, and those that do exist are not highly formalized.

– Used to pursue strategies that emphasize product quality, quick response to customers, or innovation.



Benefits of the organic type.– Good for problem solving and serving individual

customer needs.– Centralized direction by senior management is less

intense.– Good at detecting external changes and adjusting to

new technologies. Limitations of the organic type.

– Less efficient than mechanistic type.– Restricted capacity to respond to central management

direction.



Common types of hybrid structures.– Divisional firm.

• Composed of quasi-independent divisions so that different divisions can be more or less organic or mechanistic.

– Conglomerate.• A single corporation that contains a number of

unrelated businesses.



The conglomerate simultaneously illustrates three key points that will be the focus of Chapter 18.– All structures are combinations of the basic

elements.– There is no one best structure.– The firm does not stand alone but is part of a

larger network of firms that compete against other networks.


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