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?
Organizational Behavior: Chapter 17 3
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.
Organizational Behavior: Chapter 17 4
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.
Organizational Behavior: Chapter 17 5
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.
Organizational Behavior: Chapter 17 6
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.
Organizational Behavior: Chapter 17 7
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.
Organizational Behavior: Chapter 17 8
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.
Organizational Behavior: Chapter 17 9
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.
Organizational Behavior: Chapter 17 10
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.
Organizational Behavior: Chapter 17 11
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.
Organizational Behavior: Chapter 17 12
Study Question 2: What are the basic attributes of organizations?
Organizational Behavior: Chapter 17 13
Study Question 2: What are the basic attributes 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.
Organizational Behavior: Chapter 17 14
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 15
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.
Organizational Behavior: Chapter 17 16
Study Question 2: What are the basic attributes of organizations?
Organizational Behavior: Chapter 17 17
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.
Organizational Behavior: Chapter 17 18
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 19
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 20
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 21
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 22
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 23
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.
Organizational Behavior: Chapter 17 24
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.
Organizational Behavior: Chapter 17 25
Study Question 2: What are the basic attributes of organizations? Deming’s 14 points for achieving total quality
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.
Organizational Behavior: Chapter 17 26
Study Question 2: What are the basic attributes of organizations? Deming’s 14 points for achieving total quality
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.
Organizational Behavior: Chapter 17 27
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 28
Study Question 2: What are the basic attributes of organizations?
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.
Organizational Behavior: Chapter 17 29
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.
Organizational Behavior: Chapter 17 30
Study Question 3: How is work organized and coordinated?
Organizational Behavior: Chapter 17 31
Study Question 3: How is work organized and coordinated?
Organizational Behavior: Chapter 17 32
Study Question 3: How is work organized and coordinated?
Organizational Behavior: Chapter 17 33
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.
Organizational Behavior: Chapter 17 34
Study Question 3: How is work organized and coordinated?
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.
Organizational Behavior: Chapter 17 35
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.
Organizational Behavior: Chapter 17 36
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.
Organizational Behavior: Chapter 17 37
Study Question 4: What are bureaucracies and what are the common structures?
Organizational Behavior: Chapter 17 38
Study Question 4: What are bureaucracies and what are the common structures?
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.
Organizational Behavior: Chapter 17 39
Study Question 4: What are bureaucracies and what are the common structures?
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.
Organizational Behavior: Chapter 17 40
Study Question 4: What are bureaucracies and what are the common structures?
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.
Organizational Behavior: Chapter 17 41
Study Question 4: What are bureaucracies and what are the common structures?
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.
Organizational Behavior: Chapter 17 42
Study Question 4: What are bureaucracies and what are the common structures?
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.
Organizational Behavior: Chapter 17 43
Study Question 4: What are bureaucracies and what are the common structures?
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.
Organizational Behavior: Chapter 17 44
COPYRIGHT
Copyright 2005 © John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.