Organization Theory and Design 3rd Edition Solution
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CHAPTER FOUR
FUNDAMENTALS OF
ORGANIZATION STRUCTURE
Purpose of This Chapter
This chapter
introduces basic concepts of organization structure. Definitions of
organizational structure and structure can help organizations achieve their
goals are discussed. Strategies for grouping organizational activities into
functional, divisional, matrix, horizontal, or hybrid structures are shown.
Symptoms of misalignment are discussed. Some of the topics covered in this
chapter are illustrated in the GM España case.
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A
LOOK INSIDE
Opel
España
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Opel España is the
Spanish subsidiary of the global auto giant General Motors. The increasingly
consumer expectation as well as demanding business environment is leading the
car industry to adopt various new production models to fit individual needs
and high quality at reasonable prices. As a result, Opel España has spent
considerable time and effort tailoring its physical plant, equipment,
organizational structure and management systems to meet these challenges and
to allow continued growth and profitability. Its organizational design is
centered around teamwork practices designed to build empowerment, involvement
and motivation of employees, from top management to the shop floor. This
teamwork approach extends into the manufacturing process.
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Organization Structure
The definition of
organization structure includes three key components pertaining to both
vertical and horizontal aspects of organizing.
1.
It designates formal
reporting relationships, including the number of levels in the hierarchy and
the span of control of managers and supervisors;
2.
it identifies the
grouping together of individuals into departments and of departments into the
total organization;
3.
it includes the design
of systems to ensure effective communication, coordination, and integration of
effort across departments.
The first two elements
are the structural framework, which include the vertical hierarchy. The third
element refers to the pattern of interactions among organizational employees.
Organization structure represented visually in organization
charts
The concept of an
organization chart, showing what positions exist, how they are grouped and who
reports to whom, has been around for centuries. It is the visual representation
of underlying activities and processes.
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COUNTERPOINT
4.1
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The purpose of an
organization chart is to provide a common frame of reference that, in
general, asserts and reinforces a hierarchical relationship of domination
between top management, middle management and workers at the base. The chart
is not only a technical guideline to encourage people to work together but
powerful political symbol whose acceptance implied deference to its demands.
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COUNTERPOINT
4.2
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Decentralized
structures can improve organizational flexibility and productivity.
Employee’s experience of this type of structure, however, may be mixed.
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Information-Processing Perspective on Structure
An emphasis on control
is associated with specialized tasks, a hierarchy of authority, rules and
regulations, formal reporting systems, few teams or task forces and centralized
decision making, which means problems and decisions are funnelled to top levels
of the hierarchy for resolution. An emphasis on learning is associated with
shared tasks, a relaxed hierarchy, few rules, face-to-face communication, many
teams and task forces and informal, decentralized decision making, which means
decision-making authority is pushed down to lower organizational levels.
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BOOKMARK
4
The
Future of Work
by Thomas W. Malone
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Malone suggests in
his book that organizations are experiencing tremendous change. He says,
highly centralized vertical hierarchies will essentially be a thing of the past
as organizations move to flexible decentralized forms of organizing based on
horizontal work processes. Malone also listed a number of key points about
the future of work. For example, information technology is the key driver of
the transformation, managers will move from command-and-control to
coordinate-and-cultivate, and every organization needs standards.
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COUNTERPOINT
4.3
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The division of
labour is associated with control in the name of efficiency, and not
necessarily with the delivery of enhanced efficiency or effectiveness. Highly
centralized vertical hierarchies are likely to produce delayed decisions that
are based on a distance and limited understanding of the specific
circumstances at a lower level.
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Vertical Information Linkages
Linkage is defined as
the extent of communication and coordination among organizational
elements. Vertical linkages are used to coordinate activities between the top and bottom of
an organization and are designed primarily for control of the organization.
Hierarchical Referral: This vertical device is illustrated by the vertical lines in
Exhibit 4.1. The lines of the organization chart act both up and down the chain
as the communication channel.
Rules and Plans: For repetitious problems and decisions, a rule or procedure can
be established so employees know how to respond without communicating on each
separate issue. Rules provide a standard information course enabling employees
to be coordinated without actually communicating about every task. A plan also
provides standing information for employees. The budget is a good example.
Vertical information systems: This strategy to increase vertical information capacity
includes periodic reports, written information and computer-based
communications distributed to managers.
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IN
PRACTICE
Oracle
Corporation
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Larry Ellion,
co-founder of Oracle and CEO for over a quarter-century, strongly believes in
tight vertical control. Although many managers are not happy with the
stronger top-down control, Ellison and other top managers have continued to
focus on the use of vertical information system. The company’s new
super-suite of software applications that combines the best features of
products from Oracle is, however, suffered lengthy delays.
Point
to Discuss: while the top-down
control structure has its advantages, students are suggested to use this
example to list several possible underline issues inherent in complete
vertical structure. students can also refer to Counterpoint 4.3 for their
discussion.
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Horizontal Information Linkages
Horizontal
communication overcomes barriers between departments and provides opportunities
for coordination among employees to achieve unity of effort and organizational
objectives. Horizontal linkage refers to the amount of communication and coordination
horizontally across organizational departments. Horizontal linkage mechanisms
often are not drawn on the organization chart, but they invariably form some
elements of organization structure.
Information systems: Cross-functional information systems enable employees to
routinely exchange information. It is a significant method of providing
horizontal linkage in contemporary organizations.
Direct contact: Higher level horizontal linkage is direct contact between
managers or employees affected by a problem. One way to promote direct contact
is to create a special liaison role. A liaison person is located in one
department but has the responsibility for communicating and achieving
coordination with another department. Another approach is to locate people
close together so they will have more direct contact on a regular basis.
Task forces:
it is a temporary committee composed of representatives from each department
affected by a problem, the group links several departments to solve common
problems. Take forces can be an effective horizontal linkage device for
temporary issues, and it is often disbanded after tasks are accomplished.
Full-time integrator: Usually with a title such as product manager, project manager,
or brand manager, this full-time position outside the affected departments is
created to achieve coordination between two or more departments. The integrator
does not have formal authority over team members (because that rests with
managers of the functional departments), but nevertheless the integrator has
responsibility for the entire product (or project or brand).
Teams: project teams tend
to be the strongest horizontal linkage mechanism. Teams are permanent task
forces and are often used in conjunction with a full-time integrator. A virtual team is made up of organizationally or
geographically dispersed members who are linked through advanced information
and communications technologies.
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