Study Guide to Go

Study Guide to Go

Chapter 7: Designing Effective Organizations

Chapter Outlines

What Is an Organization?
Common Characteristics of Organizations
Organization Charts
Organizational Effectiveness
Contingency Design
The Burns and Stalker Model
Contingency Design Alternatives
Effective Delegation
The Advantages of Delegation
Barriers to Delegation
The Changing Shape of Organizations

Hourglass Organizations
Cluster Organizations
Virtual Organizations
Organizational Cultures

Characteristics of Organizational Cultures
Forms and Consequences of Organizational Cultures
The Organizational Socialization Process
Strengthening Organizational Cultures

Glossary

organizingcreating a coordinated authority and task structure.
organizationa cooperative and coordinated social system of two or more people with a common purpose.
authoritythe right to direct the actions of others.
organization chartvisual display of organizations positions and lines of authority.
organizational effectivenessbeing effective, efficient, satisfying, adaptive and developing, and ultimately surviving.
contingency designfitting the organization to its environment.
mechanistic organizationsrigid bureaucracies.
organic organizationsflexible, adaptive organizational structures.
departmentalizationgrouping related jobs or processes into major organizational subunits.
span of controlnumber of people who report directly to a given manager.
centralizationthe retention of decision-making authority by top management.
decentralizationmanagement shares decision-making authority with lower-level employees.
delegationassigning various degrees of decision-making authority to lower-level employees.
hourglass organizationa three-layer structure with a constricted middle layer.
cluster organizationcollaborative structure in which teams are the primary unit.
virtual organizationsInternet-linked networks of value-adding subcontractors.
organizational cultureshared values, beliefs, and language that create a common identity and sense of community.
organizational valuesshared beliefs about what the organization stands for.
organizational socializationthe process of transforming outsiders into accepted insiders.

Learning Objective Summary

Learning Objective 1: Identify and describe four characteristics common to all organizations, and explain the time dimension of organizational effectiveness.

• Whatever their purpose, all organizations must have four characteristics to exist:

- Coordination of effort

- Common goal or purpose

- Division of labor

- Hierarchy of authority

• As there is no one criterion for organizational effectiveness, both for-profit and non-profit organizations must satisfy different effectiveness criteria in the near, intermediate, and distant future.

• An effective organization should:

- Be effective, efficient, and satisfying in the near term

- Be adaptive and developing in the intermediate term

- Ultimately survive in the long term

Learning Objective 2: Explain the concept of contingency organization design, distinguish between mechanistic and organic organizations, and identify the basic departmentalization formats.

• Contingency design structures the organization to fit situational demands.

• Contingency advocates contend that there is no one best organizational setup for all situations.

• Diagnosing the degree of environmental uncertainty is an important first step in contingency design.

• Burns and Stalker discovered that:

- Mechanistic (rigid and bureaucratic) organizations are effective when the environment is relatively stable

- Organic (flexible and adaptable) organizations are best when unstable conditions prevail

• There are five basic departmentalization formats, usually combined in various ways:

- Functional (the most common approach)

- Product-service

- Geographic location

- Customer classification

- Work-flow process

Learning Objective 3: Define the term delegation, and list at least five common barriers to delegation.

• Delegation of authority, although generally resisted for a variety of reasons, is crucial to decentralization.

• Effective delegation permits managers to tackle higher priority duties while helping to train and develop lower-level managers.

• Delegation varies in degree but never means abdicating primary responsibility.

• Successful delegation requires plenty of initiative from lower-level managers.

• Barriers to delegation include:

- Doing everything yourself

- Lack of confidence and trust in employees

- Low self-confidence

- Fear of being called lazy

- Vague job definition

- Fear of competition from those below

- Not wanting to risk depending on others

- Lack of early warning signs of problems with delegated duties

- Poor role models who do not delegate

Learning Objective 4: Explain how the traditional pyramid organization is being

reshaped.

• Many factors, with global competition leading the way, are forcing management to reshape the traditional pyramid bureaucracy.

• These new organizations are characterized by fewer layers, extensive use of teams, and manageably small subunits.

• Three emerging organizational configurations are the hourglass organization, the cluster organization, and virtual organizations. Each has its own potentials and pitfalls.

Learning Objective 5: Describe at least three characteristics of organizational cultures, and explain the cultural significance of stories.

• Organizational culture is the “social glue” that binds people together through shared symbols, language, stories, and practices.

• Organizational cultures can commonly be characterized as:

- Collective

- Emotionally charged

- Historically based

- Inherently symbolic

- Dynamic

- Inherently fuzzy (or ambiguous)

• Diverse outsiders are transformed into accepted insiders through the process of organizational socialization.

• Orientations and stories are powerful and lasting socialization techniques. Stories have been called social roadmaps that guide employees in certain directions.

Test Preppers

Test Prepper 7.1

True or False?

_____ 1. By definition, it takes at least four people to make an organization.

_____ 2. Coordination of effort, common purpose, division of labor, and hierarchy of authority are all necessary before an organization is said to exist.

_____ 3. Horizontal specialization and vertical hierarchy are the two basic dimensions of an organization chart.

_____ 4. Profitability is the only acceptable criterion of organizational effectiveness.

Multiple Choice

_____ 5. As defined, how many people does it take to qualify as an “organization”?

a. Two or more

b. One or more

c. More than fifty

d. More than twenty

e. At least six

_____ 6. _____ permits each organization member to become more proficient by repeatedly doing the same specialized task.

a. Division of labor

b. Hierarchy of authority

c. Span of control

d. A common goal or purpose

e. Coordination of effort

_____ 7. A diagram of an organization’s official positions

and formal lines of authority refers to a(n)

a. fishbone diagram.

b. organization chart.

c. flow chart.

d. position chart.

e. pattern diagram.

_____ 8. If an organization is to be effective in the intermediate term, which of these criteria must be satisfied?

a. Large and growing

b. Efficient

c. Satisfying for employees and customers

d. Adaptive and developing

e. Capable of survival

Test Prepper 7.2

True or False?

_____ 1. Part of the contingency design process is determining the degree of environmental uncertainty.

_____ 2. Mechanistic organizations are quite rigid in structure.

_____ 3. According to Burns and Stalker’s research, organic organizations tend to be more effective than mechanistic ones, whatever the situation.

_____ 4. Strategic departments are one of the five basic types of departmentalization.

_____ 5. Narrow spans of control generally create flat organizations.

_____ 6. An organization is centralized if top management makes all key decisions.

Multiple Choice

_____ 7. What is a key question in contingency design?

a. How can we make our organization a closed system?

b. Which structure will eliminate major uncertainties?

c. What structural combination is situationally appropriate?

d. Will our present structure help us formulate a good strategy?

e. What is the single best organization design?

_____ 8. _____ organizations such as W.L. Gore tend to be quite flexible in structure and adaptive to change.

a. Segmented

b. Organic

c. Centralized

d. Mechanistic

e. Matrix

_____ 9. “Horizontal organizations” have _____ departments.

a. geographic location

b. customer classification

c. work-flow process

d. product-service

e. line and staff

_____ 10. Which statement about spans of control is true?

a. Spans of control are irrelevant today.

b. Today, narrower spans are better.

c. Researchers say a span of no more than seven is best.

d. It is difficult to directly manage more than three people.

e. There is no ideal span of control.

_____ 11. _____ involves the granting of decision-making authority to lower-level employees.

a. Centralization

b. Differentiation

c. Contingency design

d. Decentralization

e. Departmentalization

Test Prepper 7.3

True or False?

_____ 1. Delegation unavoidably is an all-or-nothing proposition.

_____ 2. Fear of being called lazy is a barrier to delegation.

_____ 3. Managerial follow-up is unnecessary if delegation is done right.

Multiple Choice

_____ 4. Delegation involves authority being

a. replaced with responsibility.

b. weakened.

c. eliminated.

d. shared with lower levels.

e. greatly increased.

_____ 5. Which of these is helped by delegation?

a. Integrating

b. Departmentalization

c. Training and development of managers

d. Financial control

e. Strategic planning

_____ 6. All of the following are typical barriers to delegation except

a. lack of trust in subordinates.

b. fear of being called lazy.

c. fear of competition from subordinates.

d. vague job definition.

e. working for a manager who likes to delegate.

Test Prepper 7.4

True or False?

_____ 1. One of the three current organizational trends involves integrating small units into big units.

_____ 2. In hourglass organizations, there are no middle managers.

_____ 3. Internet-linked networks of value-adding subcontractors qualify as virtual organizations.

Multiple Choice

_____ 4. A clear structural trend in modern organizations is

a. more middle managers.

b. more managers per employee.

c. narrow spans of control.

d. less teamwork.

e. fewer layers.

_____ 5. You meet a business owner sitting next to you on a plane and she says her organization is structured around teams. Which label should you affix to her organization?

a. Virtual

b. Matrix

c. Hourglass

d. Cluster

e. Lattice

_____ 6. In virtual organizations, what has become a factor of overriding importance?

a. Quality

b. Speed

c. Organizational size

d. Financial structure

e. Culture

Test Prepper 7.5

True or False?

_____ 1. Organizational culture is the “social glue” that binds an organization’s members together.

_____ 2. Among the common characteristics of organizational cultures are being collective, emotionally charged, and future focused.

_____ 3. Actual behavior is what really counts in organizational culture, not stories of past situations.

_____ 4. Orientation is the first step in the socialization process.

Multiple Choice

_____ 5. The label that best matches the term organizational values is

a. shared beliefs.

b. hierarchy.

c. instrumental values.

d. informal authority.

e. official policy.

_____ 6. According to a study of accounting firms, which type of organizational culture was associated with lower turnover rates?

a. Professional

b. Formally structured

c. Ethical

d. People-friendly

e. Skill-oriented

_____ 7. Which process transforms organizational outsiders into accepted insiders?

a. Recruitment

b. Organizational socialization

c. Self-management

d. Behavior modification

e. Staffing

_____ 8. _____ have been called “social roadmaps” in organizational socialization.

a. Values

b. Regulations

c. Stories

d. Policies

e. Norms

_____ 9. Frank, the owner of a printing company, recently noticed a lack of communication between the graphic designers and the marketing people. This problem represents which symptom of a weak organizational culture?

a. Ingrown subcultures

b. Fragmentation/inconsistency

c. Inward focus

d. Morale problems

e. Groupthink

Test Prepper Answer Key

7.1

1. F 2. T 3. T 4. F 5. a 6. a 7. b 8. d

7.2

1. T 2. T 3. F 4. F 5. F 6. T 7. c 8. b 9. c 10. e 11. d

7.3

1. F 2. T 3. F 4. d 5. c 6. e

7.4

1. F 2. F 3. T 4. e 5. d 6. b

7.5

1. T 2. F 3. F 4. T 5. a 6. b 7. b 8. c 9. a