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LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Define organizational design and describe its four objectives
2. Distinguish between mechanistic and organic organizational structures
3. Discuss the influence that contingency factorsorganizational strategy, environment,
size, age, and technologyhave on organizational design
4. Describe the characteristics, advantages, and disadvantages of functional, divisional,
matrix, team, and network structural designs
5. Define organizational culture and describe the ways that culture is manifested
6. Explain the role of managers and employees in creating culture and making a culture
effective
7. Define change and identify the kinds of change that can occur in an organization
8. Explain the steps managers can follow to implement planned change
9. Identify the organizational qualities that promote change
10. Explain why people resist change and what managers can do to overcome that
resistance
11. Discuss why change efforts fail
12. Explain the purpose of an organizational development program
KEY TERMS
change
change agent
continuous-process production
divisional structure
evolutionary change
flexible manufacturing systems (FMS)
force-field analysis
functional structure
large batch technology
management by reaction
mass production technology
matrix structure
mechanistic structure
mutual trust
network structure
organic structure
organizational design
organizational development (OD)
organizational learning
organizational life cycle
planned change
revolutionary change
small batch technology
social media
subculture
team structure
technology
three-step approach
unit production technology
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CHAPTER OUTLINE
I. INTRODUCTION
II. DESIGNING ORGANIZATIONAL STRUCTURES
A. Organizational Design Defined
III. Objectives of Organizational Design
A. Responding to Change
B. Integrating New Elements
C. Coordinating the Components
D. Encouraging Flexibility
E. Range of Organizational Design Outcomes
IV. Mechanistic Organizational Structures
A. Organic Organizational Structures
V. CONTINGENCY FACTORS AFFECTING ORGANIZATIONAL DESIGN
A. Strategy
B. Environment
C. Size of the Organization
D. Age of the Organization
1. Birth Stage
2. Youth Stage
3. Midlife Stage
4. Maturity Stage
E. Technology
VI. STRUCTURAL OPTIONS IN ORGANIZATIONAL DESIGN
A. Functional Structure
1. Advantages of the Functional Structure
2. Disadvantages of the Functional Structure
B. Divisional Structure
1. Advantages of the Divisional Structure
2. Disadvantages of the Divisional Structure
C. Matrix Structure
1. Advantages of the Matrix Structure
2. Disadvantages of the Matrix Structure
D. Team Structure
1. Advantages of the Team Structure
2. Disadvantages of the Team Structure
E. Network Structure
1. Advantages of the Network Structure
2. Disadvantages of the Network Structure
VII. ORGANIZATIONAL CULTURE
A. Organizational Culture Defined
B. Factors Shaping Culture
1. Key Organizational Processes
2. Dominant Coalition
3. Employees and Other Tangible Assets
4. Formal Organizational Arrangements
5. Social System
6. Technology
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7. External Environment
C. MANIFESTATIONS OF CULTURE
D. Statements of Principle
E. Stories
F. Slogans
G. Heroes
H. Ceremonies
I. Symbols
J. Climate
K. Physical Environment
VIII.
CREATION OF CULTURE
A. Role of Managers
B. Role of Employees
C. Factors Contributing to the Effectiveness of Culture
1. Coherence
2. Pervasiveness and Depth
3. Adaptability to the External Environment
IX. NATURE OF CHANGE
A. Sources of Change
1. External Sources
2. Internal Sources
B. Types of Change
1. Strategic Change
2. Structural Change
3. Process-Oriented Change
4. People-Centered Change
C. Rates of Change
D. Management and Change
E. HOW TO MANAGE CHANGE
F. Need for Change: Diagnosing and Predicting it
1. Phase 1: Creativity
2. Phase 2: Direction
3. Phase 3: Delegation
4. Phase 4: Coordination
5. Phase 5: Collaboration
X. Steps in Planned Change
A. Recognizing the Need for Change
B. Developing Goals
C. Selecting a Change Agent
D. Diagnosing the Problem
E. Selecting the Intervention Method
F. Developing a Plan
G. Planning for Implementation
H. Implementing the Plan
I. Following Up and Evaluating
XI. QUALITIES PROMOTING CHANGE
A. Mutual Trust
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B. Organizational Learning
C. Adaptability
XII. IMPLEMENTATION OF CHANGE
A. Resistance to Change
1. Sources of Resistance
2. Techniques for Overcoming Resistance
XIII. Why Change Efforts Fail
A. Causes
1. Faulty Thinking
2. Inadequate Process
3. Lack of Resources
4. Lack of Acceptance and Commitment
5. Lack of Time and Poor Timing
6. A Resistant Culture
B. Methods of Effecting Change
1. Three-Step Approach
2. Force-Field Analysis
XIV. ORGANIZATIONAL DEVELOPMENT
A. Purposes of Organizational Development
B. Strategies of Organizational Development
C. Evaluating the Effectiveness of Organizational Development
Enrichment Vignette
Is resistance to change always a bad thing? In fact, could there be merit in encouraging
employees and others to resist? Consider the many corporations that were dominant in
American business 20 years ago but have since gone out of existence, been taken over by
another organization, or are but a fraction of their size at one time: often the reason was not
because they could not implement change but rather because they DID change. The problem
was that the changes were not for the better. In some cases, there may have been a need for
change but not for the change that was selected.
When top management proposes change, lower-level managers and employees may lack the
big picture that stimulated the proposal, but their nearness to the frontlines may enable them to
see pitfalls that could not have been envisioned in that big picture. However, if top management
uses all the means at its disposal to persuade and involve employees in the proposed change, it
is possible that some may not ask the questions that need to be considered in order to prevent
the organization from creating a disaster for itself.
Employees do not automatically reject change. For example, if the change were to simply
involve an increase in pay without any increase in work or negative effects on benefits, working
conditions, or job security, few would resist the change. Employees will look at the size, timing,
and probability of the benefits of the proposed change and compare that analysis to the size,
timing, and probability of the costs or risks involved in the change. Their focus may be primarily
personal rather than organizational but if they are encouraged to raise their concerns, perhaps it
may be discovered by top management that the real need is not so much to overcome
employee resistance to change as it is for those at the top to modify their proposed change.
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LECTURE OUTLINE
The outline below (the lecture outline) is referenced to the above chapter outline and contains
supplementary material to enhance your discussion of the chapter, but it is organized somewhat
differently. As a result, you have a choice: by using what is in the outline below, (1) you may
present the above chapter outline material in a different sequence, or (2) you may use the
chapter outline references in the outline below to present the lecture outline material in the
same sequence as the chapter outline.
I.
II.
B.
C.
D.
E.
III.
Strategy
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1.
2.
B.
Environment
1.
2.
3.
4.
C.
2.
3.
Technology
1.
2.
3.
4.
IV.
E.
D.
Functional Structure
1.
2.
3.
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4.
5.
6.
B.
Divisional Structure
1.
2.
3.
4.
5.
C.
3.
4.
5.
Team Structure
1.
2.
3.
4.
5.
6.
7.
8.
E.
Matrix Structure
1.
2.
D.
The newest approach with the most potential is the team structure.
Separate functions are grouped within this design.
Team structures are much flatter than traditional organizational patterns.
Decision making is more decentralized and not as vertical as the traditional
chain of command.
Speed of effort and response typifies team efforts.
Accountability and responsibility are identified appropriately.
Training must be an integral part of the team concept.
A large portion of the day is spent in meetings. This is a drawback to team
structuring.
Network Structure
1.
2.
3.
4.
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a detriment to networks.
V.
A.
B.
VI.
2.
MANIFESTATIONS OF CULTURE
A.
Statements of Principle
1.
2.
B.
Stories
1.
2.
C.
Slogans
1.
2.
D.
Heroes
E.
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1.
2.
F.
Symbols
1.
2.
3.
G. Climate
1.
2.
3.
H.
Physical Environment
1.
2.
The surroundings or confines of the corporation signify the physical nature of the
work environment.
Campus like enclaves typify the intended freedom-to-express philosophy of idea
exchanges for the Silicon Valley software and computer industry.
Role of Managers
1.
B.
Managers at all levels in an organization help develop the culture. Quite simply,
managers set the tone, control the resources, and control the means to influence
the results. Managers help create culture by:
a. Clearly defining the companys mission and goals.
b. Identifying core values.
c. Determining the amount of individual autonomy and the degree to which
people work separately or in groups.
d. Structuring work to achieve goals in accordance with the firms values.
e. Developing reward systems that reinforce values and goals.
f. Creating methods of socialization that will bring new workers inside the
culture and reinforce the culture for existing workers.
Role of Employees
1.
2.
3.
Nearly all employees can accept and adapt to any culture through the process of
socialization.
Many corporate values, norms, and beliefs are shaped by employees.
Subcultures are units within an organization based upon the values, norms, and
beliefs of the workers.
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C.
How well the culture fits the mission is known as coherence. Employee
acceptance of organizational elements is within coherence.
The greater the acceptance of the commitment to organizational values, the
stronger the culture.
The most critical factor that contributes to cultural effectiveness deals with the
adaptability to external stimuli and environments.
Sources of Change
1.
2.
3.
B.
Types of Change
1.
2.
3.
C.
Rates of Change
1.
2.
D.
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IX.
5.
6.
B.
X.
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duplicated, or posted to a publicly accessible website, in whole or in part.
A.
Mutual Trust
1. Managers must trust employees and vice versa.
2. Studies indicate trust is an absolute in effective organizations.
3. The reliance upon others based on character, ability, and truthfulness is
paramount to a trustful relationship.
4. A sense of adequacy and personal security are primary ingredients.
5. Trust within organizations mitigates fear.
B.
Organizational Learning
1.
C.
Adaptability
1.
2.
XI.
Organizational learning is how the manager and the organization integrate new
ways into established systems to produce better ways of doing things. A
manager can view organizational learning in either of two ways: single looped or
double looped.
a. A single-looped learning situation is one in which only one way exists in
which to make adjustments.
b. Double-looped learning means more than one alternative exists.
Adaptiveness is being prepared for change prior to the actual need for it.
Managers who are adaptive rather than reactive will minimize wasted energy and
maximize the use of time in a change situation.
Resistance to Change
1.
2.
3.
B.
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a.
b.
c.
d.
e.
f.
C.
Three-Step Approach
This approach focuses on three distinct phases or steps.
a. Unfreezing involves identifying deficiencies and confronting the individuals
with the behaviors.
b. Change results from individuals being uncomfortable with the identified
negative behaviors and being presented with new behaviors, role models,
and support.
c. Refreezing involves recognizing and rewarding new and approved attitudes
and patterns of behavior.
2.
B.
2.
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2.
Enrichment Vignette
Not since the Industrial Revolution has U.S. business experienced so much change and
disruption. Almost every industry has been rocked by the forces of changedivestiture,
consolidation, and deregulation in the past few years.
All organizations experience change regardless of their size or business sectors. This
change can be divided into five stages:
1.
2.
3.
4.
5.
Delayed change. This occurs when the organization is poised at the top of the
change cycle. In this stage, the company is ready either to resume the development
phase or to deal with change and turn around.
Operational change. This is the most common and easiest form of change to deal
with, and comes about as the organization addresses perceived operational
deficiencies in the face of more efficient competition or an increasing demand for
products and services.
Directional change. When time-tested business strategies become less appropriate
in competitive conditions, the marketplace can compel the organization to implement
an alternative strategy or face loss of market share.
Fundamental change. This occurs when the business climate forces the organization
to reexamine its mission and leadership practices.
Total change. A complete turnaround is required when the organization is confronted
by business failure or when new management decides to redirect the business into an
entirely new market sector.
2.
3.
Business leaders who understand change and have learned to manage it to the advantage of
their organizations know that change is an opportunity for growth and development.
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duplicated, or posted to a publicly accessible website, in whole or in part.
When managers are engaged in organizational design, what are they developing?
The basic elements available to all designers of organizational structure are amounts
and types of authority, departments, line and staff positions and departments,
functional considerations, product and productivity elements, and decision-making
approaches. Specifically, they are developing the means to implement plans, achieve
objectives, and accomplish the overall mission.
2.
3.
4.
Organic Structure
Adaptable and shared tasks
Decentralized decision making
Informal horizontal communication
Vertical and horizontal collaboration
Few rules
Relaxed hierarchy: authority
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to respond to needed changes. Close association and cooperation within and across
departments must exist within unpredictable environments.
5.
What are the characteristics of a functional organization structure? What are the
advantages of a divisional structure? What are the characteristics of a matrix
organizational structure? What are the characteristics of teams? What are the
advantages and disadvantages of networks?
Characteristics of a functional organizational design: Related jobs, tasks, duties,
activities, and processes are grouped as sub-units. Specific activities are performed
mutually and collectively. Skills and expertise are unique to departments.
Advantages of a divisional structure: Customer needs can be catered to more
effectively. Accommodations and arrangements for geographic issues are available.
Flexibility and adaptation to change characterize divisional design. Duplication of
effort, energy, and time is a problem. Activities and resources may become too
common if not redundant.
Characteristics of a matrix organizational structure: Functional and divisional qualities are
blended. Respectively, specialization and accountability for these two combined designs
are important to a matrix. Adaptability and economy of scale are readily apparent with a
matrix structure. Functional and divisional differences crop up regarding organizational
objectives. Violations of chain of command are possible.
What are the seven factors that influence culture? Use specific examples to explain
how they interact.
a. Key organizational processes include the way an organization goes about
collecting and communicating information necessary to achieve its primary set of
goals. It also includes how decisions are made as well as the production
processes used in developing its products and services.
b. Objectives, strategies, personnel characteristics, and internal relationships of the
managers who oversee the organization and control its policymaking constitute
the dominant coalition.
c. Employees and other tangible assets are namely all the readily available
resources of the organization.
d. The formal organizational arrangements encompass the personnel, tasks, and
the structure of such elements as rules and procedures.
e. The social system is composed of the norms and values shared by most
employees. It is the set of relationships that exists among employees in terms of
power, affiliations, and trust.
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f.
g.
7.
8.
What is the role of managers in creating culture? What is the role of employees in
creating culture?
The manager role is very diverse. It ranges from defining the mission to creating
methods of socialization for new and veteran employees. Employees form
subcultures, shape corporate values, and adopt and promote the aspects of the
organizational culture.
9.
10. What are the four kinds of change that can occur in an organization?
An organization can experience strategical, structural, process-oriented, and/or
people-centered change.
What are the steps of planned change?
11.
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philosophy toward change that includes three elements: mutual trust, organizational
learning, and adaptability.
13.
Describe three reasons that people resist change, and explain what managers can
do to overcome that resistance.
Student responses to this question will vary. As opposed to a homework assignment,
this question could be utilized as an in-class group or individual assignment for
discussion.
14.
15.
The Conversation Prism is a graphic that helps chart online conversations between people and
communities, as well as the networks that connect the Social Web.
Choose one word from each area (Web 2.0, popular culture, ethical virtues) that is most
important to you. What do the words mean to you? If others in a company share these similar
values and beliefs, how might it influence worker behavior?
Use the Conversation Prism to identify the networks you use and the ones you are missing.
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The student answers to these questions will vary greatly. Similar to the critical thinking
questions provided throughout the text, these questions allow students the opportunity to think
in a broad, creative sense with many variables or choices for response. It is important that the
instructor encourage the students to back up or support their answers with specific subject
content from the text as well as provide a rational/logical approach to their comments.
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duplicated, or posted to a publicly accessible website, in whole or in part.
million in sales. With a keen eye for assessing Hartys strengths and weaknessesand with a
drive to growPlatt beefed up quality and customer service. He found higher-margin market
niches. The rapid technological changes overtaking the industry, however, limited future growth.
Printing was moving quickly from the world of film, type, and light to the computer-driven,
digitized world of the desktop. Platt tried to solve the problem by hiring a specialist to
computerize Hartys prepress process. But Platt soon learned that building digital desktop
capability from scratch would cost more than a million dollars.
The solution to that problemand to growthcame in the form of Pre-Press Graphics.
Based in nearby Branford, Connecticut, Pre-Press Graphics had been one of the first in the
state to aggressively use advanced desktop technology. It had already done much of the costly
research and development work Platt knew he would have to undertake. In addition, because
the owner of Pre-Press had been spending a lot of time, money, and energy on the
development of technology, the business had plateaued. The owner was looking for a buyer.
Harty Press bought Pre-Press Graphics for $500,000; and the merging of the two
companies began. Platt immediately had major problems with the change:
It was hard to imagine two more different cultures than those of Harty Press and PrePress Graphics.
Harty is based in the heart of an industrial neighborhood. Pre-Press sits twelve miles
away, out in the bustling world of office parks and fast food joints.
Hartys workers, many with 10 to 20 years of service, wear smudged aprons, have ink
under their fingernails, and carry union cards. At Pre-Press, people in running shoes and
jeans sit in front of computer screens.
Hartys management is low key, loose, and creates autonomy. The management at PrePress was intense, precise, and controlling.
The move of Hartys twelve-person prepress department to consolidate with Pre-Press
created chaos. The firms procedures and systems did not dovetail. Neither group had
been given enough notice to plan for and comprehend the effects of the merger.
Although Harty had bought Pre-Press specifically for its knowledge of desktop publishing,
Pre-Press employees who knew how to operate the computers saw that Harty workers
lacked those skills. They became protective of their knowledge and jobs.
A key Harty employee was sent to Pre-Press to work on the transition. He was sent with
no job description and no defined role; an immediate hassle resulted with former PrePress managers.
Training courses on computer technology lasted for only one session. Then familiarization
training on the computer was announced. No one knew what that meant, and no one ever
figured it out because it never took place.
Source: Edward O. Welles, Mis-Match, Inc. (June 1994), pp. 7079.
QUESTIONS
1.
Based on the experiences of Harty Press and Pre-Press Graphics, what is the
importance of culture in the change process?
2.
What specific cultural factors caused problems in the change process? Cite examples
to support your answer
3.
What specific mistakes did Harty and Pre-Press make in the change process? Cite
examples to support your answer.
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4.
Using as your guide the nine steps for planned change discussed in this chapter,
construct a change process to successfully merge Harty Press with Pre-Press
Graphics.
ANSWERS
The questions to this case attempt to allow the students to respond in various ways. That is,
these questions are subjective in nature and each student will have different perceptions and
answers.
J. B. CONSIDERS DELEGATING
J. B. Maxwell was feeling unusually tired as he adjourned his weekly meeting with his store
managers. There seemed to be more and more problems and more fires to put out over the
past several months. There just werent enough hours in the day anymore, or so it seemed to J.
B. On his way home, he thought about the real possibility that time was catching up to him.
Was he just getting older and more tired, or was the organization getting more complex and
difficult to handle?
Since founding his first video rental outlet five years ago, he had found that store openings
had become a frequent event. The first store had been the nucleus for six more, located in five
towns and cities throughout his home state of Texas. Plans and market research for five more
stores were on his desk waiting for his careful analysis.
In the beginning, it had been so simple: one store, himself and his wife, and one or two
sales clerks. Now he had seven stores, seven sets of records and budgets to check, seven sets
of orders to approve, and seven sets of personnel and finance problems to resolve. He
wondered if his initial approach to managing the stores from a central office was still the best
approach. But could he trust his store managers to make the right decision? They didnt have
the drive that he had. They seemed to be more interested in leisure than in work. The stores
were profitable but becoming less so, and competition was presenting a problem. J. B. knew
that something had to change, and he didnt want it to be his health.
Question
What are two possible answers to J.Bs present situation?
ANSWER
J. B. has seven stores to manage with plans for five more on his desk. He has
operations located in at least five towns in Texas. As the number and complexity of
operations expand beyond his abilities to control and direct them, he has to make
plans to diversify his management activities. More local control and greater
responsibility is in order for store managers. They may have to be trained to handle it
but they will have to take it sooner or later.
J.B. will have to start the practice of management by exceptiondealing with the
areas that need his direct attention and intervention the most. Much of what J. B. is
doing can probably be routinized and proceduralized. A handbook of store
management could be put together to allow the local managers to adjust to their new
responsibilities gradually and in a uniform way.
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Based on the video, Evo has not had a major problem with lost time due to frequent
meetings nor have any team members failed to do their share. Why might that be the
case? How can a team leader make sure that the team is productive without
becoming dictatorial? How does selection of members play a role?
2.
Many of the teams at Evo consist of people with a wide range of creative skills. Do
you think that would make it easier or more difficult to lead such a team? Why?
3.
How might the size of Evo impact on the effectiveness of its teams?
1. What can you infer about this organization and its structure based on the conversation you
witness in this video clip?
Alan Smith is clearly in a subordinate position in the organizational structure, whereas
Senator Hawkins holds the position of authority. Hawkins and Smith are in conflict about
their goal or purpose, and Hawkins wants to influence Smith by reminding him of their need
to coordinate their efforts.
2. Would you describe this as a mechanistic or organic organization? Explain your answer.
Students should recognize that on the spectrum from mechanistic to organic, this is a fairly
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duplicated, or posted to a publicly accessible website, in whole or in part.
mechanistic organization. Among the specific reasons they should offer to support this
opinion are: the vertical, top-down communication; a heavy emphasis on following the
instructions and decision of the superior; and a heavy emphasis on loyalty and obedience.
3. Think about some of the specific statements that Hawkins makes to Smith, and use them to
analyze the organizational culture he is creating.
Hawkins appears to be creating a culture based on fear and self-protection. He advises him
to be particularly respectful to people in authority, and never to offend or upset them. He
also warns him against taking risks, such as speaking up for someone he once considered a
friend.
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