Honors Business Management

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1 AT THE LIBRARY Honors Business Management Chapter 8 Organizational Culture, Structure and Design Key Questions Section 8.1: How do I find out about an organization's "social glue," its normal way of doing business? Section 8.2: What can be done to an organization's culture to increase its economic performance? Section 8.3: How are for-profit, nonprofit and mutual benefit organizations structured? Section 8.4: When I join an organization, what seven elements should I look for? Section 8.5: How would one describe the seven organizational structures? Section 8.6: What factors affect the design of an organization's structure? The bottom line for leaders is that if they do not become conscious of the cultures in which they are embedded, those cultures will manage them. Vocabulary organizational culture competing values framework clan culture adhocracy culture market culture hierarchy culture observable artifacts espoused values enacted values basic assumptions symbol story hero rite/ritual strength perspective fit perspective adaptive perspective organization for-profit organization nonprofit organization mutual benefit organization organization chart vertical hierarchy of authority horizontal specialization Edgar Schein common purpose coordinated effort division of labor hierarchy of authority unity of command span of control/management authority accountability responsibility delegation line managers staff personnel centralized authority decentralized authority simple structure functional structure divisional structure product division functional division geographic division matrix structure Edgar Schein team-based structure network structure virtual/hollow organizations modular organization contingency design mechanistic environment organic environment differentiation integration organizational size conglomerate technology small-batch technology large-batch technology continuous-process technology organizational life cycle birth stage youth stage midlife stage maturity stage Independent Sections Section 8.3: What is an Organization? - pp Manager s Toolbox p

2 Section 8.1: Organizational Culture I. Type of Cultures A. Clan: B. Adhocracy: C. Market: D. Hierarchy: II. Levels of Culture A. Observable Artifacts: B. Espoused/Enacted Values: C. Basic Assumptions: III. Culture is learned through,,, IV. Functions of culture A. B. C. D. Homework: Review Question 1 Section 8.2: Developing High-Performance Cultures I. Perspectives on Enhancing Performance A. Strength: B. Fit: C. Adaptive: 2

3 II. Ways to Embed Culture A. B. C. D. E. F. G. H. I. J. K. Homework: Identify one aspect of the CR North culture we identified at the start of the chapter that you would like to see changed. Then explain which of the eleven mechanisms for embedding culture you think would best improve the culture. Your answer should be completed on loose leaf in paragraph form. Section 8.4: The Major Elements of an Organization I. Edgar Schein's Four Elements A. B. C. D. 1. Unity of Command II. Additional Elements A. B. C. 1. Narrow 2. Wide 1. Line 2. Staff 1. Centralized 2. Decentralized Homework: Worksheet on Major Elements of an Organization 3

4 Section 8.5: Organizational Structures Structure Purpose Notes Simple Good for small businesses Authority in one person - flat hierarchy few rules low work specialization Functional Grouping by similar work specialties Very common resulting in grouping by departments Divisional Grouping by similarity of purpose Products Time Warner (magazines, movies, music, cable) Customers Bank (consumer, mortgage, business) Region Auto (East, West, North, South) Matrix Grid of functional and divisional for two chains of command Both a vertical and horizontal command structure Functional usually doesn t change (based on departments) Divisional can vary by product, customer, region Team-Based Eliminates functional barriers to solve problems Functional managers are brought together on temporary or permanent teams to solve a cross-functional problem still have full-time functional responsibilities Network Seamlessly connect core to outside firms Computer network used to connect the core of a company with its far-flung independent firms. Virtual/Hollow organizations Modular Outsource pieces of a product Main firm puts together "Lego blocks" made by other companies Homework: Worksheet on Drawing an Organizational Chart. 4

5 Section 8.6: Contingency Design I. Definition: II. Factors in Contingency Design A. Mechanistic v. Organic 1. Mechanistic 2. Organic B. Differentiation v. Integration 1. Differentiation 2. Integration C. Organizational Size 1. Measured by 2. Trends for small organizations 3. Trends for large organizations 5

6 a. economies of scale b. conglomerates 4. Best division size ; divisions must have D. Technology 1. Components 2. Types a. Small batch b. Large batch c. Continuous process III. Life Cycle of an Organization. A. Stage 1: The birth stage nonbureaucratic. B. Stage 2: The youth stage prebureaucratic. C. Stage 3: The midlife stage bureaucratic. D. Stage 4: The maturity stage very bureaucratic. Homework: Worksheet on Contingency Design 6

7 Name Period Date Drawing an Organizational Chart Davis County Blood Service is a nonprofit organization that operates three offices in the county for blood donations. Davis Blood Services uses the geographic structure. Each office has three laboratory technicians and seven donation technicians (phlebotomists.) The Montgomery office employs a full-time secretary. A hospital liaison officer (staff) works out of the Rocky Springs Office and reports to the Executive Director. Draw an organization chart including the positions given above and below. Unless noted, all positions are line positions. General Manager Jackson Office Laboratory Supervisor Rocky Springs Office Donations Manager Jackson Office Executive Director Donations Manager Rocky Springs Office Laboratory Supervisory Jackson Office Donations Manager Montgomery Office Development Manager, reporting to Executive Director (staff position) General Manager Montgomery Office Laboratory Supervisor Montgomery Office General Manager Rocky Springs Office 7

8 Name Period Date Major Elements of an Organization Part One Match each element with its description. Answers may be used only once. A. Centralized v. Decentralized B. Common purpose C. Coordinated Effort D. Delegation E. Division of Labor F. Hierarchy of Authority G. Span of Control 1. Describes the level of management in which most decisions are made. 2. Refers to the number of people reporting directly to a given manager. 3. The process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy. 4. Unifies employees and gives understanding of mission. 5. The chain of command. 6. The coordination of individual efforts into a group or organization-wide effort. 7. The arrangement of having discrete parts of a task done by different people. Part Two Match each term with its definition. Answers may be used only once. A. Authority B. Centralized authority C. Chain of command D. Decentralized authority E. Flat span of control F. Line managers G. Responsibility H. Staff managers I. Tall span of control J. Work specialization 1. Important decisions are made by top-level managers. 2. Obligation to perform tasks assigned. 3. Used when managers must be closely involved with their subordinates. 4. Personnel that provide advice and research for other managers. 5. Decisions are made by mid-level managers. 6. Control mechanism that makes sure the right people do the right things at the right time. 7. Situation where a manager has many people reporting to him or her. 8. Also known as the division of labor. 9. Right to make decisions and give orders. 10. Usually have people reporting to them. 8

9 Name Period Date Contingency Design Part One If the statement represents a characteristic of a mechanistic organization, write M on the line. If the characteristic is for an organic organization, write O. 1. Large size 2. Provides greater flexibility 3. Few rules 4. Tend to improvise as they go 5. Provide uniformity 6. Tend to be bureaucratic 7. Better at using large-batch technology 8. Authority is decentralized 9. Encourages networks of employees to cooperate in solving problems 10. Employees are closely supervised 11. Tend to be rigid 12. Better using small batch technology 13. Often found during the birth stage of an organization 14. Works best in a stable environment 15. Tend to have better economies of scale. 16. Better at using continuous process technology 17. Found most often during the midlife and maturity stages of an organization. Part Two Answer each question. 1. What distinguishes contingency design from the other types of organization we have studied? 2. What five elements must managers consider when using contingency design? 3. What usually causes an organization to differentiate? 4. What four elements are needed for integration to be successful? 9

10 Organizational Culture, Structure and Design Across 1. culture perspective that best maximizes performance 5. structure resulting in 2 chains of command 7. large company doing business in unrelated industries 10. requires frequent communication and coordination of the parts 12. something you should do when getting a mentor 13. span of control that often eliminates a level of management 14. caused by specialization and division of labor 15. the easiest level of organizational culture to change 17. another name for a narrow span of control 21. culture with internal focus and flexibility 22. organization usually found in large corporations 23. hierarchy that shows who reports to whom 26. accountability requires managers to do this 28. organization with few rules and a wide span of control 29. organizational stage characterized by growth and expansion 30. the most common organizational structure 31. entrepreneurial businesses usually have this structure Down 2. structure in which decisions are made by middlemanagers 3. one of the functions of an organization s structure 4. perspective that assumes culture aligns with strategic plan 6. advisory positions 8. factor affecting the design of an organization 9. one way managers can show employees the culture 11. structure held together by information technology 16. the core culture 17. structure used for problem solving 18. generally accepted way of viewing the world 19. structure that groups by products, clients or region 20. process where machines do all the work 24. what you should concentrate on when first meeting someone 25. a mixed structure 27. celebrates an important occasion 10

11 Review Questions 1. Compare an adhocracy culture with a market culture. 2. Read the Example on p Answer the Your Call question. 3. What are the three levels of culture? 4. Why is culture important to you as a manager? 5. Find two examples of the mechanisms used to embed culture in CR North. If possible, take a picture of the item. Otherwise, write a description. 6. What is unity of command? What impact has the rise of computers had on the value of this element? 7. Describe the three elements that come with authority. 8. What distinguishes line positions from staff positions? 9. List three types of organizational structure and explain the purpose of each type. 10. Read the Example on p Answer the Your Call question. 11. Which type of culture is better: mechanistic or organic? Explain your reasoning. Practice Questions 1. Which of the following refers to the obligation you have to perform the tasks assigned to you? a. responsibility; b. delegation; c. authority; d. pride. 2. Which is a value of a clan culture? a. flexibility; b. stability; c. external focus; d. competition 3. Which of the following is NOT one of the functions of culture? a. promotes social-system stability; b. facilitates collective commitment; c. shapes behavior by helping employees make sense of their surroundings; d. motivates employees to achieve organizational goals. 4. Which of these is NOT at the observable level of culture? a. rituals; b. symbols; c. stories; d. heroes. 5. Which of the following statements is TRUE regarding spans of control? a. an organization is said to be tall when there are only a few levels and a wide span of control; b. an organization is said to be flat when there are many levels and a narrow span of control; c. a narrow span of control means a manger has a limited number of people reporting to him or her; d. a wide span of control means a manager has a limited number of people reporting to him or her. 6. What types of managers have authority to make decisions and usually have people reporting to them? a. functional; b. line; c. staff; none of these 7. Which of the following structures has people with similar occupational specialties working in formal groups? a. conglomerate; b. divisional; c. simple; d. functional. 8. Which of the following structures has group divisions around similar businesses or industries? a. divisional; b. simple; c. modular; functional 9. Which of the following is a matrix structure? a. functional and divisional structures used in similar parts of the organization; b. people with diverse specialties put together in groups by similar products; c. a central core linked to outside firms; d. functional and divisional chains of command in a grid. 10. Which of the following organizations have a decentralized hierarchy of authority? a. organic; b. mechanistic; c. large; d. differentiated. 11. Which of the following statements is TRUE regarding organizational size? a. larger organizations tend to have less rules and regulations; b. small is not necessarily beautiful; c. smaller organizations have a tendency to breed apathy; d. none of these 12. Which statement about strength cultures is TRUE? a. strength cultures can make managers resistant to change; b. a strong culture forces employees to adhere to organizational values by setting up many procedures; c. strength cultures generally do not promote competitiveness and profitability 13. Which type of organizational culture is most likely to have a formalized, structured work environment? a. clan; b. market; c. adhocracy; d. hierarchy. 14. Product, customer, and geographic groups are all parts of which organizational structure? a. team b. functional; c. divisional; d. simple. 15. Edgar Schein proposed all of the following elements of organizational structure EXCEPT: a. common purpose; b. coordinated effort; c. division of responsibility; d. hierarchy of authority. 11