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JOHN R. SCHERMERHORN, JR.

MANAGEMENT
12 Edition
th

Chapter 11

Organizational
Structures and
Design
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Planning Ahead
Place Slide Title — Chapter
Text Here 11 Study Questions

1. What is organizing as a management

function?
2. What are the traditional organization
structures?
3. What are the types of horizontal organization
structures?
4. How are organizational designs changing the
workplace?

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Figure 11.1 Organizing viewed in relationship with
the other management functions

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 Chapter
Place Slide Title 11 Learning
Text Here Dashboard

1. Organizing as a Management Function

1. What is organization structure?
2. Formal structures
3. Informal structures
2. Traditional Organization Structures
1. Functional structures
2. Divisional structures
3. Matrix structures

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 Chapter
Place Slide Title 11 Learning
Text Here Dashboard

3. Horizontal Organization Structures

1. Team structures
2. Network structures
3. Boundaryless structures
4. Organizational Designs
1. Contingency in organizational design
2. Mechanistic and organic designs
3. Trends in organizational designs

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 Takeaway
Place 1: Title
Slide Organizing as a Management Function
Text Here

• Organizing as a management function

– Organizing
• Arranges people and resources to work together to
accomplish a goal
– Organization structure
• The system of tasks, reporting relationships, and
communication linkages

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 Takeaway
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Slide Organizing as a Management Function
Text Here

• An organization chart is a diagram describing

reporting relationships and the formal
arrangement of work positions within an
organization. It includes:

The division of Supervisory Communication Levels of

Major subunits
work relationships channels management

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 Takeaway
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Slide Organizing as a Management Function
Text Here

• Informal structures 
– The set of unofficial relationships between
organization members
– Social network analysis
• Identifies informal structures and social
relationships in the organization

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 Study Question
Place 1: What
Slide Title Text is organizing as a management
Here
function?
• Informal structures 
– Potential advantages of informal structures:
• Helping people accomplish their work
• Overcoming limits of formal structure
• Gaining access to interpersonal networks
• Informal learning

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 Takeaway
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Slide Organizing as a Management Function
Text Here

Potential disadvantages of informal structures:

May work Diversion of

against best May carry May breed work efforts Feeling of
Susceptibility
interests of inaccurate resistance to from alienation by
to rumor
entire information change important outsiders
organization objectives

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

• Traditional organization structures

– Departmentalization
• Groups people with and jobs into work units or formal
teams
• These formal teams are linked to create three major
types of traditional organizational structures

Functional Divisional Matrix

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

• Functional structures
– People with similar skills and performing similar
tasks are grouped together into formal work units
– Members work in their functional areas of
expertise
– Are not limited to businesses
– Work well for small organizations producing few
products or services

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Figure 11.2 Functional structures in a business, branch
bank, and community hospital

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

• Potential advantages of functional structures:

– Economies of scale
– Task assignments consistent with expertise and
training
– High-quality technical problem solving
– In-depth training and skill development
– Clear career paths within functions

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

Potential disadvantages of functional structures:

Sense of
Difficulties in Functional cooperation Narrow view of Excessive
pinpointing chimneys and common performance upward referral
responsibilities problem purpose break objectives of decisions
down

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

• Divisional structures
– Group together people who work on the same
product or process, serve similar customers,
and/or are located in the same area or
geographical region
– Common in complex organizations
– Avoid problems associated with functional
structures

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Figure 11.3 Divisional structures based on product,
geography, customer, and process

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

• Potential advantages of divisional structures:

– More flexibility in responding to environmental
changes
– Improved coordination
– Clear points of responsibility
– Expertise focused on specific customers,
products, and regions
– Greater ease in restructuring

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

Potential disadvantages of divisional structures:

Duplication of Emphasis on
Competition and
resources and divisional goals at
poor coordination
efforts across expense of
across divisions
divisions organizational goals

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

• Matrix structure
– Combines functional and divisional structures to
gain advantages and minimize disadvantages of
each
– Used in:

Service Professional Non-profit Multi-national

Manufacturing
industries fields sector corporations

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Figure 11.4 Matrix structure in a small, multi-project
business firm

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

• Potential advantages of matrix structures:

– Better cooperation across functions
– Improved decision making
– Increased flexibility in restructuring
– Better customer service
– Better performance accountability
– Improved strategic management

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Takeaway 2:Title
Place Slide Traditional Organization Structures
Text Here

Potential disadvantages of matrix structures:

Two-boss
Two-boss
system can Increased costs
system is Team meetings Team may
create task due to adding
susceptible to are time develop
confusion and team leaders
power consuming “groupitis ”
conflict in work to structure
struggles
priorities

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Takeaway
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Horizontal Organization Structures
Text Here

• Team structures
– Extensively use permanent and temporary teams
to solve problems, complete special projects, and
accomplish day-to-day tasks
– Often use cross-functional teams composed of
members from different functional departments
– Project teams are convened for a specific task or
project and disbanded once completed

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 Place Slide Title Text Here
Figure 11.5 How a team structure uses cross-functional
teams for improved lateral relations

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Takeaway
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Horizontal Organization Structures
Text Here

• Potential advantages of team structures:

– Eliminates difficulties with communication and decision
making
– Eliminates barriers between operating departments
– Improved morale
– Greater sense of involvement and identification
– Increased enthusiasm for work
– Improved quality and speed of decision making

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Takeaway
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Horizontal Organization Structures
Text Here

Potential disadvantages of team structures:

Effective use of time
depends on quality of
Conflicting loyalties Excessive time spent in
interpersonal relations,
among members meetings
group dynamics, and
team management

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Takeaway
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Horizontal Organization Structures
Text Here

Network structures
– Uses information technologies to link with networks
of outside suppliers and service contractors
– Own only core components and use strategic
alliances or outsourcing to provide other
components

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Figure 11.6 A network structure for a Web-based retail
business

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Takeaway
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Horizontal Organization Structures
Text Here

Potential advantages of network structures:

– Firms can operate with fewer full-time employees
and less complex internal systems
– Reduced overhead costs and increased operating
efficiency
– Permits operations across great distances

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Takeaway
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Horizontal Organization Structures
Text Here

Potential disadvantages of network structures:

Control and
coordination Potential loss of Potential lack of Excessively
problems may control over loyalty among aggressive
arise from outsourced infrequently used outsourcing can
network activities contractors be dangerous
complexity

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Takeaway
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Horizontal Organization Structures
Text Here

Boundaryless organizations
– Eliminate internal boundaries among subsystems
and external boundaries with the external
environment
– A combination of team and Click icon to add clip art

network structures, with the

addition of “temporariness”

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Takeaway
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Horizontal Organization Structures
Text Here

Boundaryless organizations
– Key requirements:
• Absence of hierarchy
• Empowerment of team members
• Technology utilization
• Acceptance of
impermanence

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Takeaway
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Horizontal Organization Structures
Text Here

Boundaryless organizations
– Encourage creativity, quality, timeliness,
flexibility, and efficiency
– Knowledge sharing is both a goal and essential
component

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Takeaway
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Horizontal Organization Structures
Text Here

Virtual organization
– A special form of boundaryless organization
– Operates in a shifting network of external
alliances that are
engaged as needed,
using IT and the Internet

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Figure 11.7 The boundaryless organization eliminates
internal and external barriers

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Organizational design
– Process of creating structures that accomplish
mission and objectives
– A problem-solving activity that should be
approached from a contingency perspective

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Bureaucracy
– A form of organization based on logic, order, and
the legitimate use of formal authority
– Bureaucratic designs feature …
• Clear-cut division of labor
• Strict hierarchy of authority
• Formal rules and procedures
• Promotion based on competency

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Contingency perspective on bureaucracy asks

the questions:
– When is a bureaucratic form a good choice for an
organization?
– What alternatives exist when it is not a good
choice?

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Environment determines the most appropriate

design
– Mechanistic designs work in a stable
environment
– Organic designs work in a rapidly changing and
uncertain environment
• Adaptive organizations operate with a minimum of
bureaucratic feature and encourage worker
empowerment and teamwork

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Mechanistic Designs Organic Designs

• Predictable goals • Adaptable goals
• Centralized authority • Decentralized authority
• Many rules and • Few rules and procedures
procedures • Wide spans of control
• Narrow spans of control • Shared tasks
• Specialized tasks • Many teams and task
• Few teams and task forces forces
• Formal and impersonal • Informal and personal
means of coordination means of coordination

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Figure 11.8 A continuum of organizational design
alternatives: from bureaucratic to adaptive organizations

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Contemporary organizing trends include:

– Fewer levels of management
• Shorter chains of command
• Less unity of command
– Wider spans of control
– More delegation and empowerment
– Decentralization with centralization
– Reduced use of staff

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Shorter chains of command

• The line of authority that vertically links all persons
with successively higher levels of management

Organizing trend:
• Organizations are being “streamlined” by cutting
unnecessary levels of management
• Flatter structures are viewed as a competitive
advantage

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Less unity of command

• Each person in an organization should report to one and only
one supervisor

Organizing trend:
• Organizations are using more cross-functional teams, task
forces, and horizontal structures
• Organizations are becoming more customer conscious
• Employees often find themselves working for more than one
boss

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Wider spans of control

• The number of persons directly reporting to a
manager
Organizing trend:
• Many organizations are shifting to wider spans of
control as levels of management are eliminated
• Managers have responsibility for a larger number of
subordinates who operate with less direct supervision

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

More delegation and empowerment

• A common management failure is unwillingness to
delegate
• Delegation leads to empowerment

Organizing trend:
• Managers are delegating more and finding more
ways to empower people at all levels

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

• More delegation and empowerment

– Delegation is the process distributing and
entrusting work to other persons
– The manager assigns responsibility, grants
authority to act, and creates accountability
– Authority should be commensurate with
responsibility

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Three Steps in Delegation:

Create accountability
Assign responsibility Grant authority –
– require others to
– explain task and allow others to make
report back on
expectations decisions and act
results

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Decentralization with centralization

Centralization is the
concentration of
authority for making Decentralization is the
most decisions at the top dispersion of authority to
levels of the organization make decisions throughout all
levels of the organization

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Decentralization with centralization

• Centralization and decentralization not an “either/or”
choice

Organizing trend:
• Delegation, empowerment, and horizontal structures
contribute to more decentralization in organizations
• Advances in information technology allow for the
retention of centralized control

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Place Takeaway
Slide Title 4: Organizational
Text Here Designs

Reduced use of staff

• Staff positions provide technical expertise for other parts of the
organization
• Line and staff managers may disagree over staff authority
• Advisory authority
• Functional authority
• No one best solution for dividing line-staff responsibilities

Organizing trend:
• Organizations are reducing staff size
• Organizations are seeking increased operating efficiency by
employing fewer staff personnel and smaller staff units

©2013 John Wiley & Sons, Inc. All rights reserved. 11-52