Organizations and Structures

Module 7
LIS 580: Spring 2006
Instructor- Michael Crandall
 Roadmap
Organizing and organizations
Structure of organizations
Matrix organizations
Networked organizations
Learning organizations
Challenges in organizations

April 18, 2006 LIS580- Spring 2006 2

 What Is Organizing?
Organizing
Arranging the
activities of the
enterprise in such
a way that they
systematically
contribute to the
enterprises goals.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 3

 Depicting the Organization
Organization Chart
A chart that shows the
structure of the
organization including
the title of each
managers position
and, by means of
connecting lines, who
is accountable to whom
and who has authority
for each area.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 4

 Organization Chart
In f o r m a tio n S e r v ic e s G r o u p

K n o w le d g e A r c h it e c t u r e M a n a g e r

K n o w le d g e A r c h i t e c t u r e L e a d S e a r c h /S y s te m s L e a d D e s ig n L e a d

C u s to m e r L ia is o n D e v e lo p e r A s s is ta n t D e s ig n e r

D e v e lo p e r
C a ta lo g e r
S y s t e m s A d m in
C a ta lo g e r

T a x o n o m y D e s ig n e r

April 18, 2006 LIS580- Spring 2006 5

 Organization Design and
Structure
Organization design
A process in which managers develop or
change their organizations structure
Work specialization
A component of organization structure that
involves having each discrete step of a job
done by a different individual rather than
having one individual do the whole job

Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 6

 Economies of Work
Specialization

Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 7

 Stages of Organizational
Development
Simple structure
An organization that is low in specialization
and formalization but high in centralization
Functional structure
An organization in which similar and related
occupational specialties are grouped
together
Divisional structure
An organization made up of self-contained
units Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 8

 Stages of Organizational
Development (contd)
Matrix structure
An organization in which specialists from functional
departments are assigned to work on one or more
projects led by a project manager
Team-based structure
An organization that consists entirely of work
groups or teams
Boundaryless organization
An organization that is not defined or limited by
boundaries or categories imposed by traditional
structures Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 9

 Mechanistic and Organic
Organizations
Mechanistic organization
The bureaucracy; a structure that is high in
specialization, formalization, and
centralization
Organic organization
An adhocracy; a structure that is low in
specialization, formalization, and
centralization
Structure follows strategy
Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 10

 Burns and Stalker

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 11

 Structure Variables
Principles Departmentalization
Chain of command Functional
Span of control Divisional
Authority Product
Customer
Power
Geographic
Responsibility Process

Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 12

Organizational Structure: Control
Chain of command
The management principle that no person should report to
more than one boss
Span of control
The number of subordinates a manager can direct efficiently
and effectively
Authority
The rights inherent in a managerial position to give orders
and expect them to be obeyed
Responsibility
An obligation to perform assigned activities
Power
An individuals capacity to influence decisions
Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 13

 Chain of Command

Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 14

 Tall And Flat Organizations, And
The Span Of Control
Span of Control
The number of subordinates reporting directly to a
supervisor.
Wide spans: larger number of direct reports.
Narrow spans: fewer number of direct reports.
Tall vs. Flat Organizations
Tall organizations: more management layers and
more hierarchical controls.
Flat organizations: fewer management layer and
decision making closer to the customer.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 15

Spans of Control in Country-Based
Organization

FIGURE 69
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 16

Types of Organizational Authority
Line authority
The position authority (given and defined by
the organization) that entitles a manager to
direct the work of operative employees
Staff authority
Positions that have some authority (e.g.,
organization policy enforcement) but that
are created to support, assist, and advise
the holders of line authority
Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 17

 Authority Versus Power

Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 18

 Types of Power
Power based on ones position in
Legitimate the formal hierarchy

Coercive Power based on fear

Power based on the ability to

Reward distribute something that others
value

Power based on ones expertise,

Expert special skill, or knowledge

Power based on identification

Referent with a person who has resources
or traits
Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 19

 Checklist 7.3
Principles of Delegation
The manager can delegate authority but cannot
delegate responsibility.
Clarify the assignment.
Delegate, dont abdicate.
Know what to delegate.
Specify the subordinates range of discretion.
Authority should equal responsibility.
Make the person accountable for results.
Beware of backward delegation.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 20

 Departmentalization:
Creating Departments
Departmentalization
The process through which an
organizations activities are grouped
together and assigned to managers; the
organizationwide division of work.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 21

 Departmentalization
Functional
The grouping of activities by functions performed
Product
The grouping of activities by product produced
Customer
The grouping of activities by common customers
Geographic
The grouping of activities by territory
Process
The grouping of activities by work or customer flow

April 18, 2006 LIS580- Spring 2006 22

 Organizing Departments by
Function
Functional Departmentalization
A form of organization that groups a
companys activities around essential
functions such as
manufacturing,
sales, or finance.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 23

Functional Departmentalization

FIGURE 61
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 24

Organizing Departments by Self-
Contained Divisions/Purposes
Product Departmentalization
Grouping departments around a firms
products or services, or each family of
products or services; also referred to as a
divisional organization.
Customer Departmentalization
Self-contained departments are organized
to serve the needs of specific groups of
customers.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 25

 Divisional Organization
for a Pharmaceuticals Company

FIGURE 62
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 26

Customer Departmentalization,
Grayson Steel Company

FIGURE 63
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 27

 Organizing Departments by Self-
Contained Divisions/Purposes (contd)
Marketing-channel Departmentalization
Departments focus on particular marketing
channels, such as drugstores or grocery
stores.
Geographic (Territorial)
Departmentalization
Separate departments are established for
each of the territories in which the
enterprise does business.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 28

 Marketing Channel
Departmentalization

FIGURE 64
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 29

 Divisional Organizations
Facilitate Coordination

FIGURE 65
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 30

 Checklist 6.1
Functional vs. Divisional Organizations
Functional Organization Advantages
1. It is simple, obvious, and logical.
2. It fosters efficiency.
3. It can simplify executive hiring and training.
4. It can facilitate the top managers control.
Functional Organization Disadvantages
1. It increases the workload on the executive to
whom the functional department heads
report.
2. It may reduce the firms sensitivity to and
service to the customer.
3. It produces fewer general managers.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 31

 Checklist 6.1 (contd)
Functional vs. Divisional Organizations
Divisional Organization Advantages
1. The product or service gets the single-
minded attention of its own general
manager and unit, and its customers
may get better, more responsive
service.
2. Its easier to judge performance.
3. It develops general managers.
4. It reduces the burden for the
companys CEO.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 32

 Checklist 6.1 (contd)
Functional vs. Divisional Organizations
Divisional Organization
Disadvantages
1. It creates duplication of effort.
2. It may diminish top managements
control.
3. It requires more managers with
general management abilities.
4. It can breed compartmentalization.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 33

Creating Matrix Organizations
Matrix Organization
An organization structure in which
employees are permanently attached to
one department but also simultaneously
have ongoing assignments in which they
report to project, customer, product, or
geographic unit heads.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 34

 Matrix Organization
Departmentalization

FIGURE 66
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 35

 Matrix Organizations
Advantages Disadvantages
Access to expertise. Confusion of
Stability of command.
permanent Power struggles and
department conflicts.
assignments for
employees. Lost time in
Allows for focus on coordinating.
specific projects, Excess overhead for
products, or managing matrix
customers. functions.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 36

 Departmentalization in Practice:
A Hybrid
Why mix the types of departmentalization?
Hierarchical considerations
The relationship of top level departments to their
subsidiary departments.
Efficiency
Product, customer, and territorial departments tend to
result in duplicate sales, manufacturing, and other
functional departments.
Common sense
Departmentalizing is still more an art than a science.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 37

The New Summer Tour Organization

FIGURE 68
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 38

Network-based Organizations
Organizational Network
A system of interconnected or cooperating
individuals.
Informal Networks
Communication pathways and relationships
between individuals in an organization that
do not necessarily conform to the formal
chain of command and communication
networks of an organization.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 39

 Network-based Organizations
(contd)
Formal Organizational Network
A recognized group of managers or other
employees assembled by the CEO and the
other senior executive team, drawn from
across the companys functions, business
units, geography, and levels.
Electronic Organizational Networks
Networking through technology-supported
devices such as e-mail, video-conferencing,
and collaborative computing software like
Lotus Notes.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 40

 Formal vs. Social Structure
Rarely do the
communication
patterns match the
formal structure

Cross, Rob. A bird's-eye view: Using social network analysis

to improve knowledge creation and sharing. IBM Executive
strategy report 04Jun2002
http://www-1.ibm.com/services/us/index.wss/xs/imc/a10012
62

April 18, 2006 LIS580- Spring 2006 41

 Network-based Organizations
(contd)
Team-Based Organizations
Team
A group of people committed to a common purpose, set
of performance goals, and approach for which they hold
themselves mutually accountable.
Horizontal Corporations
A structure that is organized around customer-
oriented processes performed by multidisciplinary
cross-functional teams rather than by formal
functional departments.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 42

 The Horizontal Corporation

Source: John A.
Byrne, The Horizontal
Corporation, Business
Week, 20 December FIGURE 611
1993, p. 80. G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 43

 Checklist 6.2
Building Horizontal Organizations
Make responsibilities overlap. Design
individual jobs as broadly as possible, and
keep the number of job titles to a minimum.
Base rewards on unit performance to
emphasize the importance of working
together.
Change the physical layout to promote
collective responsibility. Let people see each
others work.
Redesign work procedures, provide computer
terminals, use the e-mail network, and make
sure managers are available.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 44

 How to Create a Horizontal
Corporation

Source: Source: Reprinted from the December 20, 1993, issue of Business Week FIGURE 612
by special permission. Copyright 1993 by the McGraw-Hill Companies, Inc. G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 45

 Other Organization Types
Federal Organization
An organization in which power is distributed
between a central unit and a number of
constituents, but the central units authority is
intentionally limited.
Virtual Organization
A temporary network of independent companies
that use information technology to share skills,
reduce costs, and provide access to one anothers
markets.
Its success depends on each of the individual
firms responsibility and self-interest to accomplish
the networks purpose.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 46

Effect of Technology on Structure

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 47

 When Organizing:
Always Keep Your Goals in Mind
Business environments are in a constant state
of change.
An organizations strategy must be adapted to
changes in its competitive environment.
Structure follows strategy.
Strategic change creates the need for restructuring
the organization to acquire new and different
knowledge, skills and abilities.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 48

 Checklist 7.1
What Determines Organization Structure
Environment. Fast-changing environments
require organic structures; slowly changing
environments favor mechanistic structures.
Technology. Unit and continuous production
processes favor organic structures. Mass
production processes favor mechanistic structures.
Goals. Ask, What are the main goals we want to
achieve via this organization?
Pros and cons. Each approach to
departmentalization has pros and cons.
Logic and common sense.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 49

 What Are Learning
Organizations?
1. Adopt an organic, networked organizational
form.
2. Encourage their employees to learn and to
confront their assumptions
3. Have employees who share a common vision
4. Have the capacity
to adapt to unforeseen situations
to learn from their own experiences
to shift their shared mindsets
to change more quickly, broadly, and deeply than
ever before.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 50

Organizational Learning as a
Dynamic Process

Crossan, Lane, & White (1999)

April 18, 2006 LIS580- Spring 2006 51

 Abolishing Organizational
Boundaries
Boundaryless Organization
An organization in which management
strips away the walls which typically
separate organizational functions and
hierarchical levels, through
the widespread use of
teams, networks, and
similar structural
mechanisms.

G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 52

 The Four Organizational Boundaries
That Matter

Source: Reprinted by permission of Harvard Business Review. The Four Organizational Boundaries that Matter, FIGURE 03
from The New Boundaries of the Boundaryless Company, by Larry Hirschorn and Thomas Gilmore, MayJune G.Dessler, 2003
1992. Copyright 1992 by the President and Fellows of Harvard College. All rights reserved.

April 18, 2006 LIS580- Spring 2006 53

Managing Learning Organizations
How to Streamline Organizational Decision
Making
Downsize
Reduce management layers
Establish miniunits
How to Cultivate Employees Personal
Mastery
Provide continuous learning opportunities.
Foster inquiry and dialogue.
Establish mechanisms to ensure that the
organization is continuously aware of and can
interact with its environment.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 54

 Challenges in Organization
Merging separate organizations with different
structures
Changing an existing organization to meet
external or internal changes in conditions
Conflicts between departments or groups
Interdependence between organizational units
Centralization vs. decentralization

April 18, 2006 LIS580- Spring 2006 55

 Part of the Independent Integrator Challenge
Facing the Homeland Security Director

Source: Alison Mitchell, Disputes Erupt over Ridges Needs FIGURE 75

for His Job, New York Times, 9 November 2001, p. B7. G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 56

 Methods for Achieving
Coordination
Mutual Adjustment Appoint Staff
Achieving coordination Assistants
through face-to-face Appoint Liaisons
interpersonal
interaction. Appoint Committees
Use Rules and Organize Independent
Procedures Integrators
Standardize An individual or a group
that coordinates the
Exercise Direct activities of several
Supervision: Use the interdependent
Chain of Command departments, but is
independent of them.
Divisionalize
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 57

Managing Organizational Conflict
LineStaff Conflict
Disagreements between a line manager
and the staff manager who is giving him or
her advice.
How to Organize to Reduce Interunit
Conflict
Appeal to power and
the chain of command
Reduce interdependence
Exchange personnel
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 58

 Types of Interdependence

Source: Based on James Thompson, Organizations in Action

(New York: McGraw-Hill, 1967), Chapter 2. FIGURE 76
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 59

 Centralization and
Decentralization
Centralization
A function of how much decision-making
authority is pushed down to lower levels in
an organization; the more centralized an
organization, the higher the level at which
decisions are made
Decentralization
The pushing down of decision-making
authority to the lowest levels of an
organization
Prentice Hall, 2002

April 18, 2006 LIS580- Spring 2006 60

 Decentralize?
Decentralized Organization
Organizational authority for most departmental
decisions is delegated to the department heads.
Control for major companywide decisions is
maintained at the headquarters office.
Decentralization Rules:
Decentralize decisions that affect only one division
or area and that would take a long time for upper
management to make.
Centralize decisions that could adversely affect the
entire firm and that upper management can fairly
quickly and easily.
G.Dessler, 2003

April 18, 2006 LIS580- Spring 2006 61

 Problems With Size
There is a fairly common perception that large organizations tend to
behave much less intelligently than their size suggests. They often
lose the decisiveness seen in small groups and may seem "stupid" to
people within them who work with ideas and knowledge.

There appears to be a fundamental upper limit on the average per

capita decision rate that an organization can sustain, depending
inversely on the organization's entropy. If the limit is broached,
impaired productivity among knowledge managers may result and
large organizations may be disadvantaged when performing
knowledge-intensive tasks that require efficient use of intellectual
capital.
Janow, R. Shannon Entropy and Productivity: Why Big Organizations Can Seem Stupid. Analytic Solutions Group, LLC. 2/28/2004
http://physics.njit.edu/~janow/Paper20040228njit.pdf

April 18, 2006 LIS580- Spring 2006 62

 Hammer vs. Deming
What tradeoffs did Deming and Hammer make
in their approaches to designing
organizations?
Did you notice who was given power in
Demings approach vs. Hammer?
What is driving NYNEX to make changes in
their organization structure?
What component of the organization is hardest
to change?
Do you see the same issues arising in the
War at Work article?
April 18, 2006 LIS580- Spring 2006 63
 Next Time
Managing People
Read Chapter 9 (not 8!!) and the articles
Discussion group questions:
How can relations be improved between Stanley
and the reference librarians?
How, without simply complaining about Stanley,
can you persuade Joanna to listen to the
reference departments perspective?
Who defines the responsibilities of each
department, and how can you, as an interested
party, help accomplish this?

April 18, 2006 LIS580- Spring 2006 64