SOCI110 Module 3 - STRUCTURE
0. OBJECTIVES
In this module you will learn
-
what organizational structure represents
-
the information-processing approach to structure,
in terms of vertical and horizontal information linkages
-
the nature and the pros and cons of the basic
structures: functional, divisional/product, and geographical
-
the nature and the pros and cons of composite
structures: matrix, horizontal, and various forms of hybrid structures
1. DEFINITION OF STRUCTURE
Organization structure is reflects in the organization
chart.
The notion of organization structure has
3 components:
-
formal reporting relationships (as described
by the number of levels in the hierarchy, span of control of managers and
supervisors,...)
-
grouping together of individuals into departments,
and departments into organization
-
systems of communication, coordination, integration
of work, etc., defining the pattern of interactions among
employees
2. STRUCTURE VIEWED FROM THE INFORMATION-PROCESSING
PERSPECTIVE
Structure is viewed as constraining the flow of
information within the organization. Contextual variables affect
the information-processing requirements of an organization (EX: reciprocal
interdependence among departments requires intensive communication; uncertain
environment requires greater information processing). The information-processing
requirements determine in turn the suitability of the structure.
Structure is made up of vertical and
horizontal
linkages with different capacities for carrying information.
These linkages are the nuts and bolts of which structures are made.
The different types of vertical and horizontal linkages are described in
the next 2 exhibits.
Minicase: General Mills (Daft 6e
p. 209). General Mills uses product managers as horizontal integrators.
They are in charge of a specific product line (such as Cheerios or Gold
Medal) but have no supervisory authority. They often have to use
persuasion to get things done.
For the moment let's try to guess the answers
to the following question (we will discuss these systematic patterns when
we discuss organization technology and environment):
Q - The need for horizontal coordination increases
when
-
environmental uncertainty increases (TRUE/FALSE)
-
there is pooled interdependence (TRUE/FALSE)
-
the environment is simple and stable (TRUE/FALSE)
Q - When Emily called the "hot line" of the word
processing software to find out how to create paragraphs with hanging indent,
she was told by the customer service representative: "This is a complicated
question. Let me ask my supervisor and call you back." This
is an example of what kind of vertical linkage?
Q - A liaison person
-
may have a title such as product manager (TRUE/FALSE)
-
enhances the vertical linkage of the organization
(TRUE/FALSE)
-
reports to one of the functional departments being
coordinated (TRUE/FALSE)
-
is responsible for coordinating only one department
(TRUE/FALSE)
3. GROUPING OPTIONS IN ORGANIZATION DESIGN
Employees can be grouped by activity, output,
user/customer, or some combination.
There is trade-off in any grouping:
grouping facilitates interactions among employees in the same group, but
makes interactions among employees in different groups more difficult.
Q - What is the main advantage and the main disadvantage
of grouping employees into departments, for communication among employees:
4. BASIC STRUCTURES: FUNCTIONAL, DIVISIONAL,
& GEOGRAPHICAL
The implications of different kinds of groupings
can be understood by looking at a few "ideal types" of structure.
1. Functional Structure
Minicase: Blue Bell Creameries (Daft
p. 97). Blue Bell Creameries uses a functional structure to insure
the production of high quality ice-cream. Major departments include
sales, quality control, production, maintenance, and distribution.
2. Divisional aka Product Structure
Minicase: Microsoft Corp. (Daft p.
100). Microsoft has recently moved to a divisional structure with
8 divisions.
3. Geographic Structure
The geographic structure may be viewed as a special
form of divisional structure.
Q - Nick Zabor is the vice president of human
resource management for his company. Other officers in the company
include the vice presidents of engineering, production, and finance.
The structure of this small company is likely to be ___ ?
5. COMPOSITE STRUCTURES: MATRIX, HORIZONTAL,
HYBRID
In recent times organizations have adapted to
growth and changes in environment and technology by developing more complex
structures that are composites of the basic types.
1. Matrix Structure
Minicase: Worldwide Steel (aka
Pittsburgh Steel) (Daft pp. 105-106). Pittsburgh Steel
(aka Worldwide Steel) changed from a functional structure to a matrix
structure to respond to increased environmental turbulence due to inflation,
contraction and foreign competition. Two functional departments,
field sales and industrial relations, were kept outside the matrix because
they work independently.
A unique characteristic of the matrix structure
is that some employees have 2 "bosses". The "matrix bosses" are department
heads and program directors.
A matrix structure is appropriate when:
-
there is pressure for flexible sharing of resources
across products (which is a function of the overall size of the organization
and is more likely when the organization is not very large)
-
there is a dual environmental pressure for both
technical quality (favoring a functional structure) and frequent
innovation (favoring a product structure)
-
the environmental domain is highly uncertain (
= unstable + complex) and there is high interdependence among departments
2. Horizontal Structure
Minicase: Xerox (Daft p. 110). Xerox
has reorganized into an horizontal structure in which a set of teams deals
with an entire process. Teams take an idea through all the stages
necessary to produce a marketable product. Each team contains all
the necessary knowledge and skills that would have once been distributed
among separate functional departments.
3. Hybrid Structure
Hybrid structures combine elements of the basic
structures to tailor a structure to the specific needs of the organization.
EX:
-
Organization has self-contained units (divisions)
for its different products, but some functions are kept centralized and
located at headquarters (see Sun Petroleum example)
-
Organization creates a new horizontal structure
based on work processes while maintaining some functional departments,
such as finance and human resources (see Ford example).
Minicase: Sun Petroleum Products
(Daft 6e p. 222). To become more responsive to changing markets,
Sun Petroleum reorganized from a functional to a hybrid structure by creating
3 product lines, each with its own marketing, planning, supply & distribution,
and manufacturing departments. This product structure coexists with
functional departments for refineries, human resources, technology, financial
services, etc.
6. SYMPTOMS OF STRUCTURAL DEFICIENCY
In the information-processing view, the structure
must meet the information-processing requirements of the organizations
as determined by contextual factors.
One can approach the issue of how well a structure fits structural contingencies
of the organization by comparing different structures along dimensions
of
-
need for control, efficiency, reliability, stability
-
need for coordination, learning, innovation, flexibility
If it doesn't, structural deficiency may be indicated
in the following symptoms:
-
decision making is delayed or of poor quality
(top management overloaded because of too much centralization? Inadequate
horizontal or vertical linkages?)
-
lack of innovation in the presence of a changing
environment (insufficient horizontal coordination? No provision
for environmental scanning and innovation?)
-
too much conflict (no mechanism to combine
conflicting department goals into overall organizational goals, perhaps
because of insufficient horizontal linkages)
Q - When jobs with similar activities are grouped
together in an organization, the structure is called ____ ?
Q - When the primary method for dividing labor
uses self-contained units, the structure is called ____ ?
Q - Weaknesses of the matrix structure include
-
not enough emphasis can be placed on functional
specialization (TRUE/FALSE?)
-
employees may experience anxiety and stress from
having two bosses (TRUE/FALSE?)
-
not enough emphasis can be placed on product innovation
(TRUE/FALSE?)
Q - "Major advantages of a functional structure
are specialization, efficiency, and quality." (TRUE/FALSE?)
Q - "A major disdvantage of the functional
structure
is that it is slow to respond to environmental changes that require coordination
between departments." (TRUE/FALSE?)
Q - A divisional/product structure
-
increases centralization of decision making (TRUE/FALSE?)
-
is not suited to rapid change in an unstable environment
(TRUE/FALSE?)
-
facilitates coordination across product lines
(TRUE/FALSE?)
-
allows units to adapt to differences in products,
regions, and customers (TRUE/FALSE?)
Q - The Sun Petroleum Products Company restructured
from a functional structure. It now has divisions for fuels, lubricants,
chemicals, human resources, technology, and financial services. The
new structure is called a ___ structure.
Q - "One advantage of the matrix structure
is that it reduces the amount of time managers must spend in meetings."
(TRUE/FALSE?)
Q - "A matrix structure is appropriate when
pressure exists to share resources across product lines but achieveing
high technical quality is not a primary consideration." (TRUE/FALSE?)
APPENDIX: AQUARIUS ADVERTISING AGENCY CASE
Last modified 4 Sep 2001
