John R. Schermerhorn, Jr.

11 Daniel G. Bachrach

Introduction to
Management
13th edition

CHAPTER 11
FUNDAMENTALS OF ORGANIZING
 PLANNING AHEAD — KEY TAKEAWAYS

❑ Describe organizing as a management function

and the difference between formal and informal
organization structures.
❑ Identify the traditional organizational structures,
and the strengths and weaknesses of each.
❑ Identify newer horizontal organizational
structures, and the strengths and weaknesses of
each.
❑ Explain how organizational designs are changing
in the modern workplace.

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 CHAPTER 11 OUTLINE
1. Organizing as a Management Function
a) What is organization structure?
b) Formal structures
c) Informal structures
2. Traditional Organization Structures
a) Functional structures
b) Divisional structures
c) Matrix structures
3. Horizontal Organization Structures
a) Team structures
b) Network structures
c) Boundaryless structures
4. Organizational Designs
a) Contingency in organizational design
b) Mechanistic and organic organization designs
c) Trends in organizational designs
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ORGANIZING AS A MANAGEMENT FUNCTION
 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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FIGURE 11.1 ORGANIZING VIEWED IN RELATIONSHIP
WITH THE OTHER MANAGEMENT FUNCTIONS

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ORGANIZING AS A MANAGEMENT FUNCTION
 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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ORGANIZING AS A MANAGEMENT FUNCTION
 Informal structures 
 The set of unofficial relationships between organization
members
 Social network analysis
 Identifies informal structures and social relationships in the

organization
 Potential advantages of informal structures:
 Allow people to make contacts with others who can help them

get things done

 Stimulate learning as people work and interact together

 Sources of emotional support and friendship that satisfy

members’ social needs

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ORGANIZING AS A MANAGEMENT FUNCTION

Potential disadvantages of informal structures:

Diversion of
Presence of May carry May breed work efforts Feeling of
Susceptibility
“In and out inaccurate resistance to from alienation by
to rumor
groups” information change important outsiders
objectives

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TRADITIONAL ORGANIZATION STRUCTURES

 Traditional organization structures

Functional Divisional Matrix

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TRADITIONAL ORGANIZATION STRUCTURES
 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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TRADITIONAL ORGANIZATION STRUCTURES
Potential disadvantages of functional structures:
Functional chimneys
problem
Difficulties in pinpointing • Sense of cooperation and common
responsibilities purpose break down
• Narrow view of performance
objectives

Potential advantages of functional structures:

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

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

Potential advantages of divisional structures:

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

Potential disadvantages of matrix structures:

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

Potential advantages of matrix structures:

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

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HORIZONTAL ORGANIZATION STRUCTURES
 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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 FIGURE 11.5 HOW A TEAM STRUCTURE USES CROSS-
FUNCTIONAL TEAMS FOR IMPROVED LATERAL RELATIONS

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HORIZONTAL ORGANIZATION STRUCTURES

Potential disadvantages of team structures:

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

Potential advantages of team structures:

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

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 HORIZONTAL ORGANIZATION STRUCTURES

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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HORIZONTAL ORGANIZATION STRUCTURES

Potential disadvantages of network structures:

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

Potential advantages of network structures:

Firms can operate
with fewer full-time Reduced overhead Permits operations
employees and less costs and increased across great
complex internal operating efficiency distances
systems
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HORIZONTAL ORGANIZATION STRUCTURES
Boundaryless organizations
 Eliminate internal boundaries among
subsystems and external boundaries with the
external environment
 A combination of team and network
structures, with the addition of
“temporariness”

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HORIZONTAL ORGANIZATION STRUCTURES

Boundaryless organizations
 Key requirements:
 Absence of hierarchy
 Empowerment of team members

 Technology utilization

 Acceptance of
impermanence
 Encourage creativity, quality, timeliness,
flexibility, and efficiency
 Knowledge sharing is both a goal and
essential component
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HORIZONTAL ORGANIZATION STRUCTURES

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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 ORGANIZATIONAL 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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 ORGANIZATIONAL 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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 ORGANIZATIONAL 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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 ORGANIZATIONAL 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 • Informal and personal
• Formal and impersonal 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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