CHAPTER 6

Organization Structure and Design

The Basic Elements of Organizing

Organization structure and design

 Refers to the overall set of elements that can be used to configure an organization.

Job specialization
 The degree to which the overall task of the organization is broken down and divided into smaller
component parts.

Work teams
 An alternative to job specialization that allows an entire group to design the work system it will use to
perform an interrelated set of tasks.

Alternatives to Specialization

Job rotation
 An alternative to job specialization that involves systematically moving employees from one job to
another.

Job enlargement
 An alternative to job specialization that increases the total number of tasks that workers perform.

Job characteristics approach

 An alternative to job specialization that suggests that jobs should be diagnosed and improved along
five core dimensions, taking into account both the work system and employee preferences.

Five Core Dimensions

 Skill variety, the number of things a person does in a job.
 Task identity, the extent to which the worker does a complete or identifiable portion of the total job.
 Task significance, the perceived importance of the task.
 Autonomy, the degree of control the worker has over how the work is performed.
 Feedback, the extent to which the worker knows how well the job is being performed.

Grouping Job: Departmentalization

Departmentalization
 The process of grouping jobs according
to some logical arrangement.
 Establishing Reporting Relationships

Chain of command
 A clear and distinct line of authority among the positions in an organization.

Span of management
 The number of people who report to a particular manager.

Tall Versus Flat Organizations

In recent years, managers have begun to focus attention on the optimal number of layers in their organizational
hierarchy. Having more layers results in a taller organization, whereas having fewer layers results in a flatter
organization.

Tall Organizations
 Are more expensive because of the number of managers involved.
 Foster more communication problems because of the number of people through whom information
must pass.

Flat Organizations
 Lead to higher levels of employee morale and productivity.
 Create more administrative responsibility for the relatively few managers.
 Create more supervisory responsibility for managers due to wider spans of control.

Distributing Authority
Authority
 Power that has been legitimized by the organization.

Delegation
 The process by which a manager assigns a portion of his or her total workload to others.

Reasons for Delegation:

 To enable the manager to get more work done by utilizing the skills and talents of subordinates.
 To foster development of subordinates by having them participate in decision making and problem
solving.

Decentralization and Centralization

Decentralization
 The process of systematically delegating power and authority throughout the organization to middle
and lower level managers.

Centralization
 The process of systematically retaining power and authority in the hands of higher-level managers.

Coordinating Activities

Coordination
 The process of linking the activities of the various departments of the organization
The Need for Coordination:
 The primary reason for coordination is that departments and work groups are interdependent—they
depend on one another for information and resources to perform their respective activities.
 The greater the interdependence between departments, the more coordination the organization requires
if departments are to be able to perform effectively.

Three Major Forms of Interdependence

Pooled interdependence
 When units operate with little interaction; their output is pooled at the organizational level

Sequential interdependence
 When the output of one unit becomes the input for another in a sequential fashion

Reciprocal interdependence
 When activities flow both ways between units.

The Bureaucratic Model of Organization Design

Bureaucracy
 A model of organization design based on a legitimate and formal system of authority.

According to Weber, the ideal bureaucracy exhibits five basic characteristics:

 The organization should adopt a distinct division of labor, and each position should be filled by an
expert.
 The organization should develop a consistent set of rules to ensure that task performance is uniform.
 The organization should establish a hierarchy of positions or offices that creates a chain of command
from the top of the organization to the bottom.
 Managers should conduct business in an impersonal way and maintain an appropriate social distance
between themselves and their subordinates.
 Employment and advancement in the organization should be based on technical expertise, and
employees should be protected from arbitrary dismissal.

The Situational Influences on Organization Design

Situational view of organization design

 Based on the assumption that the optimal design for any given organization depends on a set of
relevant situational factors

Core Technology
Technology
 Conversion process used to transform inputs into outputs

Three basic forms of technology were identified by Joan Woodward.

1. Unit or small batch technology -the product is custom made to customer specifications and produced in
small quantities.

2. Large batch or mass production technology – the product is manufactured in assembly line fashion by
combining components parts into another part or finished product.

3. Continuous process technology- raw materials are transformed to a finished product by a series of machine.
Environment

Mechanistic Organization
 Similar to the bureaucratic model, most frequently found in stable environments.

Organic organization
 Very flexible and informal model of organization design, most often found in unstable and
unpredictable environments.

Differentiation
 Extent to which the organization is broken down into subunits.

Integration
 Degree to which the various subunits must work together in a coordinated fashion.

Organizational Size and Life Cycle

Organizational size
 Total number of full-time or full-time equivalent employees.

Organizational life cycle

 Progression through which organizations evolve as they grow and mature.

Basic Forms of Organization Design

Functional (U-Form) Design

 functional design Based on the functional approach to departmentalization.

 Requires coordination across all departments.

 Resembles functional departmentalization in its advantages and disadvantages.
 Promotes a narrowing functional rather than broader organizational focus.
 Tends to promoter centralization.
 Is common in smaller organizations.
Conglomerate (H-Form) Design
 Used by an organization made up of a set of unrelated businesses.

 Organization consists of a set of unrelated businesses with a general manager for each business.
 Holding-company design is similar to product departmentalization.
 Coordination is based on the allocation of resources across companies in the portfolio.
 Design has produced only average to weak financial performance; has been abandoned for other
approaches.

Divisional (M-Form) Design

 Based on multiple businesses in related areas operating within a larger organizational framework.

 Is based on multiple businesses in related areas operating within a larger organizational framework;
following a strategy of related diversification.
 Activities are decentralized down to the divisional level; others are centralized at the corporate level.
 The largest advantages of the M-form design are the opportunities for coordination and sharing of
resources.

Matrix Design
 Based on two overlapping bases of departmentalization.

 A set of product groups or temporary

departments are superimposed across the
functional departments.

 Employees in the matrix become members

of both their departments and a project team
under a project manager.

 The matrix creates a multiple command

structure in which an employee reports to
both departmental and project managers.
Hybrid Design
 Is based on two or more organization design forms such as a mixture of related divisions and a single
unrelated division.

Emerging Issues In Organization Design

Team Organization
 An approach to organization design that relies almost exclusively on project-type teams, with little or
no underlying hierarchy.

Virtual Organization
 One that has little or no formal structure

Learning Organization
 One that works to facilitate the lifelong learning and personal development of all its employees while
continually transforming itself to respond to changing demands and needs
CHAPTER 9
Basic Elements of Individual Behavior in Organizations

Understanding Individuals in Organizations

Psychological Contract
 The overall set of expectations held by an individual with respect to what he or she will contribute to
the organization and what the organization will provide in return.

Contributions
 What the individual provides to the organization.

Inducements
 What the organization provides to the individual.

The Person-Job Fit

 The extent to which the contributions made by the individual match the inducements offered by the
organization.

Personality and Individual Behavior

Individual differences
 Personal attributes that vary from one person to another.

Personality
 The relatively stable set of psychological and behavioral attributes that distinguish one person from
another.

The “Big Five” Personality Traits

The “Big Five” Model of Personality

 A popular personality framework based on five key traits.

Agreeableness
 A person’s ability to get along with others.

Conscientiousness
 A person’s ability to manage multiple tasks and consistently meet deadlines.

Neuroticism
 Extent to which a person experiences anxiety or is poised, calm, resilient, and secure.

Extraversion
 A person’s comfort level with relationships.

Openness
 A person’s rigidity of beliefs and range of interests.
 The Myers-Briggs Framework

This framework, based on the classic work of Carl Jung, differentiates people in terms of four general
dimensions, defined as follows:

 The Myers–Briggs Type Indicator (MBTI) is one popular questionnaire that some organizations use
to assess personality types. Is a useful method for determining communication styles and interaction
preferences.
 Extraversion (E) versus introversion (I). Extraverts get their energy from being around other people,
whereas introverts are worn out by others and need solitude to recharge their energy.
 Sensing (S) versus intuition (N). The sensing type prefers concrete things, whereas intuitives prefer
abstract concepts.
 Thinking (T) versus feeling (F). Thinking individuals base their decisions more on logic and reason,
whereas feeling individuals base their decisions more on feelings and emotions.
 Judging (J) versus perceiving (P). People who are the judging type enjoy completion or being
finished, whereas perceiving types enjoy the process and open-ended situations.

Personality Traits at Work

Locus of control
 The degree to which an individual believes that his or her behavior has a direct impact on the
consequences of that behaviour.

Internal locus of control

 individuals who believe they are in control of their lives.

External locus of control

 individuals believe that external forces dictate what happens to them.

Self-efficacy
 An individual’s beliefs about his or her capabilities to perform a task.

Authoritarianism
 The extent to which an individual believes that power and status differences are appropriate within
hierarchical social systems like organizations.

Machiavellianism
 Behavior directed at gaining power and controlling the behavior of others.

Self-esteem
 The extent to which a person believes that he or she is a worthwhile and deserving individual.

Risk propensity
 The degree to which an individual is willing to take chances and make risky decisions.

Emotional Intelligence

Emotional Intelligence (EQ)

 The extent to which people are selfaware, manage their emotions, motivate themselves, express
empathy for others, and possess social skills.
EQ various dimensions can be described as follows:
 Self-awareness. It refers to a person’s capacity for being aware of how they are feeling. In general,
more self-awareness allows people to more effectively guide their own lives and behaviors.
 Managing emotions. This refers to a person’s capacities to balance anxiety, fear, and anger so those
emotions do not overly interfere with getting things accomplished.
 Motivating oneself. This refers to a person’s ability to remain optimistic and to continue striving in the
face of setbacks, barriers, and failure.
 Empathy. This refers to a person’s ability to understand how others are feeling, even without being
explicitly told.
 Social skill. This refers to a person’s ability to get along with others and to establish positive
relationships.

Attitudes and Individual Behavior

Attitudes
 Complexes of beliefs and feelings that people have about specific ideas, situations, or other people.

Cognitive Dissonance
 Caused when an individual has conflicting attitudes.

Work-Related Attitudes

Job satisfaction or dissatisfaction

 An attitude that reflects the extent to which an individual is gratified by or fulfilled in his or her work.

Organizational commitment
 An attitude that reflects an individual’s identification with and attachment to the organization itself.

Affect and Mood in Organizations

Positive affectivity
 A tendency to be relatively upbeat and optimistic, have an overall sense of well-being, see things in a
positive light, and seem to be in a good mood.

Negative affectivity
 A tendency to be generally downbeat and pessimistic, see things in a negative way, and seem to be in a
bad mood.

Perception and Individual Behavior

Perception
 The set of processes by which an individual becomes aware of and interprets information about the
environment.

Selective perception
 The process of screening out information
that we are uncomfortable with or that
contradicts our beliefs.

Stereotyping
 The process of categorizing or labelling
people on the basis of a single attribute.
 Perception and Attribution

Attribution
 The process of observing behavior and attributing causes to it.

The basic framework around which we form attributions is

 Consensus (the extent to which other people in the same situation behave the same way)
 Consistency (the extent to which the same person behaves in the same way at different times)
 Distinctiveness (the extent to which the same person behaves in the same way in other situations)

Stress and Individual Behavior

Stress
 An individual’s response to a strong stimulus, which is called a stressor.

General Adaptation Syndrome (GAS)

 General cycle of the stress process

The GAS represents the normal process by which we react to stressful events.
Stage 1: alarm—we feel panic and alarm, and our level of resistance to stress drops.
Stage 2: resistance—represents our efforts to confront and control the stressful circumstance.
Stage 3: exhaustion—and just give up or quit.

Personality Types

Type A
 Individuals who are extremely competitive, are very devoted to work, and have a strong sense of time
urgency.

Type B
 Individuals who are less competitive, are less devoted to work, and have a weaker sense of time
urgency.

Causes and Consequences of Stress

Organizational Stressors

Causes of Work Stress

 There are several causes of work stress in organizations. Four general sets of organizational stressors
are task demands, physical demands, role demands, and interpersonal demands.
Consequences of Stress

Negative personal consequences

 Behavioral—smoking, alcoholism, overeating, drug abuse.
 Psychological—sleep disturbances, depression.
 Medical—heart disease, stroke, backaches, ulcers, skin conditions.
 Negative work-related consequences
 Poor quality work output and lower productivity.
 Job dissatisfaction, low morale, and a lack of commitment.
 Withdrawal through indifference and absenteeism

Individual Consequences of Stress

Burnout
 A feeling of exhaustion that may develop when someone experiences too much stress for an extended
period of time.

Managing Stress

Stress Management Strategies for Individual

 Regular exercise
 Relaxation
 Time management
 Support group

Creativity in Organizations

Creativity
 The ability of an individual to generate new ideas or to conceive of new perspectives on existing ideas.

The Creative Individuals

These attributes generally fall into three categories:

Background Experiences and Creativity

 creative individuals were raised in environments in which creativity was nurtured.

Personal Traits and Creativity

 traits shared by most creative people are openness, an attraction to complexity, high levels of
energy, independence and autonomy, strong self-confidence, and a strong belief that one is, in
fact, creative.

Cognitive Abilities and Creativity

 are an individual’s power to think intelligently and to analyze situations and data effectively.

Divergent thinking
 is a skill that allows people to see differences among situations, phenomena, or events.

Convergent thinking
 is a skill that allows people to see similarities among situations, phenomena, or events.
 Types of Workplace Behavior

Workplace Behavior
 A pattern of action by the members of an organization that directly or indirectly influences
organizational effectiveness.

Performance Behaviors
 The total set of work-related behaviors that the organization expects the individual to display.

Withdrawal Behaviors

Absenteeism
 When an individual does not show up for work.

Turnover
 When people quit their jobs.

Organizational Citizenship
 The behavior of individuals that makes a positive overall contribution to the organization.

Determinants of Organizational Citizenship

 Individual’s personality, attitudes and needs

 Social context of the workplace
 Organizations capacity to reward citizenship

Dysfunctional Behaviors
 Those that detract from, rather than contribute to, organizational performance.

 Absenteeism and turnover

 Theft and sabotage
 Sexual and racial harassment
 Politicized behavior
 Intentionally misleading others
 Spreading malicious rumors
 Workplace violence
CHAPTER 10
Managing Employee Motivation and Performance

The Nature of Motivation

Motivation
 The set of forces that cause people to behave in certain ways.

Individual performance is generally determined by three things:

 Motivation (the desire to do the job),
 Ability (the capability to do the job),
 The work environment (the resources needed to do the job). If an employee lacks ability, the manager
can provide training or replace the worker.

Content Perspectives on Motivation

Content Perspectives
 Approach to motivation that tries to answer the question “What factors motivate people?”

The Needs of Hierarchy Approach

 Maslow’s hierarchy of needs Suggests that

people must satisfy five groups of needs in
order— physiological, security,
belongingness, esteem, and self-actualization.

The Two-Factor Theory

Two-Factor Theory of Motivation
 Suggests that people’s satisfaction and dissatisfaction are influenced by two independent sets of
factors—motivation factors and hygiene factors.

The Individual Human Needs

Need for Achievement

 The desire to accomplish a goal or task more effectively than in the past.

Need for Affiliation

 The desire for human companionship and acceptance.

Need for Power

 The desire to be influential in a group and to control one’s environment.
 Process Perspectives on Motivation

Process Perspectives
 Approaches to motivation that focus on why people choose certain behavioral options to satisfy their
needs and how they evaluate their satisfaction after they have attained those goals.

1.) Expectancy theory

 Suggests that motivation depends on
two things—how much we want
something and how likely we think we
are to get it.

The Expectancy Model of Motivation

Effort-to-Performance Expectancy
 The individual’s perception of the probability that effort will lead to high performance.

Performance-to-Outcome Expectancy
 The individual’s perception that performance will lead to a specific outcome.

Outcomes Consequences - of behaviors in an organizational setting, usually rewards.

Valence
 An index of how much an individual values a particular outcome; the attractiveness of the outcome to
the individual.

The Porter-Lawler Extension

The Porter–Lawler Extension of Expectancy Theory

 suggests that if performance results in equitable
rewards, people will be more satisfied. Thus,
performance can lead to satisfaction. Managers must
therefore be sure that any system of motivation
includes rewards that are fair, or equitable, for all.

The Equity Theory

Equity Theory
 Contends that people are motivated to seek social equity
in the rewards they receive for performance.

Goal-Setting Theory
Behavior
 is a result of conscious goals and intentions.

Setting goals
 influences behavior in organizations.

Goal difficulty is the extent to which a goal is challenging and requires effort.
Goal specificity is the clarity and precision of the goal.
Goal acceptance is the extent to which a person accepts a goal as his or her own.
Goal commitment is the extent to which he or she is personally interested in reaching the goal.
The Expanded Goal-Setting Theory of Motivation

The Reinforcement Perspectives on Motivation

Reinforcement Theory
 Approach to motivation that argues that behavior that results in rewarding consequences is likely to be
repeated, whereas behavior that results in punishing consequences is less likely to be repeated.

Assumes that:
 Behavior that is rewarded is likely to be repeated.
 Behavior that is punished is less likely to be repeated.

Kinds of Reinforcement in Organization

Positive Reinforcement
 A method of strengthening behavior with rewards or positive outcomes after a desired behavior is
performed.

Avoidance
 Used to strengthen behavior by avoiding unpleasant consequences that would result if the behavior
were not performed.

Punishment
 Used to weaken undesired behaviors by using negative outcomes or unpleasant consequences when the
behavior is performed.

Extinction
 Used to weaken undesired behaviors by simply ignoring or not reinforcing them.

Providing Reinforcement in Organizations

Fixed-Interval Schedule
 Provides reinforcement at fixed intervals of time, such as regular weekly pay-checks.

Variable-Interval Schedule
 Provides reinforcement at varying intervals of time, such as occasional visits by the supervisor.

Fixed-Ratio Schedule
 Provides reinforcement after a fixed number of behaviors regardless of the time interval involved, such
as a bonus for every fifth sale.

Variable-Ratio Schedule
 Provides reinforcement after varying numbers of behaviors are performed, such as the use of
compliments by a supervisor on an irregular basis.
 Using Reinforcement in Organizations

Organizational Behavior Modification (OB Mod)

 Method for applying the basic elements of reinforcement theory in an organizational setting.

Popular Motivational Strategies

Empowerment
 The process of enabling workers to set their own work goals, make decisions, and solve problems
within their sphere of responsibility and authority.

Participation
 The process of giving employees a voice in making decisions about their own work.

Areas of Participation for Employees

 Making decisions about their jobs.
 Making decisions about administrative matters.
 Participating in decision making about broader issues of product quality.

Alternative Forms of Work Arrangement

Compressed Work Schedule

 Working a full forty-hour week in fewer than the traditional five days.

Flexible-Work Schedules
 Work schedules that allow employees to select, within broad parameters, the hours they work.

Job Sharing
 When two part-time employees share one full-time job.

Telecommuting
 Allowing employees to spend part of their time working offsite, usually at home.

Using Reward Systems To Motivate Performance

Reward System
 The formal and informal mechanisms by which employee performance is defined, evaluated, and
rewarded

Effects of Organizational Rewards

 Higher-level performance-based rewards motivate employees to work harder.
 Rewards help align employee self-interest with organizational goals.
 Rewards foster increased retention and citizenship.

Merit Reward Systems

Merit Pay
 Pay awarded to employees on the basis of the relative value of their contributions to the organization.

Merit Pay Plan

 Compensation plan that formally bases at least some meaningful portion of compensation on merit.
 Incentive Reward System

Monetary Incentives
 Incentive plan.
 Employee is paid a certain amount of money for every unit the employee produces.
 Sales commissions plan.
 Employee is paid a percentage of the employee’s sales to customers for selling the firm’s products or
services.

Nonmonetary Incentives
 Immediate, and one-time rewards.
 Days off, additional paid vacation time, and special perks.

Common Team and Group Reward Systems

Gainsharing Programs
 Designed to share the cost savings from productivity improvements with employees.

Scanlon Plan
 Similar to gainsharing, but the distribution of gains is tilted much more heavily toward employees.

Profit Sharing Plans Provide

 an annual bonus to all employees based on corporate profits.

New Approach to Performance-Based Rewards

Standard Forms of Executive Compensation

 Base salary
 Incentive pay (bonuses)

Special Forms of Executive Compensation

 Stock option plans
 Executive perks

Employee Participation
 Allowing employee participation in the deciding the distribution of rewards.

Innovation in Incentive Programs

 Offering stock options to all employees.
 Individualizing reward systems such that different employees can be offered different incentives.