‘Sructurng Orgenttations for Todays Challenges CHAPTER'S 233 The informal organization is the ‘system that develops as employees meet and form relationships. The ‘grapevine, the unofficial flow of information among employees, is the nerve center of the informal organization. How does the informal organization affect the ret eneremet As effective as the informal organization may be in creating group coop- eration, it can still be equally powerful in resisting management directives. Employees may form unions, go on strike together, and generally disrupt operations. Learning to create the right corporate culture and work within the informal organization is thus a key to managerial success.”* eum. + What is an inverted organization? + Why do organizations outsource functions? + What is organizational culture? ‘atin the basi pines of organization management. + What is happening today to American businesses? They are adjusting to changing markets. That is a normal function in a capitalist economy. There will be big winners, like Google and Facebook, and big losers as well. The key to success is remaining flexible and adapt- ing to the changing times. + What are the principles of organization management? Structuring an organization means devising a division of labor (some- times resulting in specialization), setting up teams or departments, and assigning responsibility and authority. It includes allocating resources (such as funds), assigning specific tasks, and establishing procedures for accomplishing the organizational objectives. Managers also have to make ethical decisions about how to treat workers.234 PARTS Business Management Empowering Employee to Setisty Customers Cr ‘Compare the organizational theories of Fayol and Weber. + What were Fayo!'s basic principles? Fayol introduced principles such as unity of command, hierarchy of authority, division of labor, subordination of individual interests to the gen- eral interest, authority, clear communication channels, order, and equity. + What principles did Weber add? Weber added principles of bureaucracy such as job descriptions, written rules and decision guidelines, consistent procedures, and staffing and pro. motions based on qualifications. PRED Evaluate the choices managers make in structuring organizations. + What are the four major choices in structuring organizations? Choices to make in structuring and restructuring organizations cover (1) centralization versus decentralization, (2) breadth of span of control, (3) tall versus flat organization structures, and (4) type of departmentalization. + What are the latest trends in structuring? Departments are often replaced or supplemented by matrix organizations and cross-functional teams that decentralize authority, The span of con- trol becomes larger as employees become self-directed. Another trend is to eliminate managers and flatten organizations. ce Contrast thé + What are the two major organizational models? ‘wo traditional forms of organization are (1) line organizations and (2) line-and-staff organizations. A line organization has clearly defined responsibility and authority, is easy to understand, and provides each worker with only one supervisor. The expert advice of staff assistants in a line-and-staff organization helps in areas such as safety, quality control, computer technology, human resource management, and investing. + What are the key alternatives to the major organizational models? Matrix organizations assign people to projects temporarily and encour- age interorganizational cooperation and teamwork. Cross-functional self-managed teams have all the benefits of the matrix style and are long term, various organizational model EERD eertitytne benetits of ntertirm cooperation and coordination + What are the major concepts involved in interfirm communications? Networking uses communications technology and other means to link organizations and allow them to work together on common objectives. A virtual corporation is a networked organization of replaceable firms that join and leave as needed. Benchmarking tells firms how their performance measures up to that of their competitors in specific functions. The com- pany may then outsource to companies that perform its weaker functions more effectively and efficiently. The functions that are left are the firm's core competencies + What is an inverted organization? An inverted organization places employees at the top of the hierarchy; managers are at the bottom to train and assist employees.‘Structuring Organizations or Today's Ch curren 235 CEE Soe or opinion ctr canta bnenes aap are + What is organizational culture? Organizational (or corporate) culture consists of the widely shared values within an organization that foster unity and cooperation to achieve com- mon goals. + Whatis the difference between the formal and informal organization of a firm? The formal organization details lines of responsibility, authority, and po tion. It’s the structure shown on organization charts. The informal organi zation is the system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal orga- nization. It’s the human side of the organization. The informal organiza- tion is an invaluable managerial asset that often promotes harmony among workers and establishes the corporate culture. As effective as the informal organization may be in creating group cooperation, it can still be equally powerful in resisting management directives. err benchmarking 228 economies of scale 214 networking 226 bureaucracy 217 flat organization organization (or centralized authority 218 structure 219 corporate) culture 231 chain of command 26 formal organization 232 organizational core competencies 229 hierarchy 2'6 chart 216 cross-functional self- Informal organization 232 real time 227 managed teams 226 inverted restructuring 230 decentralized ‘organization 230 span of control 219 ‘authority 218 line organization 223 _staff personnel 223 departmentalization 220 line personnel 223, tall organization digital natives 229 matrix organization 224 structure 219 virtual corporation 227 Now that you have learned some of the basic principles of organization, pause and think about where you have already applied such concepts yourself or when you have been part of an organization that did. 1. Did you find a division of labor necessary and helpful? 2. Were you assigned specific tasks or left on your own to decide what to do? 3. Were promotions based strictly on qualifications, as Weber suggested? What other factors may have been considered? 4, What problems seem to emerge when an organization gets larger? 5. What organizational changes might you recommend to the auto compa- nies? The airline industry?