CHAPTER 10

Managing
Organizational
Structure and
Culture

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 Learning Objectives
1. Identify the factors that influence managers’ choice of an
organizational structure.
2. Explain how managers group tasks into jobs that are motivating
and satisfying for employees.
3. Describe the types of organizational structures managers can
design, and explain why they choose one structure over another.
4. Explain why managers must coordinate jobs, functions, and
divisions using the hierarchy of authority and integrating
mechanisms
5. List the four sources of organizational culture, and explain why and
how a company’s culture can lead to competitive advantage.

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 Organizational Structure

Organizational architecture
• The organizational structure, control systems,
culture, and human resource management
systems that together determine how
efficiently and effectively organizational
resources are used

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 Designing Organizational Structure
(1 of 4)

Organizing
• Process by which managers establish the
structure of working relationships among
employees to allow them to achieve an
organization’s goals efficiently and effectively

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 Designing Organizational Structure
(2 of 4)

Organizational
structure
• Formal system of task
and reporting
relationships that
coordinates and
motivates
organizational
members so they work
together to achieve
organizational goals

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 Designing Organizational Structure
(3 of 4)

Organizational design
• The process by which managers create a
specific type of organizational structure and
culture so that a company can operate in the
most efficient and effective way

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 Figure 10.1 Factors Affecting
Organizational Structure

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 Designing Organizational Structure
(4 of 4)

The way an organization’s structure works

depends on the choices managers make
about:
1. How to group tasks into individual jobs.
2. How to group jobs into functions and
divisions.
3. How to allocate authority and coordinate
functions and divisions.

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 Grouping Tasks into Jobs:
Job Design
Job design
• Job Design is the process by which managers
decide how to divide tasks into specific jobs
(division of labor).
• The appropriate division of labor results
in an effective and efficient workforce.

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 Job Design

Job simplification
• The process of reducing the number of tasks
that each worker performs
Job enlargement
• Increasing the number of different tasks in a
given job by changing the division of labor
Job enrichment
• Increasing the degree of responsibility a
worker has over a job
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 Job Enrichment

1. Empowering workers to experiment to

find new or better ways of doing the job
2. Encouraging workers to develop new
skills
3. Allowing workers to decide how to do the
work
4. Allowing workers to monitor and measure
their own performance

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 The Job Characteristics Model (1 of 2)

Skill variety
• Employee uses a wide range of skills.
Task identity
• Worker is involved in all tasks of the job from
beginning to end of the production process.
Task significance
• Worker feels the task is meaningful to the
organization.

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 The Job Characteristics Model (2 of 2)

Autonomy
• Employee has freedom to schedule tasks and
carry them out.
Feedback
• Worker gets direct information about how well
the job is done.

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 Grouping Jobs into Functions

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 Functional Structure (1 of 2)

Advantages
• Encourages learning from others doing similar
jobs
• Easy for managers to monitor and evaluate
workers
• Allows managers to create the set of functions
they need in order to scan and monitor the
competitive environment

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 Functional Structure (2 of 2)

Disadvantages
• Difficult for departments to communicate with
others
• Preoccupation with own department and
losing sight of organizational goals

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 Divisional Structures

Divisional structure
• An organizational structure composed of
separate business units within which are the
functions that work together to produce a
specific product for a specific customer
• Product, geographic, market

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 Figure 10.3 Product, Geographic,
and Market Structures

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 Types of Divisional Structures (1 of 3)

Product structure
• Managers place each distinct product line or
business in its own self-contained division.
• Divisional managers have the responsibility
for devising an appropriate business-level
strategy to allow the division to compete
effectively in its industry or market.
• GlaxoSmithKline groups research into 8
product divisions to focus on particular
clusters of diseases
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 Product Structure

• Allows functional managers to specialize

in one product area
• Allows division managers to become
experts in their area
• Removes need for direct supervision of
division by corporate managers
• Allows divisional management to improve
the use of resources

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 Types of Divisional Structures (2 of 3)

Geographic structure
• Divisions are broken down by geographic
location.
Global geographic structure
• Managers locate different divisions in each of
the world regions where the organization
operates.
• This generally occurs when managers are
pursuing a multi-domestic strategy.

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 Figure 10.4 Global Geographic and
Global Product Structures

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 Types of Divisional Structures (3 of 3)

Market structure
• Groups divisions according to the particular
kinds of customers they serve
• Allows managers to be responsive to the
needs of their customers and act flexibly in
making decisions in response to customers’
changing needs

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 Matrix Design Structure

Matrix structure
• A matrix structure is an organizational
structure that simultaneously groups people
and resources by function and product.
• The structure is very flexible.
• Each employee has two bosses.

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 Matrix Structure

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 Product Team Structure (1 of 2)

Product team structure

• Structure in which employees are
permanently assigned to a cross-functional
team and report only to the product team
manager or to one of the manager’s direct
subordinates
• Does away with dual reporting relationships
and two-boss managers

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 Product Team Structure (2 of 2)

Cross-functional team
• A group of managers brought together from
different departments to perform
organizational tasks
• Example: Sealy’s cross-functional team
designs a new mattress outside hierarchy

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 Figure 10.5 Product Team Structure

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 Allocating Authority (1 of 3)

Authority
• Power to hold people accountable for their
actions and to make decisions concerning the
use of organizational resources
Hierarchy of authority
• An organization’s chain of command,
specifying the relative authority of each
manager

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 Allocating Authority (2 of 3)

Span of control
• The number of subordinates who report
directly to a manager

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 Allocating Authority (3 of 3)

Line manager
• Someone in the direct line or chain of
command who has formal authority over
people and resources at lower levels
Staff manager
• Someone responsible for managing a
specialist function, such as finance or
marketing

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 Tall and Flat Organizations (1 of 2)

Tall structures have many levels of

authority and narrow spans of control.
• As hierarchy levels increase, communication
gets difficult, creating delays in the time being
taken to implement decisions.
• Communications can also become distorted
as they are repeated through the firm.
• Tall structures can become expensive.

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 Tall Organizations

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 Tall and Flat Organizations (2 of 2)

Flat structures have fewer levels and wide

spans of control.
• Results in quick communications but can
lead to overworked managers

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 Centralization and
Decentralization of Authority
Decentralizing authority
• Giving lower-level managers and non-
managerial employees the right to make
important decisions about how to use
organizational resources
• Flexible and responsive

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 Integrating Mechanisms

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 Organizational Culture (1 of 3)

Organizational culture
• The shared set of beliefs, expectations,
values, and norms that influence how
members of an organization relate to one
another and cooperate to achieve
organizational goals
• Organizational values: the shared standards
that its members use to evaluate whether they
have helped the company achieve its vision
and goals
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 Organizational Culture (2 of 3)

Organizational culture
• Organizational norms: specify or prescribe
the kinds of shared beliefs, attitudes, and
behaviors that its members should observe
and follow
• Informal, but powerful, rules about how
employees should behave or conduct
themselves

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 Figure 10.9 Sources of an
Organization’s Culture

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 Organizational Culture (3 of 3)

Organizational ethics
• The moral values, beliefs, and rules that
establish the appropriate way for an
organization and its members to deal with
each other and with people outside the
organization

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 Video: The Container Store

The Container Store provides significantly more

training for its employees than the industry norm.
How does this training impact job enrichment at
The Container Store?

Employees at The Container Store have a 5-

minute "huddle" every morning. What is the
purpose of this meeting, and how does it reinforce
the culture of the organization?

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