Essentials of Organizational Behavior
Fourteenth Edition
Chapter 15
Foundations of
Organizational Structure
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After studying this chapter you should be
able to:
1. Identify the seven elements of an organization’s structure.
2. Identify the characteristics of the functional structure, the
divisional structure, and the matrix structure.
3. Identify the characteristics of the virtual structure, the
team structure, and the circular structure.
4. Describe the effects of downsizing on organizational
structures and employees.
5. Contrast the reasons for mechanistic and organic
structural models.
6. Analyze the behavioral implications of different
organizational designs.
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What Is Organization Structure?
• Organizational Structure:
Defines how job tasks are formally divided,
grouped, and coordinated
– Key elements:
1.
2.
3.
4.
5.
6.
7.
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
Boundary spanning
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Key Questions and Answers
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Work Specialization
• Work specialization:
Describes the degree to which activities in the
organization are subdivided into separate jobs
– Also known as division of labor
– Benefits
▪ Greater efficiency and lower costs
– Costs
▪ Human costs when carried too far
▪ Job enlargement as a solution
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Work Specialization Economies
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Departmentalization
• Departmentalization:
Basis by which jobs are grouped together so that
common tasks can be coordinated
• Common bases:
–
–
–
–
Functional
Product or service
Geography
Process and customer
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Chain of Command
• Chain of command:
Unbroken line of authority that extends from the
top of the organization to the lowest echelon and
clarifies who reports to whom
– Authority: positional rights
– Unity of command: one boss
• Fewer organizations find this is relevant
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Span of Control
• Span of control:
The number of employees a manager is expected
to effectively and efficiently direct
– Determines the number of levels and managers an
organization has
▪ Trend is toward wider spans of control
▪ Wider span depends on knowledgeable employees
▪ Affects speed of communication and decision making
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Contrasting Spans of Control
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Centralization and Decentralization
• Centralization:
Degree to which decision making is concentrated
at a single point in the organization
– Only includes formal authority: positional rights
– Highly centralized when top managers make all the
decisions
– Decentralized when front line employees and
supervisors make decisions
– Trend is toward increased decentralization
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Formalization
• Formalization:
Degree to which jobs within the organization are
standardized
– Formal: minimum discretion over what is to be done,
when it is done, and how
– Informal: freedom to act is necessary
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Boundary Spanning
• Boundary spanning:
When individuals form relationships outside their
formally assigned groups
– Liaison roles
– Development activities
▪ Job rotations
– Organizational goals and shared identity
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Common Organizational Designs
• Three common organizational frameworks:
1. Simple structure
2. Bureaucracy
3. Matrix structure
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Simple Structure
• Low degree of departmentalization
• Wide spans of control
• Authority centralized in a single person
• Little formalization
• Difficult to maintain in anything other than small
organizations
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Bureaucracy
• Highly routine operating tasks achieved through
specialization
–
–
–
–
–
Formal rules and regulations
Centralized authority
Narrow spans of control
Tasks grouped by functional departments
Decision making follows the chain of command
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Functional and Divisional Structures
• Functional structure: groups employees by their
similar specialties, roles, or tasks
• Divisional structure: groups employees into
units by product, service, customer, or geographic
market area
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Matrix Structure
• Combines two forms of departmentalization
– Functional
– Product
• Dual chain of command
• Advantages:
– Facilitates coordination and efficient allocation of
specialists
• Disadvantages:
– Possible confusion, fosters power struggles, stress
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Matrix Structure for a College of Business
Administration
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New Design Options
• Virtual Organization:
A small core organization that outsources its major
business functions
– Highly centralized with little or no departmentalization
– Provides maximum flexibility while concentrating on
what the organization does best
– Reduced control over key parts of the business
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A Virtual Organization
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The Team Structure
• Team structure:
–
–
–
–
Eliminates the chain of command
Has limitless spans of control
Replaces departments with empowered teams
Breaks down geographical barriers
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The Circular Structure
• Circular structure: Top management is at the
center of the organization with its vision spreading
outward in rings grouped by function
– May be confusing for employees
– May be used to spread CSR initiatives
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The Leaner Organization: Downsizing
• Downsizing:
A systematic effort to make an organization leaner
by selling off business units, closing locations or
reducing staff
– Controversial because of the negative impact on
employees
– Impact on organizational performance has been very
controversial
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Organizational Design Models
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Determinants of Structure
• Organizational Strategy
– Innovation strategy: introduce new offerings-prefer
organic structures
– Cost-minimization strategy: cost control–prefer
mechanistic structures
– Imitation strategy: minimal risk and maximum profit–
both structures used
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Optimal Structural Option
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More Determinants of Structure
• Organization Size
– Move toward mechanistic structure as size increases
• Technology
– Routine activities prefer mechanistic structures, nonroutine prefer organic structures
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Still More Determinants of Structure
• Environment
–
–
–
–
Dynamic environments lead to organic structures
Capacity
Volatility
Complexity
• Institutions
– Act as guidelines for appropriate behavior
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The Environment
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Organizational Designs and Employee
Behavior
• Cannot generalize any link between structure and
performance
• Consider employee preferences for:
–
–
–
–
Work specialization
Span of control
Centralization
Predictability versus autonomy
• National culture influences organizational
structure
– High power distance cultures accept mechanistic
structures
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Implications for Managers
• Specialization can make operations more efficient, but excessive
specialization can create dissatisfaction and reduced motivation.
• Avoid designing rigid hierarchies that overly limit employees’
empowerment and autonomy.
• Balance the advantages of remote work against the potential pitfalls
before adding flexible workplace options.
• Downsize your organization to realize major cost savings, and focus
the company around core competencies-but only if necessary because
downsizing can have a significant negative impact on employee affect.
• Consider the scarcity, dynamism, and complexity of the environment,
and balance the organic and mechanistic elements when designing an
organizational structure.
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Essentials of Organizational Behavior
Fourteenth Edition
Chapter 16
Organizational Culture
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.
After studying this chapter you should be
able to:
1. Describe the common characteristics of organizational
culture.
2. Compare the functional and dysfunctional effects of
organizational culture on people and the organization.
3. Identify the factors that create and sustain an
organization’s culture.
4. Show how culture is transmitted to employees.
5. Describe the similarities and differences in creating an
ethical culture, a positive culture, and a spiritual culture.
6. Show how national culture may affect the way
organizational culture is interpreted.
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Organizational Culture
• Organizational culture:
A system of shared meaning held by members
that distinguishes the organization from other
organizations
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Characteristics of Organizational Culture
1.
2.
3.
4.
5.
6.
7.
Innovation and risk taking
Attention to detail
Outcome orientation
People orientation
Team orientation
Aggressiveness
Stability
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Culture Is a Descriptive Term
Culture
Job Satisfaction
• Organizational culture • Measures affective
is concerned with how
responses to the work
employees perceive an environment:
organization’s culture,
concerned with how
not whether or not they employees feel about
like it
the organization
• Descriptive
• Evaluative
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Do Organizations Have Uniform Cultures?
• The dominant culture expresses the core
values that are shared by a majority of the
organization’s members
• Subcultures tend to develop in large
organizations to reflect common problems,
situations, or experiences of members
– Subcultures mirror the dominant culture but may add to
or modify the core values
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Strong versus Weak Cultures
• In a strong culture, the organization’s core
values are both intensely held and widely shared
• Strong cultures will:
– Have great influence on the behavior of members
– Increase cohesiveness
– Result in lower employee turnover
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Culture versus Formalization
• High formalization creates predictability,
orderliness, and consistency
• A strong culture achieves the same end without
the need for written documentation
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The Functions of Culture
•
•
•
•
•
Defines boundaries
Conveys a sense of identity
Generates commitment beyond oneself
Enhances social stability
Sense-making and control mechanism
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Culture Creates Climate
• Organizational climate:
The shared perceptions organizational members
have about their organization and work
environment
– Positive climate is linked to higher customer
satisfaction and financial performance
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The Ethical Dimension
• Ethical work climate (EWC):
Shared concept of right and wrong behavior in the
workplace that reflects the true values of the
organization and shapes the ethical decision
making of its members
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Culture and Sustainability
• Sustainability:
Organization practices that can be sustained over
a long period of time because the tools or
structures that support them are not damaged by
the processes
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Culture and Innovation
• Culture and innovation:
Innovative companies are characterized by their
open, unconventional, collaborative, vision-driven,
and accelerating cultures
• Culture as an asset:
Culture can contribute to an organization’s bottom
line
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Culture as a Liability
• Institutionalization
Behaviors and habits go unquestioned – can stifle
innovation
• Barriers to change
Culture is slow to change – even in a dynamic environment
• Barriers to diversity
Culture seeks to minimize diversity
Can embed prevalent bias and prejudice
• Barriers to acquisitions and mergers
Cultural incompatibility can be a problem
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How a Culture Begins
• Ultimate source of an organization’s culture is its
founders
• Founders create culture in three ways
1. Hiring and keeping those who think and feel the same
way they do
2. Indoctrinating and socializing those employees to their
way of thinking and feeling
3. Acting as a role model and encouraging employees to
identify with them
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Keeping a Culture Alive
• Selection: seek out those who fit in
• Top management: establish norms of behavior by
their actions
• Socialization: help new employees adapt to the
existing culture
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A Socialization Model
• Pre-arrival: initial knowledge about the
organization and own unique ideas
• Encounter: exposed to the organization
• Metamorphosis: member changed to fit within
the organization
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Entry Socialization Options
• Formal: new workers
separated for training
• Collective: group
basis
• Fixed: planned
activities
• Serial: role models
used
• Divestiture: strip
away characteristics
to build up new ones
• Informal: new workers
immediately put to work
• Individual: one-on-one
• Variable: no timetables
• Random: on your own
• Investiture: accepts and
confirms existing
characteristics
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Summary: How Cultures Form
• Success in employee socialization depends on
management’s selection of socialization methods
and the closeness of new employees’ values to
those of the organization
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How Employees Learn Culture
• Culture is transmitted to employees through:
– Stories: provide explanations
– Rituals: reinforce key values
– Material symbols: convey importance, degree of
egalitarianism desired, and appropriate behaviors
– Language: identify and segregate members
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Creating an Ethical Organizational Culture
• A strong culture with high risk tolerance, low-tomoderate aggressiveness, and a focus on means
as well as outcomes is most likely to shape high
ethical standards
–
–
–
–
–
Managers must be visible role models
Communicate ethical expectations
Provide ethical training
Visibly reward ethical acts and punish unethical ones
Provide protective mechanisms
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Creating a Positive Organizational Culture
• A positive organizational culture emphasizes:
–
–
–
–
Building on employee strengths
Rewarding more than punishing
Encouraging vitality and growth
Recognizing outside context
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A Spiritual Culture
• Workplace spirituality: recognizes that people
have an inner life that nourishes and is nourished
by meaningful work that takes place in the context
of community
• Characteristics of a spiritual organization:
–
–
–
–
Benevolence
Strong sense of purpose
Trust and respect
Openmindedness
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The Global Context
• Organizational culture can reflect national culture
and it can transcend national boundaries
– Managers need to be culturally sensitive:
▪
▪
▪
▪
Talk in a low tone
Speak slowly
Listen more
Avoid discussing religion and politics
• Ethical decision making can be culture-bound
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Impact on Employee Performance and
Satisfaction
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Implications for Managers
• Realize that an organization’s culture is relatively fixed in
the short term.
• Hire individuals whose values align with those of the
organization; these employees will tend to remain
committed and satisfied.
• Understand that employees’ performance and socialization
depend to a considerable degree on their knowing what to
do and not do.
• You can shape the culture of your work environment.
• Understand the cultural relevance of your organization’s
norms before introducing new plans or initiatives overseas.
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Essentials of Organizational Behavior
Fourteenth Edition
Chapter 17
Organizational Change and
Stress Management
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After studying this chapter you should be
able to: (1 of 2)
1. Contrast the forces for change and planned
change.
2. Describe ways to overcome resistance to
change.
3. Compare the four main approaches to managing
organizational change.
4. Demonstrate three ways of creating a culture for
change.
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After studying this chapter you should be
able to: (2 of 2)
5. Identify the potential environmental,
organizational, and personal sources of stress at
work as well as the role of individual and cultural
differences.
6. Identify the physiological, psychological, and
behavioral symptoms of stress at work.
7. Describe individual and organizational
approaches to managing stress at work.
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Forces for Change
•
•
•
•
•
•
Nature of the workforce
Technology
Economic shocks
Competition
Social trends
World politics
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Reactionary versus Planned Change
• Change:
Making things different
• Planned change:
Change activities that are intentional and goal
oriented
• Change agents:
People who act as catalysts and assume the
responsibility for managing change activities
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Resistance to Change
• People tend to resist change, even in the face of
evidence of its benefits
– Can be positive if it leads to open discussion and
debate
• Remember, not all change is good
– Change agents need to carefully think through the
implications
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Sources of Resistance
Individual
•
•
•
•
•
Habit
Security
Economic factors
Fear of the unknown
Selective information
processing
•
•
•
•
•
Organizational
Structural inertia
Limited focus of change
Group inertia
Threat to expertise
Threat to established
power relationships and
resource allocations
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Overcoming Resistance to Change
1.
2.
3.
4.
5.
6.
7.
8.
Communication
Participation
Building support and commitment
Developing positive relationships
Implementing changes fairly
Manipulation and cooptation
Selecting people who accept change
Coercion
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Approaches to Managing Organizational
Change
•
•
•
•
Lewin’s Three-Step Model of Change
Kotter’s Eight-Step Model of the Change Process
Action Research
Organizational Development
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Lewin’s Three-Step Model
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Unfreezing the Status Quo
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Kotter’s Eight-Step Plan
1.
2.
3.
4.
Create urgency
Form coalition
Create new vision
Communicate the
vision
5. Empower others
6. Reward “wins”
7. Consolidate
improvements
Movement
Unfreezing
Refreezing
8. Reinforce the
change
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Action Research
• Action research: Change process based on the
systematic collection of data and the selection of a
change action based on what the analyzed data
indicate
• Five steps:
1.
2.
3.
4.
5.
Diagnosis
Analysis
Feedback
Action
Evaluation
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Organizational Development
• Organizational development:
A collection of change methods that try to improve
organizational effectiveness and employee wellbeing
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OD Interventions
1. Sensitivity Training
Change behavior through unstructured group interaction
1. Survey Feedback
Gathering data and acting on it
2. Process Consultation
Using outside consultants
3. Team Building
Increase trust and openness
4. Intergroup Development
Change attitudes, stereotypes, and perceptions
5. Appreciative Inquiry
Discovering what the organization does right
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Creating a Culture for Change
• Paradox theory:
The key paradox in management is that there is
no final optimal status for an organization
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Stimulating a Culture of Innovation
• Innovation: A new idea applied to initiating or
improving a product, process, or service
• Sources of innovation:
–
–
–
–
Organic structure
Long tenure in management
Slack resources
High interunit communication
• Context and innovation
• Idea champions and innovation
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Idea Champions
• Idea champions: Managers who actively and
enthusiastically promote an idea, build support,
overcome resistance, and ensure that innovation
is implemented
– Have high self-confidence, persistence, energy, and
acceptance of risk
– Use inspiration and vision to gain commitment
– Have decision-making discretion
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Creating a Learning Organization
• Learning organization:
An organization that has developed the continuous
capacity to adapt and change
• Managing learning:
– Establish a strategy
– Redesign the organization’s structure
– Reshape the organization’s culture
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Characteristics of a Learning Organization
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Work Stress
• Stress: A dynamic condition in which an individual
is confronted with an opportunity, demand, or
resource related to what is desired and for which
the outcome is perceived to be both uncertain and
important
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Types of Work Stress
• Challenge Stress: associated with workload,
pressure to complete tasks, and time urgency
– Can be positive
• Hindrance Stress: comes from obstacles to
achieving goals
– Mostly negative
• Usually stress is associated with demands and
resources
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A Model of Stress
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Managing Stress
Organizational
1.
2.
3.
4.
5.
6.
Selection and placement
Goal-setting programs
Job redesign
Employee involvement
Employee sabbaticals
Organizational
communication
7. Wellness programs
•
•
•
•
Individual
Time management
Physical activity
Relaxation techniques
Social support network
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Implications for Managers
• You are a change agent for your organization. The decisions that you
make and your role-modeling will help shape the organization’s
change culture.
• Your management policies and practices will determine the degree to
which the organization learns and adapts to changing environmental
factors.
• Some stress is good.
• You can help alleviate harmful workplace stress for you and any
employees you supervise by accurately matching workloads to
employees, providing employees with stress-coping resources, and
responding to their concerns.
• You can identify extreme stress when performance declines, turnover
increases, health-related absenteeism increases, and engagement
declines. Stay alert for early indicators and be proactive.
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