Chapter 8 Organizational Design, Culture and Change

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Define organizational design and describe its four objectives

2. Distinguish between mechanistic and organic organizational structures
3. Discuss the influence that contingency factors—organizational strategy, environment,
size, age, and technology—have on organizational design
4. Describe the characteristics, advantages, and disadvantages of functional, divisional,
matrix, team, and network structural designs
5. Define organizational culture and describe the ways that culture is manifested
6. Explain the role of managers and employees in creating culture and making a culture
effective
7. Define change and identify the kinds of change that can occur in an organization
8. Explain the steps managers can follow to implement planned change
9. Identify the organizational qualities that promote change
10. Explain why people resist change and what managers can do to overcome that
resistance
11. Discuss why change efforts fail
12. Explain the purpose of an organizational development program

KEY TERMS

change network structure

change agent organic structure
continuous-process production organizational design
divisional structure organizational development (OD)
evolutionary change organizational learning
flexible manufacturing systems (FMS) organizational life cycle
force-field analysis planned change
functional structure revolutionary change
large batch technology small batch technology
management by reaction social media
mass production technology subculture
matrix structure team structure
mechanistic structure technology
mutual trust three-step approach
unit production technology

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER OUTLINE

I. INTRODUCTION
II. DESIGNING ORGANIZATIONAL STRUCTURES
A. Organizational Design Defined
III. Objectives of Organizational Design
A. Responding to Change
B. Integrating New Elements
C. Coordinating the Components
D. Encouraging Flexibility
E. Range of Organizational Design Outcomes
IV. Mechanistic Organizational Structures
A. Organic Organizational Structures
V. CONTINGENCY FACTORS AFFECTING ORGANIZATIONAL DESIGN
A. Strategy
B. Environment
C. Size of the Organization
D. Age of the Organization
1. Birth Stage
2. Youth Stage
3. Midlife Stage
4. Maturity Stage
E. Technology
VI. STRUCTURAL OPTIONS IN ORGANIZATIONAL DESIGN
A. Functional Structure
1. Advantages of the Functional Structure
2. Disadvantages of the Functional Structure
B. Divisional Structure
1. Advantages of the Divisional Structure
2. Disadvantages of the Divisional Structure
C. Matrix Structure
1. Advantages of the Matrix Structure
2. Disadvantages of the Matrix Structure

VII. ORGANIZATIONAL CULTURE

A. Organizational Culture Defined
B. Factors Shaping Culture
1. Key Organizational Processes
2. Dominant Coalition
3. Employees and Other Tangible Assets
4. Formal Organizational Arrangements
5. Social System
6. Technology
7. External Environment
 C. MANIFESTATIONS OF CULTURE
D. Statements of Principle
E. Stories
F. Slogans
G. Heroes
H. Ceremonies
I. Symbols
J. Climate
K. Physical Environment

VIII. CREATION OF CULTURE

A. Role of Managers
B. Role of Employees
C. Factors Contributing to the Effectiveness of Culture
1. Coherence
2. Pervasiveness and Depth
3. Adaptability to the External Environment

IX. NATURE OF CHANGE

A. Sources of Change
1. External Sources
2. Internal Sources
B. Types of Change
1. Strategic Change
2. Structural Change
3. Process-Oriented Change
4. People-Centered Change
C. Rates of Change
D. Management and Change
E. HOW TO MANAGE CHANGE
F. Need for Change: Diagnosing and Predicting it
1. Phase 1: Creativity
2. Phase 2: Direction
3. Phase 3: Delegation
4. Phase 4: Coordination
5. Phase 5: Collaboration
X. Steps in Planned Change
A. Recognizing the Need for Change
B. Developing Goals
C. Selecting a Change Agent
D. Diagnosing the Problem
E. Selecting the Intervention Method
F. Developing a Plan
G. Planning for Implementation
H. Implementing the Plan
I. Following Up and Evaluating
XI. QUALITIES PROMOTING CHANGE
A. Mutual Trust
B. Organizational Learning
C. Adaptability

XII. IMPLEMENTATION OF CHANGE

A. Resistance to Change
1. Sources of Resistance
2. Techniques for Overcoming Resistance
XIII. Why Change Efforts Fail
A. Causes
1. Faulty Thinking
2. Inadequate Process
3. Lack of Resources
4. Lack of Acceptance and Commitment
5. Lack of Time and Poor Timing
6. A Resistant Culture
B. Methods of Effecting Change
1. Three-Step Approach
2. Force-Field Analysis

XIV. ORGANIZATIONAL DEVELOPMENT

A. Purposes of Organizational Development
B. Strategies of Organizational Development
C. Evaluating the Effectiveness of Organizational Development

Enrichment Vignette

Is resistance to change always a bad thing? In fact, could there be merit in encouraging
employees and others to resist? Consider the many corporations that were dominant in
American business 20 years ago but have since gone out of existence, been taken over by
another organization, or are but a fraction of their size at one time: often the reason was not
because they could not implement change but rather because they DID change. The problem
was that the changes were not for the better. In some cases, there may have been a need for
change but not for the change that was selected.

When top management proposes change, lower-level managers and employees may lack the
big picture that stimulated the proposal, but their nearness to the frontlines may enable them to
see pitfalls that could not have been envisioned in that big picture. However, if top management
uses all the means at its disposal to persuade and involve employees in the proposed change, it
is possible that some may not ask the questions that need to be considered in order to prevent
the organization from creating a disaster for itself.

Employees do not automatically reject change. For example, if the change were to simply
involve an increase in pay without any increase in work or negative effects on benefits, working
conditions, or job security, few would resist the change. Employees will look at the size, timing,
and probability of the benefits of the proposed change and compare that analysis to the size,
timing, and probability of the costs or risks involved in the change. Their focus may be primarily
personal rather than organizational but if they are encouraged to raise their concerns, perhaps it
may be discovered by top management that the real need is not so much to overcome
employee resistance to change as it is for those at the top to modify their proposed change.
LECTURE OUTLINE
The outline below (the lecture outline) is referenced to the above chapter outline and contains
supplementary material to enhance your discussion of the chapter, but it is organized somewhat
differently. As a result, you have a choice: by using what is in the outline below, (1) you may
present the above chapter outline material in a different sequence, or (2) you may use the
chapter outline references in the outline below to present the lecture outline material in the
same sequence as the chapter outline.

I. INTRODUCTION (CHAPTER OUTLINE: SECTION I)

II. DESIGNING ORGANIZATIONAL STRUCTURES (CHAPTER OUTLINE: SECTION II)

A. Organizational Design Defined (CHAPTER OUTLINE: SECTION III)

1. Organizational design is the creation or change of organizational structure.

2. Organizations, in a true sense of semantics, are structurally reorganized through
change.
3. The need for authority, departmentalization, line and staff positions, etc., makes
organizations common.

B. Objectives of Organizational Design

1. “Nothing lasts forever,” “Change is constant”; therefore, organizations

must
respond to required or forced changes to their environment.
2. Redesign, upgrades, growth, response, and newness all characterize the
elements of structure factors that must be dealt with.
3. Departments must coordinate, cooperate, and display flexibility in order to
structure a successful and compatible workplace.

C. Range of Organizational Design Outcomes

D. Mechanistic Organizational Structure (CHAPTER OUTLINE: SECTION IV)

1. Mechanistic structures typically feature a rigid design.

2. Many mechanistic structures exhibit strong bureaucratic qualities, characteristics,
and tendencies.
3. Tight controls are readily apparent within mechanistic organizations.

E. Organic Organizational Structure

1. As opposed to mechanistic structures, organic structures tend to be more

flexible, which allows them to respond to different conditions.
2. Organic structures more readily adapt to change.

III. CONTINGENCY FACTORS AFFECTING ORGANIZATIONAL DESIGN

(CHAPTER OUTLINE: SECTION V)

A. Strategy
 1. Structure must follow strategy in order to achieve objectives regarding the
designs of organizations.
2. A change in strategy will cause a change in structure.

B. Environment

1. Environments impact upon decision making as well as organizational structure.

2. Mechanistic structures operate well within stable environments.
3. Unstable, changing, or unpredictable environments are more conducive to
organic designs.
4. Decision making, span of control, formality, centralization, and many other such
elements influence the relationship of structure to environment.

C. Size of the Organization

1. Frequently, size is a determinate of structure.

2. Specialization is more apparent in larger organizations.
3. Many large organizations are transforming from mechanistic to organic
structures.

D. Age of the Organization

1. As far as organizations are concerned, longevity begets or correlates to formality,

i.e., the older, the more formal.
2. Many mature companies have grown into a state of mechanistic structure.
3. Life cycles stages of an organization fall in a predictable pattern.

E. Technology

1. Technology is a compilation of knowledge, machinery, work procedures, and

materials that transforms inputs into outputs (productivity).
2. Small batch (unit production) technology is a method of production of goods in
small quantities to meet specific customer needs.
3. Mass production (large batch) technology is appropriate for high volume,
standardized products.
4. The entire productivity process is accomplished through a series of mechanical
or chemical processes in continuous-process technology, such as with soft drinks
and gasoline.

IV. STRUCTURAL OPTIONS IN ORGANIZATIONAL DESIGN (CHAPTER OUTLINE:

SECTION VI)

A. Functional Structure

1. Grouping related jobs, tasks, activities, or processes in various organizational

sub-units is called departmentalization.
2. Functional departments distinguish tasks/jobs according to the specific activities
performed.
3. Expertise and skills are unique to various functional departments.
 4. Common functions include finance, production, marketing, personnel,
engineering, and human resources.
5. Gathering specialists by functional structure results in economies of scale, and
work duplication is minimized.
6. Narrow perspectives and lack of collaboration and awareness of others are
downfalls to functional structuring.

B. Divisional Structure

1. Departments are grouped according to organizational output with divisional

structures.
2. Self-contained strategic business units (SBUs) that produce a single product are
divisional by design.
3. Customer or geographic special needs, requests, and/or arrangements also
serve as divisional structures.
4. Divisional structures are often flexible and adaptable to change.
5. Duplication of time, effort, and energies for activities and resources are a “black
mark” of divisional structures.

C. Matrix Structure

1. The matrix structure is a hybrid design of functional and divisional qualities.

2. Functional specialization is common with the focus and accountability of
divisional structures.
3. Functional expertise, adaptability, response to change, and economy of scale
flourish within matrix organizations.
4. A dual or multiple chain of command can result within matrix areas.
5. Conflicts regarding functional and divisional objectives are common.

D. Team Structure

1. The newest approach with the most potential is the team structure.
2. Separate functions are grouped within this design.
3. Team structures are much flatter than traditional organizational patterns.
4. Decision making is more decentralized and not as “vertical” as the traditional
chain of command.
5. Speed of effort and response typifies team efforts.
6. Accountability and responsibility are identified appropriately.
7. Training must be an integral part of the team concept.
8. A large portion of the day is spent in meetings. This is a drawback to team
structuring.

E. Network Structure

1. These structures are dependent upon “outsiders” performing contractual services

and critical functions.
2. Specific areas of work can be “farmed out.”
3. Less personnel, including administrative overhead, is needed.
4. Unless specified and enforceable within contractual agreements, lack of control is
 a detriment to networks.

V. ORGANIZATIONAL CULTURE (CHAPTER OUTLINE: SECTION VII)

A. Organizational Culture Defined

B. Factors Shaping Culture

1. Every company possesses a special blend of elements that lead to a unique

culture. The following are seven cultural-shaping factors:
a. Key organizational processes regarding communication processes,
workflow, and productivity.
b. Dominant coalition comprised of objectives, strategy, personal
characteristics, and interrelationships.
c. Employees and other tangible assets, including population, facilities, land,
inventory, finances, and resources.
d. Formal organizational arrangements: rules, structure, and procedures.
e. Social system made up primarily of norms and values.
f. Technology that combines knowledge, process, and equipment.
g. External environment: supplies, markets, competitors, and governing issues.

2. Each of these factors is in itself a complex phenomenon. None is independent of

the others. Their dynamic interaction shapes organization culture.

VI. MANIFESTATIONS OF CULTURE

A. Statements of Principle

1. Written statements of principle are expressed using terms such as quality,

responsibility, mutuality, efficiency, and freedom.
2. These expressions set the stage for the culture and guide the company.

B. Stories

1. Background and historical accomplishments reaffirm the values of traditional

beliefs.
2. Accounts of yesteryear help form the thinking and practice of new and
contemporary workers.

C. Slogans

1. Short, direct, and to-the-point expressions reflect cultural identities of companies.

2. Slogans represent a phrase or saying that clearly express the value and
operating attitude of the organization.

D. Heroes

1. Hero: an exemplary person who reflects the image, attitudes, or values.

2. Founders and executives who spurred corporate success are heroes.
E. Ceremonies
 1. Award banquets and company gatherings that give recognition for
accomplishment mark this facet of cultural identity.
2. Ceremonies honor promotions, sales awards, and achievements of employees.

F. Symbols

1. Symbols are objects that convey meaning.

2. Symbols frequently represent the core values of a business.
3. Status is reflected through parking privileges, size/location of office, etc.

G. Climate

1. Cultures are made up of climates. Climates are subsets of cultures.

2. The workplace and morale of workers constitute elements of daily climate.
3. Worker attitudes dictate the positive or negative “atmosphere” of the workplace,
i.e., the climate of the shop.

H. Physical Environment

1. The surroundings or confines of the corporation signify the physical nature of the
work environment.
2. Campus like enclaves typify the intended freedom-to-express philosophy of idea
exchanges for the Silicon Valley software and computer industry.

VII. CREATION OF CULTURE (CHAPTER OUTLINE: SECTION VIII)

A. Role of Managers

1. Managers at all levels in an organization help develop the culture. Quite simply,
managers set the tone, control the resources, and control the means to influence
the results. Managers help create culture by:
a. Clearly defining the company’s mission and goals.
b. Identifying core values.
c. Determining the amount of individual autonomy and the degree to which
people work separately or in groups.
d. Structuring work to achieve goals in accordance with the firm’s values.
e. Developing reward systems that reinforce values and goals.
f. Creating methods of socialization that will bring new workers inside the
culture and reinforce the culture for existing workers.

B. Role of Employees

1. Nearly all employees can accept and adapt to any culture through the process of
socialization.
2. Many corporate values, norms, and beliefs are shaped by employees.
3. Subcultures are units within an organization based upon the values, norms, and
beliefs of the workers.
 C. Factors Contributing to the Effectiveness of Culture

1. How well the culture fits the mission is known as coherence. Employee
acceptance of organizational elements is within coherence.
2. The greater the acceptance of the commitment to organizational values, the
stronger the culture.
3. The most critical factor that contributes to cultural effectiveness deals with the
adaptability to external stimuli and environments.

VIII. NATURE OF CHANGE (CHAPTER OUTLINE: SECTION IX)

A. Sources of Change

1. Change originates in external as well as internal environments.

2. Political, social, technological, and economic stimuli are associated with external
environments.
3. Management policies and styles, systems, procedures, and employee attitudes
are internal sources of change.

B. Types of Change

1. The major areas of change in a company include:

a. Strategic change—sometimes in the course of business operations, it is
necessary to change the strategy to achieve the goals or even to change the
mission of the organization.
b. Structural change—organizations often find it necessary to change the
structural design of the company. In addition, when the company changes
its procedures, policies, and rules, it is changing its structure.
c. Process-oriented change—reengineering processes to achieve optimum
work flow and productivity.
d. People-centered change—this type of change focuses on changing the
attitudes, behaviors, skills, or performance of employees in the company.
2. Strategically, structural, process-oriented, or people-centered changes occur
continually in dynamic businesses.
3. Often, changes in one area will impact upon changes in other areas.

C. Rates of Change

1. Evolutionary change focuses on incremental steps.

2. Revolutionary change is bold and continuous with “leaps” of
dramatic
transformation.

D. Management and Change

1. Various levels of management are affected differently by change.

2. Top-level managers are involved in strategy, structure, and process changes.
3. Middle managers face structural, process-oriented, or people-centered changes.
4. Primarily, first-line managers deal with process-oriented and people-centered
change issues.
IX. HOW TO MANAGE CHANGE

A. Need for Change: Diagnosing and Predicting

1. Planned change is a product of anticipation and foresight.

2. Management by reaction is just one subset of crisis management.
3. The change agent is the catalysis or activator for the implementation of change.
4. One way a company can deal with the sources and reasons for change is to try
and anticipate them ahead of time and plan for them.
a. A company and its managers can adopt a philosophy of planned change.
b. This involves trying to anticipate when changes will occur in the
environment—both inside and outside the company—to which management
will have to respond and then think about the type of response it will take.
5. The other approach is to adopt a philosophy in which no energy is spent to
anticipate change.
a. Management by reaction becomes the philosophy.
b. An event happens and the wheels go into motion, crushing the employees
and bringing turbulence to the environment.
6. A useful tool to help diagnose the need for organizational change has been
developed by Larry Greiner. He has graphed the phases of change that
organizations go through—in other words, they are predictable.

B. Steps in Planned Change (CHAPTER OUTLINE: SECTION X)

1.Once the commitment is made by an individual manager and an organization that

change will be planned, it is necessary to create a logical step-by-step approach.
a. Step 1: Recognition of the need for change. The first step in the process is
recognition of the need for change. It can come from either external or
internal sources.
b. Step 2: Development of goals. Before any action is taken, it is necessary to
determine why the change is necessary and what specific goals are to be
achieved.
c. Step 3: Selection of a change agent. The person who will manage the
change—a change agent—must be selected.
d. Step 4: Diagnosis. In this step, the change agent sets about gathering data
about the climate of the organization.
e. Step 5: Selection of intervention method. This step requires a decision on
the best way to bring about the change.
f. Step 6: Development of a plan. This step involves actually putting together
the “what.”
g. Step 7: Planning for implementation. In this phase the when, where, and
how of the plan are determined.
h. Step 8: Implementation. After all the questions have been answered, the
change action is put into operation.
i. Step 9: Follow-up and evaluation. The actual results should be compared to
the goals.
X. QUALITIES PROMOTING CHANGE (CHAPTER OUTLINE: SECTION XI)
 A. Mutual Trust
1. Managers must trust employees and vice versa.
2. Studies indicate trust is an absolute in effective organizations.
3. The reliance upon others based on character, ability, and truthfulness is
paramount to a trustful relationship.
4. A sense of adequacy and personal security are primary ingredients.
5. Trust within organizations mitigates fear.

B. Organizational Learning

1. Organizational learning is how the manager and the organization integrate new
ways into established systems to produce better ways of doing things. A
manager can view organizational learning in either of two ways: single looped or
double looped.
a. A single-looped learning situation is one in which only one way exists in
which to make adjustments.
b. Double-looped learning means more than one alternative exists.

C. Adaptability

1. Adaptiveness is being prepared for change prior to the actual need for it.
2. Managers who are adaptive rather than reactive will minimize wasted energy and
maximize the use of time in a change situation.

XI. IMPLEMENTATION OF CHANGE (CHAPTER OUTLINE: SECTION XII)

A. Resistance to Change

1.The resistance to change is a natural expected phenomenon of human beings.

2.Change cannot take place until employees overcome their resistance.
3.People resist change for the following reasons:
a. Change scares people with loss of security.
b. Economic losses are obviously fearful, whether imagined or real.
c. Loss of power and control poses a threat to those in authority.
d. Old habits are difficult to break.
e. Selective perception is unique to all.
f. Awareness of weaknesses in the proposed change is frequently a point of
contention and/or objection.
4. Managers can overcome resistance to change by initiating the following:
a. Allow those affected to be active participants in the process.
b. Open up all means of communication.
c. Watch timing—give plenty of warning.
d. Be sensitive and compassionate to the concerns and requests of others.
e. Reassure against fear by providing an atmosphere of security.
B. Why Change Efforts Fail (CHAPTER OUTLINE: SECTION XIII)

1. Change for the mere sake of change is inappropriate.

2. Some change efforts are inefficient, ineffective, or unsuccessful.
3. Typical causes for change failure are:
 a. Faulty thinking from lack of analysis.
b. Inadequate or inappropriate selection of change process.
c. Resources can be lacking.
d. Acceptance and commitment are not taken seriously.
e. Poor timing or inadequate time.
f. Aspects of the culture need to be changed first.

C. Methods of Effecting Change

There are two approaches or models for handling changes in individuals and their
behaviors at work.

1. Three-Step Approach
This approach focuses on three distinct phases or steps.
a. Unfreezing involves identifying deficiencies and confronting the individuals
with the behaviors.
b. Change results from individuals being uncomfortable with the identified
negative behaviors and being presented with new behaviors, role models,
and support.
c. Refreezing involves recognizing and rewarding new and approved attitudes
and patterns of behavior.

2. Force Field Analysis

Force field analysis depicts the change process as one which must overcome a
person’s or organization’s status quo or existing state of equilibrium—the balance
between forces for change and forces that resist change.
a. The change forces are known as driving forces, and the resisting forces are
known as restraining forces.
b. Managers who contemplate making changes can diagnose the situation as it
presently exists. They prepare a list of both driving and restraining forces
and of the attitudes that surround them. Change can be attempted by
weakening the restraining forces or strengthening the driving forces, or both.

XII. ORGANIZATIONAL DEVELOPMENT (CHAPTER OUTLINE: SECTION XIV)

A. Purposes of Organizational Development

1. Organizational development (OD) is a companywide, long-term plan, rather than

one undertaken by an individual manager.
2. The primary purpose of OD is to bring about a system of organizational renewal
that can effectively cope with organizational changes.
B. Strategies of Organizational Development

1. OD strategies consist of various tools, devices, and methods of introducing

changes (diagnostic strategies: consultants, surveys, group discussions; change
strategies: training programs, development programs, team-building activities,
job enrichment, management by objectives, meetings and seminars, grid OD).
2. Since organizational development is an ongoing, long-term effort to introduce
lasting change and to reshape an organization’s technology, structure, and
 people, its successful implementation depends on significant investments of
money and time.

C. Evaluating the Effectiveness of Organizational Development

1. The primary evaluation of OD effectiveness uses the goals established when OD

efforts and strategies began. Results of the OD evaluation will provide feedback
needed to redirect and improve programs, strategies, and change agents.
2. OD is an expression of management’s efforts to stay flexible and control their
own destiny.

Enrichment Vignette

Not since the Industrial Revolution has U.S. business experienced so much change and
disruption. Almost every industry has been rocked by the forces of change—divestiture,
consolidation, and deregulation in the past few years.
All organizations experience change regardless of their size or business sectors. This
change can be divided into five stages:

1. Delayed change. This occurs when the organization is poised at the top of the
change cycle. In this stage, the company is ready either to resume the development
phase or to deal with change and turn around.
2. Operational change. This is the most common and easiest form of change to deal
with, and comes about as the organization addresses perceived operational
deficiencies in the face of more efficient competition or an increasing demand for
products and services.
3. Directional change. When time-tested business strategies become less appropriate
in competitive conditions, the marketplace can compel the organization to implement
an alternative strategy or face loss of market share.
4. Fundamental change. This occurs when the business climate forces the organization
to reexamine its mission and leadership practices.
5. Total change. A complete turnaround is required when the organization is confronted
by business failure or when new management decides to redirect the business into an
entirely new market sector.

To work with change in all areas, business leaders should:

1. Recognize that previously successful and even comfortable organizational and

leadership qualities may no longer be appropriate for the new business climate and
may need to be replaced with an alternative set of critical success factors.
2. Identify the organization’s culture as a valuable resource for new and innovative
ideas.
3. Apply strategies that are appropriate for prevailing change conditions—not just
conventional “micro-strategies” of restructuring or cost controls.

Business leaders who understand change and have learned to manage it to the advantage of
their organizations know that change is an opportunity for growth and development.
Alternatively, those who resist change will always be confronted by it.

SUGGESTED RESPONSES TO REVIEW QUESTIONS

1. When managers are engaged in organizational design, what are they developing?

The basic elements available to all designers of organizational structure are amounts
and types of authority, departments, line and staff positions and departments,
functional considerations, product and productivity elements, and decision-making
approaches. Specifically, they are developing the means to implement plans, achieve
objectives, and accomplish the overall mission.

2. Identify and discuss the four objectives of organizational design.

Managers must respond to change, integrate new elements, ensure collaboration,

and encourage flexibility. Student discussion will vary.

3. What are the characteristics of a mechanistic organization? What are the

characteristics of an organic organization?

Mechanistic Structure Organic Structure

• Fixed and specialized tasks
• Centralized decision making
• Formal vertical communication
• Rigid hierarchical relationships
• Many rules
• Strict hierarchy of authority
• Adaptable and shared tasks
• Decentralized decision making
• Informal horizontal communication
• Vertical and horizontal collaboration
• Few rules
• Relaxed hierarchy: authority

4. Name factors that influence organizational design. How does an organization’s

strategy influence organizational design? What types of structure are appropriate for
the three types of technology? What two needs in organizational design result from a
volatile environment?

In some way or fashion the following elements all influence organizational design:
a. Strategy
b. Environment
c. Size
d. Age
e. Technology
Structure must follow strategy. Strategy dictates the pace and direction of structure.
Existing companies that change philosophy, mission, and/or strategy must change the
structural makeup to accommodate new factors, forces, requirements, and/or
demands. As an example, PepsiCo must adapt accordingly when they attempt to
manufacture an “uncola” such as Crystal.

Organic structures work well with small batch technology and continuous-process
production. A mechanistic structure is better suited to large batch technology.
Organic structures fit within unstable environments more readily. Flexibility is needed
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
 to respond to needed changes. Close association and cooperation within and across
departments must exist within unpredictable environments.

5. What are the characteristics of a functional organization structure? What are the
advantages of a divisional structure? What are the characteristics of a matrix
organizational structure? What are the characteristics of teams? What are the
advantages and disadvantages of networks?

Characteristics of a functional organizational design: Related jobs, tasks, duties,

activities, and processes are grouped as sub-units. Specific activities are performed
mutually and collectively. Skills and expertise are unique to departments.

Advantages of a divisional structure: Customer needs can be catered to more

effectively. Accommodations and arrangements for geographic issues are available.
Flexibility and adaptation to change characterize divisional design. Duplication of
effort, energy, and time is a problem. Activities and resources may become too
common if not redundant.

Characteristics of a matrix organizational structure: Functional and divisional qualities are

blended. Respectively, specialization and accountability for these two combined designs
are important to a matrix. Adaptability and economy of scale are readily apparent with a
matrix structure. Functional and divisional differences crop up regarding organizational
objectives. Violations of chain of command are possible.

Characteristics of teams: Separate functional areas can collaborate. Structure

becomes flatter. Decision-making is more horizontal with speed and effort between
participants. Accountability is distinguishable. Often, too much time is spent in
meetings.

Advantages and disadvantages of networks: The size of staff and operations can be
reduced. Specific work can be contracted to other specialists. Control may be
lacking because of the indirect nature of “subbing” out the required work.

6. What are the seven factors that influence culture? Use specific examples to explain
how they interact.
a. Key organizational processes include the way an organization goes about
collecting and communicating information necessary to achieve its primary set of
goals. It also includes how decisions are made as well as the production
processes used in developing its products and services.
b. Objectives, strategies, personnel characteristics, and internal relationships of the
managers who oversee the organization and control its policymaking constitute
the dominant coalition.
c. Employees and other tangible assets are namely all the readily available
resources of the organization.
d. The formal organizational arrangements encompass the personnel, tasks, and
the structure of such elements as rules and procedures.
e. The social system is composed of the norms and values shared by most
employees. It is the set of relationships that exists among employees in terms of
power, affiliations, and trust.

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 f. Technology encompasses the major techniques commonly used by employees
while engaging in organizational processes. It also includes the underlying
assumptions about technology.
g. The external environment includes all possible suppliers, markets, competitors,
regulators, and associations that influence the organization’s goods and services.

7. How is culture evidenced?

An organization’s culture is nurtured and becomes apparent to its members in various

ways. Some aspects of culture are explicit; some must be inferred. The chief
evidences of culture are statements of principle, stories, slogans, heroes, ceremonies,
symbols, climate, and the physical environment.

8. What is the role of managers in creating culture? What is the role of employees in
creating culture?

The manager role is very diverse. It ranges from defining the mission to creating
methods of socialization for new and veteran employees. Employees form
subcultures, shape corporate values, and adopt and promote the aspects of the
organizational culture.

9. How does culture influence organizational effectiveness? What factors contribute to

an effective culture?

Awareness, understanding, and participation within an organization’s culture are

important to management because culture affects performance and productivity. The
factors that help determine how effective an organizational culture becomes are
coherence, pervasiveness and depth, and adaptability to the external environment.

10. What are the four kinds of change that can occur in an organization?

An organization can experience strategical, structural, process-oriented, and/or

people-centered change.
11. What are the steps of planned change?

The steps of planned change are as follows:

a. Recognize the need.
b. Develop goals.
c. Select a change agent.
d. Diagnose the problem.
e. Select the intervention method.
f. Develop a plan.
g. Plan for implementation.
h. Implement the plan.
i. Follow up and evaluate.

12. What organizational qualities promote change?

Managers can help create a climate that promotes change by developing a

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 philosophy toward change that includes three elements: mutual trust, organizational
learning, and adaptability.

13. Describe three reasons that people resist change, and explain what managers can
do to overcome that resistance.

Student responses to this question will vary. As opposed to a homework assignment,

this question could be utilized as an in-class group or individual assignment for
discussion.

14. What are three reasons that change efforts fail?

Similar to question 13 above.

15. Why do organizations adopt an organizational development program?

Managing change is an ongoing process. If a manager does it well, he or she can

maintain a positive organizational climate. Some organizations make thorough
analysis of their problems and then implement long-term solutions to solve them.
Such an approach is called organizational development (OD). OD is a process of
renewal, updating, awakening, or rebirth that strives to maximize organizational
effectiveness and individual work satisfaction.

INSTRUCTIONAL EXPLANATION: DISCUSSION QUESTIONS FOR CRITICAL THINKING

These thought-provoking questions are provided by the authors for each chapter as primers for
student discussion. This method of questioning ensures that the students have read the
assigned materials or content. These questions are presented to generate thinking and
discussion. They can be used as supplemental homework assignments and/or class
discussions that center on specific critical thinking issues and applications.
It is important that students are able to respond from their experiences and through their
perceptions as well as incorporate the specific course content into their reasoning, explanations,
descriptions, and individualized contributions. Most of these questions cannot be answered in a
right/wrong fashion. Instead, student responses and/or group discussions should be
encouraged by the instructor to bring out individualized critical thinking as opposed to absolute
correct answers.

WEB 2.0 EXERCISES

Conversation Prism
The Conversation Prism is a graphic that helps chart online conversations between people and
communities, as well as the networks that connect the Social Web.

Choose one word from each area (Web 2.0, popular culture, ethical virtues) that is most
important to you. What do the words mean to you? If others in a company share these similar
values and beliefs, how might it influence worker behavior?

Use the “Conversation Prism” to identify the networks you use and the ones you are missing.

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The student answers to these questions will vary greatly. Similar to the critical thinking
questions provided throughout the text, these questions allow students the opportunity to think
in a broad, creative sense with many variables or choices for response. It is important that the
instructor encourage the students to “back up” or support their answers with specific subject
content from the text as well as provide a rational/logical approach to their comments.

SUGGESTED RESPONSES TO EXPERIENTIAL LEARNING CASE: A Cultural Mismatch

The questions of this case provide opportunity for students to respond in many ways. That is,
the case is brief and the scenario is complex. Student interpretations and perceptions regarding
problem identification will differ greatly. However, all four questions will provide opportunity for
students to compare, contrast, and learn from their recommendations, comments, and solutions.
This case provides opportunity for group and/or class interaction, discussion, and/or debate.

Lonely Planet: Structure That Makes Sense

Discussion Questions and Suggested Answers:

1. In what ways is Lonely Planet decentralized? In what ways is it centralized?

Students will note those activities that have assigned to specific regions and others that
serve all regions and which help cut costs and improve efficiency. In addition, regions
have some areas of independence and ability to act on their own.

2. Does Lonely Planet have a tall structure or a flat structure? Explain briefly.

Students will note that it is neither a pure flat or tall structure but will observe many
attributes of a relatively flat structure.

3. In what ways does Lonely Planet achieve horizontal coordination across departments or
offices?

Students will note policies that are directed toward achieving interaction among the
offices and departments as well as the use of technology and the Wheeler’s
personal contact with the various areas of the organization.

ADDITIONAL CASE PROBLEMS WITH SUGGESTED ANSWERS

A CULTURAL MISMATCH: NUMBER TWO

Harty Press operates out of a complex of one-story cinder-block buildings in the industrial
section of New Haven, Connecticut. A commercial printer of everything from local advertising to
slick annual reports, Harty has stood unfailing since its founding in 1911. Inside the plant, the air
is ripe with the smell of ink and the hum of presses. Harty’s CEO George R. Platt grew up
working in the company, first during summers, and then full time after college to work alongside
his father and founder, George E. Platt.
When George R. Platt took over Harty Press, the business had 20 employees and $1
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million in sales. With a keen eye for assessing Harty’s strengths and weaknesses—and with a
drive to grow—Platt beefed up quality and customer service. He found higher-margin market
niches. The rapid technological changes overtaking the industry, however, limited future growth.
Printing was moving quickly from the world of film, type, and light to the computer-driven,
digitized world of the desktop. Platt tried to solve the problem by hiring a specialist to
computerize Harty’s prepress process. But Platt soon learned that building digital desktop
capability from scratch would cost more than a million dollars.
The solution to that problem—and to growth—came in the form of Pre-Press Graphics.
Based in nearby Branford, Connecticut, Pre-Press Graphics had been one of the first in the
state to aggressively use advanced desktop technology. It had already done much of the costly
research and development work Platt knew he would have to undertake. In addition, because
the owner of Pre-Press had been spending a lot of time, money, and energy on the
development of technology, the business had plateaued. The owner was looking for a buyer.
Harty Press bought Pre-Press Graphics for $500,000; and the merging of the two
companies began. Platt immediately had major problems with the change:
 It was hard to imagine two more different cultures than those of Harty Press and Pre-
Press Graphics.
 Harty is based in the heart of an industrial neighborhood. Pre-Press sits twelve miles
away, out in the bustling world of office parks and fast food joints.
 Harty’s workers, many with 10 to 20 years of service, wear smudged aprons, have ink
under their fingernails, and carry union cards. At Pre-Press, people in running shoes and
jeans sit in front of computer screens.
 Harty’s management is low key, loose, and creates autonomy. The management at Pre-
Press was intense, precise, and controlling.
 The move of Harty’s twelve-person prepress department to consolidate with Pre-Press
created chaos. The firms’ procedures and systems did not dovetail. Neither group had
been given enough notice to plan for and comprehend the effects of the merger.
 Although Harty had bought Pre-Press specifically for its knowledge of desktop publishing,
Pre-Press employees who knew how to operate the computers saw that Harty workers
lacked those skills. They became protective of their knowledge and jobs.
 A key Harty employee was sent to Pre-Press to work on the transition. He was sent with
no job description and no defined role; an immediate hassle resulted with former Pre-
Press managers.
Training courses on computer technology lasted for only one session. Then “familiarization
training” on the computer was announced. No one knew what that meant, and no one ever
figured it out because it never took place.

Source: Edward O. Welles, “Mis-Match,” Inc. (June 1994), pp. 70–79.

QUESTIONS

1. Based on the experiences of Harty Press and Pre-Press Graphics, what is the
importance of culture in the change process?
2. What specific cultural factors caused problems in the change process? Cite examples
to support your answer
3. What specific mistakes did Harty and Pre-Press make in the change process? Cite
examples to support your answer.

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duplicated, or posted to a publicly accessible website, in whole or in part.
 4. Using as your guide the nine steps for planned change discussed in this chapter,
construct a change process to successfully merge Harty Press with Pre-Press
Graphics.
ANSWERS

The questions to this case attempt to allow the students to respond in various ways. That is,
these questions are subjective in nature and each student will have different perceptions and
answers.

J. B. CONSIDERS DELEGATING

J. B. Maxwell was feeling unusually tired as he adjourned his weekly meeting with his store
managers. There seemed to be more and more problems and more fires to put out over the
past several months. There just weren’t enough hours in the day anymore, or so it seemed to J.
B. On his way home, he thought about the real possibility that time was catching up to him.
Was he just getting older and more tired, or was the organization getting more complex and
difficult to handle?
Since founding his first video rental outlet five years ago, he had found that store openings
had become a frequent event. The first store had been the nucleus for six more, located in five
towns and cities throughout his home state of Texas. Plans and market research for five more
stores were on his desk waiting for his careful analysis.
In the beginning, it had been so simple: one store, himself and his wife, and one or two
sales clerks. Now he had seven stores, seven sets of records and budgets to check, seven sets
of orders to approve, and seven sets of personnel and finance problems to resolve. He
wondered if his initial approach to managing the stores from a central office was still the best
approach. But could he trust his store managers to make the right decision? They didn’t have
the drive that he had. They seemed to be more interested in leisure than in work. The stores
were profitable but becoming less so, and competition was presenting a problem. J. B. knew
that something had to change, and he didn’t want it to be his health.
Question

What are two possible answers to J.B’s present situation?

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duplicated, or posted to a publicly accessible website, in whole or in part.
A in order could be put together to allow the local managers to adjust to their new
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greater© 2013
store Cengage Learning. All Rights Reserved. May not be scanned, copied or
responsi manage or posted to a publicly accessible website, in whole or in part.
duplicated,
bility is ment
ON THE JOB VIDEO CASE SOLUTIONS: Evo Gear: Leading Teams

Discussion Questions and Suggested Answers:

1. Based on the video, Evo has not had a major problem with lost time due to frequent
meetings nor have any team members failed to do their share. Why might that be the
case? How can a team leader make sure that the team is productive without
becoming dictatorial? How does selection of members play a role?

2. Many of the teams at Evo consist of people with a wide range of creative skills. Do
you think that would make it easier or more difficult to lead such a team? Why?

3. How might the size of Evo impact on the effectiveness of its teams?

BIZ FLIX VIDEO CASE

Video Case: Rendition

Video Case Synopsis

U. S. government operatives suddenly whisk Anwar El-Ibrahimi (Omar Metwally) from his flight
from Cape Town, South Africa after it arrives in Washington, D.C. He is a suspected terrorist
whom the government sends to North Africa for torture and interrogation (extraordinary
rendition). Douglas Freeman (Jake Gyllenhaal), a CIA analyst, becomes involved. He reacts
negatively to the torture techniques and urges El-Ibrahimi’s release. The story has other
complications in the form of El-Ibrahimi’s pregnant wife at home who desperately fights for her
husband’s safe return.
This BizFlix video case opens with a night shot of the Washington Monument. We learn
that Congressional aide Alan Smith (Peter Sarsgaard) was once a friend of El-Ibrahimi, and he
feels compelled to attempt to defend him. Yet Senator Hawkins (Alan Arkin) tells Alan to back
off in no uncertain terms.

Video Case Discussion Questions and Suggested Answers

1. What can you infer about this organization and its structure based on the conversation you
witness in this video clip?

Alan Smith is clearly in a subordinate position in the organizational structure, whereas

Senator Hawkins holds the position of authority. Hawkins and Smith are in conflict about
their goal or purpose, and Hawkins wants to influence Smith by reminding him of their need
to coordinate their efforts.

2. Would you describe this as a mechanistic or organic organization? Explain your answer.

Students should recognize that on the spectrum from mechanistic to organic, this is a fairly
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duplicated, or posted to a publicly accessible website, in whole or in part.
 mechanistic organization. Among the specific reasons they should offer to support this
opinion are: the vertical, top-down communication; a heavy emphasis on following the
instructions and decision of the superior; and a heavy emphasis on loyalty and obedience.

3. Think about some of the specific statements that Hawkins makes to Smith, and use them to
analyze the organizational culture he is creating.

Hawkins appears to be creating a culture based on fear and self-protection. He advises him
to be particularly respectful to people in authority, and never to offend or upset them. He
also warns him against taking risks, such as speaking up for someone he once considered a
friend.

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duplicated, or posted to a publicly accessible website, in whole or in part.