Part 3

Managing for
Quality and
Competitiveness

McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
 Organizational Culture

Organizational Culture (Corporate Culture)

• A firm’s shared values, beliefs, traditions, philosophies,
rules, and role models for behavior

o Ensures that organizational members:

 Share values
 Observe common rules
 Share problem solving approaches

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 Organizational Culture

Formal Expression Informal Expression

Mission statement Dress code (or lack of one)

Code of ethics Work habits

Memos Extracurricular activities

Manuals Stories

Ceremonies

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Impact of Corporate Culture
on Business Performance

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 Organizational Structure
Structure

• The arrangement or relationship of positions within

an organization

o An organization’s structure develops when:

1. Managers assign work tasks to specific individuals
or work groups
2. Coordinate the diverse activities required to reach
the firm’s objectives

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 Organizational Structure

• Decision making
• Costs and efficiencies
Impacts: • Overall success and sustainability
• Employee unity
• Understanding of how to deal with problems

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 The organizational
structure at TOMS Shoes
consists of two parts
 The for-profit component
of the company manages
overall operations
 Its nonprofit component,
Friends of TOMS, is
responsible for volunteer
activities and shoe
donations

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 Organizational Charts

Organizational Chart

• A visual display of the organizational structure, lines of

authority (chain of command), staff relationships,
permanent committee arrangements, and lines of
communication

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The Evolution of a Clothing Store,
Phases 1, 2, and 3

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 Assigning Tasks

Specialization

• The division of labor into small, specific tasks and the

assignment of employees to do a single task

o Why specialize:
 Efficiency
 Ease of training
• Activities too numerous for one person

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Henry Ford, the founder
of Ford Motor Company,
revolutionized
manufacturing by
creating assembly lines
like this one to specialize
the tasks his workers
performed

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 Risks of Overspecialization

• Employees become bored

Overspecialization • Job dissatisfaction
can have negative • Poor quality work
consequences • Increased injuries
• Increased employee turnover

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 Departmentalization

Departmentalization
• The grouping of jobs into working units usually called
departments, units, groups, or divisions
• Functional departmentalization
• Product departmentalization
• Geographical departmentalization
• Customer departmentalization

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 Functional Departmentalization
Functional Departmentalization
• The grouping of jobs that perform similar functional
activities, such as finance, manufacturing, marketing,
and human resources

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 Product Departmentalization
Product Departmentalization

• The organization of jobs in relation to the products of

the firm

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 The Campbell Soup Company uses product
departmentalization to organize its company
 However, the firm also engages in a type of geographic
departmentalization for various regions

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Geographical Departmentalization
Geographical Departmentalization
• The grouping of jobs according to geographic location,
such as state, region, country, or continent

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 Customer Departmentalization

Customer Departmentalization
• The arrangement of jobs around the needs of various
types of customers

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An Organizational Chart for the City of Corpus Christi

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 Delegation of Authority

Delegation of Authority
• Giving employees not only tasks, but also the power to
make commitments, use resources, and take whatever
actions are necessary to carry out those tasks

 As a business grows, so do the number and complexity

of decisions that must be made; no one manager can
handle them all
 Delegation of authority frees a manager to concentrate
on larger issues such as planning or dealing with
problems and opportunities

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 Responsibility and Accountability

Responsibility
• The obligation, placed on employees through
delegation, to perform assigned tasks satisfactorily
and be held accountable for the proper execution of
work
Accountability
• The principle that employees who accept an
assignment and the authority to carry it out are
answerable to a superior for the outcome

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 Degree of Centralization
Centralized Organizations
• A structure in which authority is concentrated at the top, and
very little decision-making authority is delegated to lower
levels
• Overcentralization can cause serious problems for a
company, in part because it may take longer for the
organization as a whole to implement decisions and to
respond to changes and problems on a regional scale

Decentralized Organizations
• An organization in which decision-making authority is
delegated as far down the chain of command as possible
• Delegating authority to lower levels of managers may
increase the organization’s productivity

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 Span of Management
Span of Management
• The number of subordinates who report to a particular
manager
 A wide span of management exists when a manager directly
supervises a very large number of employees
 A narrow span of management exists when a manager
directly supervises only a few subordinates

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 Organizational Layers

Organizational Layers

• The levels of management in an organization

 Complements the concept of span of management

 A company with many layers of managers is
considered tall; in a tall organization, the span of
management is narrow
 Organizations with few layers are flat and have wide
spans of management

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 Forms of
Organizational Structures

• Line structure
Forms of • Line-and-staff structure
Organizational
Structures • Multidivisional structure
• Matrix structure

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 Line Structure

Line Structure
• The simplest organizational structure in which direct
lines of authority extend from the top manager to the
lowest level of the organization

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 Line-and-Staff Structure

Line-and-Staff Structure

• A structure having a traditional line relationship

between superiors and subordinates and also
specialized managers – called staff managers –
who are available to assist line managers

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Line-and-Staff Structure

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 Multidivisional Structure

Multidivisional Structure

• A structure that organizes departments into larger

groups called divisions

 Occurs as organizations grow larger and more

diversified
 Divisions can be formed on the same bases as
departments (customer, product, and/or geography)
 Delegation of authority and divisionalized work

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 Matrix Structure

Matrix Structure

• A structure that sets up teams from different

departments, thereby creating two or more
intersecting lines of authority; also called a project-
management structure

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Matrix Structure

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 Groups and Teams

Group
• Two or more individuals who communicate with one
another, share a common identity, and have a common
goal

Team
• A small group whose members have complementary
skills; have a common purpose, goals, and approach;
and hold themselves mutually accountable

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Differences between Groups and Teams

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 Committees and Task Forces
Committee
• A permanent, formal group that performs a specific task

Task Force
• A temporary group of employees responsible for bringing
about a particular change
 Typically come from across all departments and levels of an
organization
 Membership is usually based on expertise rather than
organizational position
 Occasionally, a task force may be formed from individuals
outside a company

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 Teams

Project Teams
• Groups similar to task forces which normally run their
operation and have total control of a specific work
project

Product-Development Teams
• A specific type of project team formed to devise,
design, and implement a new product

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 Teams

Quality-Assurance Teams (or Quality Circles)

• Small groups of workers brought together from
throughout the organization to solve specific quality,
productivity, or service problems

Self-Directed Work Teams (SDWT)

• A group of employees responsible for an entire work
process or segment that delivers a product to an
internal or external customer

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The Flow of Communication in an
Organizational Hierarchy

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 Technology and Communication
 Technology has generated many alternatives to face-
to-face communications:
Voice-mail E-mail
Social media Online newsletters
Videoconferencing Online meeting services

 Many companies use internal networks called intranets to

share information with employees
 A survey of managers and executives found that they feel
28% of meetings are a waste of time and that information
could be communicated more effectively using other methods

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 Formal Communication
Flow of communication within the formal organizational
structure as depicted on organizational charts
Upward Communication
• Flows from lower to higher levels of the organization
• Includes information such as progress reports, suggestions
for improvement, inquiries, and grievances

Downward Communication
• Refers to the traditional flow of information from upper
organizational levels to lower levels
• Typically involves directions, the assignment of tasks and
responsibilities, performance feedback, and certain details
about the organization’s strategies and goals

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 Formal Communication
Horizontal Communication
• Involves the exchange of information among colleagues and
peers on the same organizational level, such as across or
within departments
• Information informs, supports, and coordinates activities both
within the department and with other departments

Diagonal Communication
• When individuals from different units and organizational
levels communicate
• With firms downsizing and increasing the use of work teams,
workers are being required to communicate with others in
different departments and on different levels to solve
problems and coordinate work

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 Informal Communication
Grapevine

• An informal channel of communication, separate from

management’s formal, official communication channels
 Managers can utilize informal communications
as a sounding device
 Can obtain valuable information from the
grapevine that could improve decision making
 Some organizations use the grapevine to their
advantage by floating ideas, soliciting feedback,
and reacting accordingly
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 Monitoring Communications

 Technological advances and the increased use of

electronic communication in the workplace have made
monitoring its use necessary for most companies
 Managers must monitor communications:
 Without invading employee privacy
 While generating respect and mindfulness amongst
employees
 Model Electronic Privacy Act on the American Civil
Liberties Union site

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 Improving
Communication Effectiveness
 Encourage employees to provide feedback
 Helps identify strengths and weaknesses
 Avoid interruptions
 Develop strong and effective communication channels
through training
 Important for companies to communicate their e-mail
policies throughout the organization

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