Chapter out lines

Chapter five: Power and Politics in

organizations
Chapter six: conflict
Chapter seven: Organizational
Culture
Chapter eight : Organizational
Structure and Design

1
Ch. 5 Power and Politics in organizations

A Definition of Power

• Power refers to a capacity that A has to influence

the behavior of B. so B acts in accordance with A ’s
wishes.
• Probably the most important aspect of power is that it
is a function of dependence .
• Dependency, The Key To Power
• Bs relationship to A when A possesses something that B
requires
• The greater B ’s dependence on A, the greater A ’s
power in the relationship.
2
 Types of Individual Power: A Summary

Individual Power

Position Power
Personal Power
• Referent power
• Legitimate power
• Expert power
• Reward power
• Coercive power

3
PERSONAL POWER

4
 Bases of Power: Formal Power
Legitimate Power: you derive from your formal
position or office held in the organization's
hierarchy of authority.
For example, the president of a corporation has certain
powers because of the office they hold in the
corporation. Like most power, legitimate power is based
upon perception and reality.

5
Coercive Power
Coercive power is when someone in a
position of power uses the threat of
punishment to force subordinates
into complying with their demands.
Fear of punishment is the incentive to
comply. There are many types of
coercive power, including expert power,
legitimate power, reward power, and
informational power
6
7
 Bases of Power: Personal Power
Expert Power/ use your specialized skills to help your
team members,
Influence based on special skills or knowledge. It is generally
acknowledged that physicians have expertise and hence
expert power: Most of us follow our doctor’s advice.
Computer specialists, tax accountants, economists,
industrial psychologists, and other specialists wield
power as a result of their expertise.

Referent Power like charismatic leaders/ reach their audience effectively

and authoritatively through clear communication and articulation, as
well as promote an environment of collaboration and teamwork
Influence based on possession by an individual of desirable resources or
personal traits. 8
9
 charismatic leaders
If I like, respect, and admire you, you can exercise
power over me because I want to please you.
Referent power develops out of admiration of
another and a desire to be like that person. It helps
explain, for instance, why celebrities are paid
millions of dollars to endorse products in
commercials
10
Reward power

11
Influence Tactics
• What power tactics do people use to translate power bases into
specific action?
• What options do they have for influencing their bosses, coworkers, or
employees
• Research has identified the following influence tactics.
1. Legitimacy. Relying on your authority position or saying a request
accords with organizational policies or rules.
2. Rational persuasion. Presenting logical arguments and factual evidence
to demonstrate a request is reasonable.
3. Consultation. Increasing the target’s support by involving him or her in
deciding how you will accomplish your plan.
4. Exchange. Rewarding the target with benefits or favors in exchange for
following a request.
5. Personal appeals. Asking for compliance based on friendship or loyalty.
6. Pressure. Using warnings, repeated demands, and threats.
7. Coalitions. Enlisting the aid or support of others to persuade the target
to agree. Common examples of coalitions within organizations
are unions that may threaten to strike if their demands are not 12
Definition of politics

• Those activities that are not required as part of one’s formal role in
the organization, but that influence the distribution of advantages
within the organization.
• It is outside one’s specified job requirements.
• It encompasses efforts to influence decision-making goals,
criteria, or processes.
 It includes such behaviors as withholding information, whistle
blowing, spreading rumors, Leaking confidential information to
the media, Exchanging favors with others in the organization for
mutual benefit, and Lobbying on behalf of or against a particular
individual or decision alternative.
• Organizational politics are activities people perform to acquire,
enhance, and use power & other resources to obtain their preferred
outcomes in a situation where there is uncertainty or disagreement.
13-13
Identify the causes and consequences of political behavior

13-15
 Individual factors
• Factors Contributing to Political Behavior as shown in Exhibit , include individual
factors.
• Researchers have identified certain personality traits, needs, & other factors that
are likely to be related to political behavior.
• Individuals with an internal locus of control are more prone to take a proactive
stance & attempt to manipulate situations in their favor.
• The Machiavellian personality is comfortable using politics as a means to further
his/her self-interest.
• An individual’s investment in the organization, perceived alternatives, and
expectations of success will influence the tendency to pursue illegitimate means
of political action.
• The more a person expects increased future benefits from the organization, and
the more that person has to lose if forced out, the less likely he or she is to use
illegitimate means.
• Conversely, the more alternate job opportunities an individual has—due to a
favourable job market, possession of scarce skills or knowledge, prominent
reputation, or influential contacts outside the organization—the more likely the
person is to employ politics. 16
 Organizational factors
• The organizational factors that influence politics are many. Political activity is probably more a
function of the organization’s characteristics than of individual difference variables.
• When an organization’s resources are declining, when the existing pattern of resources is changing,
and when there is opportunity for promotions, politics is more likely to surface.
• Cultures characterized by low trust, role ambiguity, unclear performance evaluation systems, high
pressures for performance, and self-serving senior managers will create breeding grounds for
politicking.
• When organizations downsize to improve efficiency, people may engage in political actions to
safeguard what they have.
• Promotion decisions have consistently been found to be one of the most political in organizations.
• The less trust there is within the organization, the higher the level of political behavior and the more
likely it will be illegitimate.
• Role ambiguity means that the prescribed behaviors of the employee are not clear. The greater the
role ambiguity, the more one can engage in political activity with little chance of it being visible.
• Subjective performance criteria create ambiguity. Single outcome measures encourage doing
whatever is necessary to “look good.” The more time that elapses between an action and its
appraisal, the more unlikely that the employee will be held accountable for his/her political
behaviors.
• The more pressure that employees feel to perform well, the more likely they are to engage in
politicking.. When employees see top management successfully engaging in political behavior,
17
a
climate is created that supports politicking.
Identify the causes and consequences of political behavior

13-18
Consequences of political behavior
• For most people, who have modest political skills or are
unwilling to play the politics game, outcomes tend to be
predominantly negative.
• Exhibit summarizes the extensive research on the relationship
between organizational politics and individual outcomes.
• There is very strong evidence indicating that perceptions of
organizational politics are negatively related to job satisfaction.
• The perception of politics leads to anxiety or stress.
• When it gets to be too much to handle, employees quit.
• When employees of two agencies in a recent study in Nigeria
viewed their work environments as political, they reported
higher levels of job distress & were less likely to help their co-
workers.
19
 Chapter SIX
Define conflict
A Definition of Conflict
• A process that begins when one party perceives that another party
has negatively affected, or is about to negatively affect,
something that the first party cares about.
• The parties to it must perceive conflict.

14-21
 Differentiate between the traditional, &
interactionist
• The Traditional View of Conflict
• Assumed all was bad & to be avoided.
• Viewed negatively and discussed with such terms violence,
destruction, and irrationality.
• Conflict was a dysfunctional outcome resulting from poor
communication, a lack of openness & trust between people,
and the failure of managers to be responsive to the needs
and aspirations of their employees.

Copyright © 2013 Pearson Education, Inc. publishing as 14-22

Prentice Hall
Differentiate between the traditional,
& interactionist
• The interactionist view of conflict encourages because a
harmonious, peaceful, and cooperative group is prone to
becoming static, indifferent, and unresponsive to needs for
change and innovation.
• But, not all conflicts are good.
• Functional, constructive forms of conflict support
goals.
• Conflicts that hinder group performance are
dysfunctional or destructive forms of conflict.

Copyright © 2013 Pearson Education, Inc. publishing as 14-23

Prentice Hall
 The Effect of Conflict on Organizational Performance

Exhibit 5.1
conflict

• At first, conflict can increase organizational

performance because it exposes
weaknesses in organizational decision
making , design & prompts/ STIMULATES
the organization to make changes.
• Managers realign.
The job of top managers is to prevent conflict
from going beyond point A & to channel conflict
in directions that increase organizational
performance.
26
The effect of conflict on organizational performance
At first, conflict can increase organizational performance
because it exposes weaknesses in organizational decision
making & design & prompts the organization to make
changes.
At some point—point A in Exhibit 5.1.—an increase in
conflict leads to a decline in performance because conflict
between managers gets out of control, & the organization
fragments into competing interest groups.
• The job of top managers is to prevent conflict from going
beyond point A & to channel conflict in directions that
increase organizational performance.
• Thus, managing conflict is a way to improve organizational
decision making & resource allocation, making the
organization more effective
 Sources of Organizational Conflict
• Conflict between individuals & between groups has many
sources, & managers need to be aware of them so that when it
occurs, they can either control or resolve it.
• Three major sources of interpersonal & intergroup conflict are
differentiation, task relationships, & scarcity of resources.
• Differentiation in an organization occurs when employees &
tasks are split up into different subunits or groups, such as
functions & divisions.
• each different group can focus on its specific tasks & so can
work to continuously increase its performance. The splitting of
the organization into functions or divisions produces conflict.
• For example, manufacturing generally has a cost-directed
efficiency orientation.
• R&D is oriented toward long-term, innovative technical goals, &
• Marketing is oriented toward identifying & finding ways to satisfy
customer needs.
• Thus, manufacturing may consider investing money in cost-
saving machinery as the solution to a company’s problem, while
R&D wants to invest the money to promote product innovation &
sales wants to increase advertising expenditures to increase
demand . Because different functions have different orientations &
priorities these differences can lead to conflict that can do
considerable harm.
• They can undermine an organization’s cohesiveness & functional
integration & reduce its performance.

29
 STATUS INCONSISTENCIES
• Very often, functions whose activities are the most central &
essential to a company’s operations come to view themselves as
more important than other functions & believe they have
higher status or prestige in the organization.
• As a result, they may attempt to achieve their goals at the
expense of other functions & the result is conflict among
functions that lowers organizational performance. Top managers
need to work to prevent this happening.
• To demonstrate their high status, they respond more slowly to
the needs of other functions & this also results in conflict
between them.
• Task relationships generate conflict between people & groups
because organizational tasks are interrelated & affect one
another.
TASK INTERDEPENDENCIES
• If one function does not do its job well, the ability of the
function next in line to perform at a high level is reduced, &
the outcome is likely to be conflict.
• For example, the ability of manufacturing to reduce costs on
the production line depends on how well R&D has designed the
product so it can be made more cheaply & how well sales has
attracted large customer orders so large production runs
(which lower production costs) become possible.
• The potential for conflict increases as the interdependence of
functions or divisions increases.
• Thus, as task interdependence increases from pooled, to
sequential, to reciprocal interdependence, the potential for
conflict among functions or divisions is greater.
Scarcity of Resources
• Competition for scarce resources produces conflict.
• Conflict over the allocation of capital occurs among
divisions & between divisions & corporate headquarters.
• Budget fights can be fierce when resources are scarce.
• Other organizational groups also have an interest in the way
a company allocates scarce resources.
• Shareholders care about the size of their dividends.
• Employees want to maximize their salaries & benefits.
• Managers in competition for scarce resources may fight
over whom should get the biggest pay raise.
 Pondy’s Model of Organizational Conflict
Exhibit .5.2

Stage 1:
Latent Conflict

Stage 2:
Perceived Conflict

Stage 3:
Felt Conflict

Stage 4:
Manifest Conflict

Stage 5:
Conflict Aftermath
Pondy’s Model of Organizational Conflict

• Louis Pondy developed a widely accepted model of

organizational conflict that views conflict as a dynamic
process that consists of five sequential stages (see Exhibit
5.2).
• No matter how or why conflict arises in an organization,
managers can use Pondy’s model to analyze a conflict &
guide their attempts to manage & resolve it.
• Latent Conflict In the first stage of Pondy’s model, there is
no actual conflict.
• The potential for conflict to arise is present, but latent or
under the surface, each of the sources of conflict can cause
it to suddenly or gradually emerge.
 Perceived Conflict
• This stage of conflict begins when one party—becomes aware that its goals are thwarted by
the actions of another party.
• Each party searches for the origins of the conflict, defines why the conflict is emerging,
analyzes the events that led to its occurrence, & constructs a scenario that accounts for the
problems it is experiencing with other parties.
• For example, the manufacturing function of a company may trace its production problems to
defective inputs used in the assembly process.
• Manufacturing managers wonder why the inputs are substandard & after an investigation
discover that the materials mgmt function chose to buy inputs from the lowest-cost supplier.
• This decision reduces input costs & improves materials mgment’s performance, but raises
production costs & worsens manufacturing’s performance.
• Manufacturing comes to see materials management as preventing its goals & interests.
• At the stage of perceived conflict, the conflict usually escalates as functions start to argue
about the origin of the problem.
• In an attempt to get materials management to change its purchasing practices, manufacturing
complains about materials management to the CEO or to anyone else who will listen.
• Materials mgmt argues that low-cost inputs do not reduce quality & claims that manufacturing
does not properly train its employees. Each party perceives the conflict & its causes
differently.
• Thus, although both functions share the same goal of superior product quality, they have very
different explanations for why product quality is falling.
 Felt Conflict
• During the stage of felt conflict, the parties in conflict develop
negative feelings about each other.
• For example, groups/functions close ranks, develop an “us-
versus-them” attitude, & each blames the other for starting
the problem.
• As conflict escalates, cooperation between groups declines &
so does organizational effectiveness.
• For example, it is almost impossible to speed new product
development if materials management & manufacturing are
fighting over the quality of inputs & final products.
• As the parties in conflict battle & argue for their points of
view, the significance of the disputed issue is likely blown out
of proportion.
• This is extremely common & why managers need to solve
conflicts as early as possible.
Manifest Conflict
• In the stage, the hostility between the parties in conflict
leads them to engage in openly aggressive behaviors as
both parties try to hurt each other & thwart each other’s
goals.
Manifest conflict can take many forms:
1. Heated arguments
2. Even physical violence between people & groups
3. fighting in the top-management team occurs as managers
seek to promote their own careers at the expense of
others in the organization.
Conflict Aftermath
• Sooner or later, conflict in an organization is resolved in one
way or another—someone gets fired, dysfunctional groups
are broken up, or the organization & its divisions are
restructured.
• Although conflict may seem to disappear for a while, it is likely
that the source of the original conflict will result in more
problems later.
• Suppose that sales, still angry over the earlier “mix-up” with
manufacturing, has to once again request that manufacturing
change its scheduling to satisfy an urgent product order from
an important customer. How will these functions behave?
• Probably, their lack of trust will make it hard for them to agree
on anything.
 Individual-Level Conflict Management
• The management of conflict between individuals is directed at
changing the attitudes or behavior of those involved in the conflict.

• If the conflict is due to a clash of personalities & the parties in

conflict simply do not understand one another’s point of view, an
organization can help the people involved by bringing in outside
help to give advice & counsel.

• If the conflict is due to work-force diversity—such as when a young

person supervises older, more experienced workers or a female
manager supervises an all-male work group—the organization can
use education & training to help employees appreciate the
differences in their attitudes & avoid or successfully resolve
conflict.
Cont’d
• If the conflict is due to a basic disagreement about how the
work should be performed, managers can use a step-by-step
negotiation approach
• The steps in the process are as follows:
1. A manager meets with both the employees in conflict
• Each employee then is asked to express their thoughts &
both employees, understand the facts of the conflict & each
other’s different positions.
2. The manager summarizes the dispute between the
employees in a written form, creating a report that carefully
matches both sides of the case to identify the main factors in
dispute.
For example, if the dispute is about one employee
performing substandard work, each employee’s
explanation of events is noted carefully
 Cont’d
3. The manager discusses the facts in the report with each employee
separately acting as a neutral third party; the manager uses the fact-
finding report to work out a solution that each employee can accept
4. The manager meets with both employees to discuss the agreement
& get their commitment to resolving the dispute.
• If the conflict cannot be negotiated successfully, another solution is
to move people around.
• Managers can transfer employees to new positions where they
will not meet each other
• Job rotation & assignments to new teams or departments or even to
new countries help people to develop fresh perspectives on issues in
dispute.
• Promotion can also be used to change attitudes.
• As a last resort, an organization can fire the people involved &
replace them with others who have no history of dysfunctional
conflict.
Ways of Handling Conflict
Exhibit 5.3

Interest in helping others

High
Accommodation Collaboration

Compromise
Low

Avoidance Competition

Low High
Interest in achieving individual goals
 Direct negotiations
• groups are held either with or without a third-party
negotiator.
• The third party facilitates the bargaining process to help the
parties in dispute find a solution to their problem.
• Sometimes the manager, often the CEO, who is responsible
for the performance of the parties in conflict acts as the
third party.
• A third party who plays the role of mediator takes a neutral
stance & works with the parties to reconcile their
differences.
• Five forms of negotiation can be identified as the parties
in conflict attempt to manage their differences:
compromise, collaboration, accommodation,
avoidance, & competition (see Exhibit 5.3).
REACTIONS TO CONFLICT

• Reactions to conflict can be differentiated along two dimensions: how

important each party’s goals are to that party & how compatible the
goals are.
• The importance of reaching a goal may range from very high to very
low.
• The degree of goal compatibility is the extent to which the goals can be
achieved simultaneously.
• In other words, the goals are compatible if one party can meet its goals
without preventing the other from meeting its goals.
• The goals of different groups may be very compatible, completely
incompatible, or somewhere in between.
 1. Avoidance

• Avoidance occurs when an interaction is relatively unimportant to

either party’s goals, and the goals are incompatible
• Because the parties to the conflict are not striving toward compatible
goals & the issues in question seem unimportant, the parties simply try
to avoid interacting with one another.
• For example, one state agency may simply ignore another agency’s
requests for information.
• The requesting agency can then practice its own form of avoidance by
not following up on the requests.
 2. Accommodation/ SOME WHERE TO STAY
• Accommodation occurs when the goals are compatible but the interactions are not
considered important to overall goal attainment.
• This style is simply putting the other parties needs before own’s own. You allow them to
win and get their way.
• Interactions of this type may involve discussions of how the parties can accomplish their
interdependent tasks with the least expenditure of time and effort. This type of interaction
tends to be very friendly.
• For instance, both you and your team member have two different ads campaign,
and you think it is best to go with your team member’s idea than fighting with him.
• For example, during a college’s course scheduling period, potential conflict (classroom)
may exist between the marketing & management departments.
• Both departments offer morning classes. Which department is allocated the 9:00 a.m.
time period & which one the 10:00 a.m. time period may not be that much important to
either group.
• Their overall goal is for the classes to be scheduled so that students will be able to take
courses.
 3. Competition
• Competition occurs when the goals are incompatible, & the
interactions are important to each party’s meeting its goals.
• If all parties are striving for a goal but only one can reach the goal,
the parties will be in competition.
• For example: In a firm, the first, second, & third shifts each sought to
win the weekly productivity prize by posting the highest productivity
record.
• Workers on the winning shift received recognition in the company
newspaper. Because the issue was important to each group and the
interests of the groups were incompatible, the result was
competition.
 4. Collaboration
• occurs when the interaction between groups is very important to goal
attainment & the goals are compatible
• Example: In the class scheduling situation mentioned earlier, conflict may
arise over which courses to teach in the first semester & which ones in the
second. Both departments would like to offer specific courses in the same
semester. However, by discussing the issue & refocusing their overall goals to
match students’ needs, the marketing & economics departments can
collaborate on developing a proper sequence of courses.
• In a collaborative interaction, goals may differ but be compatible.
• Parties to a conflict may initially have difficulty working out the ways in which
all can achieve their goals. However, because the interactions are important
to goal attainment, the parties are willing to continue to work together to
achieve the goals.
• Collaborative relationships can lead to new & innovative ideas & solutions to
differences among the parties.
 5. Compromise/ COOPERATION/ finding the middle
group
• Compromise occurs when the interactions are moderately important
to goal attainment & the goals are neither completely compatible nor
completely incompatible.
• Often each party gives up something, but because the interactions
are only moderately important, they do not regret what they have
given up.
• Example Contract negotiations between union & management are
usually examples of compromise. Each side brings numerous issues
of varying importance to the bargaining table.
• The two sides frequently give and take on the issues through rounds
of offers and counteroffers.
• Weeks of negotiations ending in numerous compromises usually
result in a contract agreement between the union & management.
 Ch. 7 Organizational Culture
What Is Organizational Culture?

Organizational Culture
 Every company has its own unique personality, just like
people do.
 The unique personality of an organization is referred to as
its culture.
 In groups of people who work together, organizational
culture is an invisible but powerful force that
influences the behavior of the members of that group.

55
Dimensions of Organizational Culture

57
 Culture as a Liability:

Barrier
Barrier toto change:-
change:- Consistency
Consistency of of behavior,
behavior, an
an asset
asset in in aa
stable
stable environment,
environment, may may then
then burden
burden the
the organization
organization andand
make
makeititdifficult
difficultto
to respond
respond toto changes.
changes.
Barrier
Barrier toto diversity:-
diversity:- Hiring
Hiring new
new employees
employees who
who differ
differ from
from
the
the majority
majority in in race,
race, age,
age, gender,
gender, disability,
disability, or
or other
other
characteristics
characteristicscreates
createsaa paradox
paradox
Barrier
Barrier to to acquisitions
acquisitions and and mergers:-
mergers:- MoreMore than
than thethe
financial
financial advantage
advantage and and product
product synergy,
synergy, decision
decision on on
merger
merger and and acquisition
acquisition havehave recently
recently focused
focused on on the
the
cultural
cultural compatibility
compatibility of of the
the two
two firms.
firms.
60
 Strong versus Weak Cultures
• If most employees (responding to management surveys) have
the same opinions about the organization’s mission & values,
the culture is strong; if opinions vary widely, the culture is
weak.
• The more members who accept the core values & the greater
their commitment, the stronger the culture and the greater its
influence on member behavior, because the high degree of
shared-ness and intensity creates a climate of high behavioral
control.
• Factors Influencing the Strength of Culture
1. Size of the organization
2. Clarity of cultural values and beliefs
3. Age of the organization
4. Rate of employee turnover
61
Creating and Sustaining Culture
How Culture Begins?
• Ultimate source of an organization’s culture is its founders.
1. Founders hire and keep only employees who think & feel the same way
they do.
2. Founders indoctrinate and socialize these employees to their way of
thinking and feeling.
3. The founders’ own behavior acts as a role model that encourages
employees to identify with them & thereby internalize their beliefs,
values, and assumptions.

64
 Keeping Culture Alive
• Three forces play a particularly important part in sustaining a culture
• Selection
• Concern with how well the candidates will fit into the organization.
• Provides information to candidates about the organization.
• Eg, selecting employees who have entrepreneurial skills for company which values
innovation.
• Top Management
• Senior executives help establish behavioral norms that are adopted by the organization.
Through words and behavior, senior executives establish norms that filter through the
organization about,
• for instance, whether risk taking is desirable, how much freedom managers give
employees, what is appropriate dress, and what actions earn pay raises, promotions, and
other rewards.

• Socialization
• The process that helps new employees adapt to the organization’s culture. 65
 Stages in the Socialization Process

Pre-arrival Stage
This refers to the individual’s set of values , attitudes and expectations about both the
work and the organization. One way to capitalize on prehire characteristics in
socialization is to use the selection process to inform prospective
employees about the organization as a whole
Encounter Stage
The stage in the socialization process in which a new employee sees what the
organization is really like and confronts the possibility that expectations and reality may
diverge.
Metamorphosis Stage
The stage in the socialization process in which a new employee changes and adjusts to
the work, work group, and organization.
This time the new comers accept the norms of the organization, their peers and the
work 66
A Socialization Model
 A successful metamorphosis should have a positive impact
on new employees’ productivity and their commitment to
the organization and reduce their propensity to leave the
organization.

67
 How Culture Affects Managers
• Managerial Decisions Affected by Culture
• Planning
• The degree of risk that plans should contain
• Whether plans should be developed by individuals or
teams
• The degree of environmental scanning in which
management will engage
• Organizing
• How much autonomy should be designed into
employees’ jobs
• Whether tasks should be done by individuals or in
teams
• The degree to which department managers interact with
each other 68
Cont’d…..
• Leading
• The degree to which managers are concerned
with increasing employee job satisfaction
• What leadership styles are appropriate
• Whether all disagreements—even constructive
ones—should be eliminated
• Controlling
• What criteria should be emphasized in employee
performance evaluations
• What repercussions will occur from exceeding
one’s budget
• Whether to impose external controls or to allow
employees to control their own actions
69
Demonstrate how an ethical culture can
be created
• How can management create a more ethical culture?
1. Be a visible role model. Employees look to top
management behavior as a benchmark.
2. Provide ethical training. Training sessions should
reinforce standards of conduct and clarify
permissible practices
3. Reward ethical acts and punish unethical ones.

16-70
Ch. 8. Organizational Structure and Design
Definition
• Organization structure defines how tasks are formally divided,
grouped , and coordinated.
• It refers to the division of labor as well as the patterns of
coordination, communication, work flow , and formal power that
direct organizational activities.
• In general, it is the formal arrangement of jobs within an
Organization
 Organizational Design- refers to the creation & modification of
organization structure.
 The process of developing or changing an organization’s structure
Key Elements Organization Structure

I.I.Work
Workspecialization
specialization
II.
II.Departmentalization
Departmentalization
III.
III.Chain
Chainofofcommand
command
IV.
IV.Span
Spanofofcontrol
control
V.
V.Centralization
Centralizationand
anddecentralization
decentralization
VI.
VI.Formalization
Formalization
 I. Work Specialization
 The degree to which tasks in the organization are subdivided into
separate jobs with each step completed by a different person.
 Divide a job into a number of steps, each completed by a separate
individual.
 In essence, individuals specialize in doing part of an activity rather than
the entirety.
 Example: Henry Ford became rich and famous by building automobiles
on an assembly line, demonstrating that work can be performed more
efficiently by using a work specialization strategy. Every Ford worker
was assigned a specific, repetitive task. By breaking jobs up into small
standardized tasks, Ford was able to produce cars at the rate of one
every 10seconds, while using employees who had relatively limited
skills.
Work Specialization (cont’d…)

Division
Divisionof
oflabor:
labor:
1.
1. Makes
Makesefficient
efficientuse
useof
ofemployee
employeeskills
skills
2.
2. Increases
Increasesemployee
employeeskills
skillsthrough
through
repetition
repetition
3.
3. Less
Lesstime
timeisisspent
spentin
inchanging
changingtasks
tasks
and
anditit increases
increasesproductivity
productivity
cont’d
However, Overspecialization can result in human
diseconomies from boredom, exhaustion, stress,
increased absenteeism, and higher turnover which
more than offset the economic advantages.
 2. Departmentalization
 After deciding what job tasks will be done by whom,
common work activities need to be grouped together so
work gets done in a coordinated & integrated way.
 How jobs are grouped together is called
departmentalization.
 For instance, a hotel might have departments such as:
 Front desk operations
 Sales & catering
 Housekeeping and laundry, and
 Maintenance.
Types of departmentlization
1. Functional- Groups employees based on work performed (e.g.,
engineering, accounting, information systems, human resources)
2. Product Groups employees based on major product areas in the
corporation (e.g., women’s footwear, men’s footwear, and apparel &
accessories)
3. Customer Groups employees based on customers’ problems and
needs (e.g., wholesale, retail, government)
4. Geographic Groups employees based on location served (e.g., North,
South, Midwest, East)
5. Process Groups employees based on the basis of work or customer
flow (e.g. Enrollment, testing, payment). —like that found in many
government offices or in health care clinics.
IV. Span of control
• How many employees can a manager efficiently
and effectively direct?
• This question of span of control is important
because it largely determines the number of
levels & managers an organization has.
 Span of Control
• The number of employees who can be effectively & efficiently
supervised by a manager.
• The traditional view was that managers should not—directly
supervise more than 5/6 subordinates.
Most effective and efficient span depends on:
1. Employee experience and training (more they have, larger span)
2. Similarity of employee tasks (more similarity, larger span)
3. Complexity of those tasks (more complex, smaller span)
4. Physical proximity of employees (closer proximity, larger span)
5. Amount and type of standardized procedures (more
standardized, larger span)
6. Sophistication of the organization’s management information
system (more sophisticated, larger span)
 cont’d
• Wider spans are more efficient in terms of cost.
• Narrow spans have three major drawbacks.
1. First, as already described, they are expensive because they
add levels of management.
2. Second, they make vertical communication in the organization
more complex.
3. Third, narrow spans of control encourage overly tight
supervision and discourage employee autonomy.
Current Trends on span of control
For the following reasons , most organization today
prefer wider span of control:
1. To reduce overhead cost and other costs
2. To speed up decision making
3. To increase flexibility
4. To get closure to customers
5. To empower employees
 VI. Formalization
Formalization-
 Refers to the degree to which jobs within the organization are standardized( job
description, rules, procedures , policies).
High formalization:
 Minimize job incumbent’s option (what, when , how… to do)
 Allow employees to handle the input in exactly the same way
 Results consistent and uniform out put
Low standardization:
 Job behaviors are relatively non-programmed
 High level of freedom for employees discretion
 Allow employees to consider alternatives in their works
 Although some formalization is necessary for consistency and
control, many organizations today rely less on strict rules and
standardization to guide and regulate employee behavior
 Key Design Questions and Answers for Designing the Proper Organizational
Structure

The Key Question The Answer is Provided

1.To what degree are activities subdivided in to Work specialization
separate jobs?

2. On what basis will jobs be grouped together? Departmentalization

3. To whom do individuals and groups report?

Chain of command
4. How many individuals can a manager efficiently
and effectively direct? Span of control

5. Where does decision-making authority lie ?

Centralization and decentralization
6.To what degree will there be rules and
regulations to direct employees and managers
Formalization
 Organizational Design Decisions
• Mechanistic Organization  Organic Organization
 A rigid and tightly controlled  Highly flexible and adaptable
structure structure
 High specialization  Non-standardized jobs

 Rigid departmentalization  Fluid team-based structure

 Narrow spans of control  Little direct supervision

 High formalization  Minimal formal rules

 Limited information network  Open communication network

(downward)  Empowered employees
 Low decision participation
 Structural decisions are influenced
1. by; strategy of the organization- Organizational structure follows strategy.
Overall
 Forinstance, the flexibility & free-flowing information of the organic structure
works well when an organization is pursuing innovations.
 The mechanistic organization with its efficiency, stability, & tight controls
works best for companies wanting to tightly control costs.
• Innovation Strategy- A strategy that emphasizes the introduction of major new products &
services often require open structure.
• Cost-minimization Strategy- A strategy that emphasizes tight cost controls, avoidance of
unnecessary innovation or marketing expenses, & price cutting
2. Size of the organization
 Firms change from organic to mechanistic organizations as they grow in size.
 Large organizations— with more than 2,000 employees—tend to have more
specialization, departmentalization, centralization, and rules & regulations than
do small organizations
3. Technology use by the organization
 Firms adapt their structure to the technology they use.
 Organizations adapt their structures to their technology(i.e unit/mass
production) depending on how routine their technology is for
transforming inputs into outputs.
 In general, the more routine the technology, the more mechanistic the
structure can be, and organizations with more nonroutine technology
are more likely to have organic structures.
4. Degree of environmental uncertainty
 Dynamic environments require organic structures; mechanistic
structures need stable environments.
 Worldwide economic downturns, global competition, accelerated
product innovation by competitors, & increased demands from
customers for high quality & faster deliveries are examples of dynamic
environmental forces.
 Mechanistic organizations are not equipped to respond to rapid
environmental change and environmental uncertainty.
5. Human Resources
• Highly skilled workers whose jobs require working in teams
usually need a more flexible structure.
• Higher skilled workers (e.g., Chief Accountants and doctors) often
have internalized professional norms.
• Managers must take into account all factors (environment, strategy,
size, technology and human resources) when designing the structure
of the organization.
Organizational Designs and Employee Behavior

Research
ResearchFindings:
Findings:
•• Work
Workspecialization
specializationcontributes
contributestotohigher
higheremployee
employeeproductivity,
productivity,but
butititreduces
reducesjob
job
satisfaction.
satisfaction.
•• The
Thebenefits
benefitsofofspecialization
specializationhave
havedecreased
decreasedrapidly
rapidlyas
asemployees
employeesseek
seekmore
more
intrinsically
intrinsicallyrewarding
rewardingjobs.
jobs.
•• The
Theeffect
effectof
ofspan
spanof
ofcontrol
controlononemployee
employeeperformance
performanceisiscontingent
contingentupon
upon
•• Individual
Individualdifferences
differencesand
andabilities,
abilities,
•• Task
Taskstructures,
structures,and
and
•• Other
Otherorganizational
organizationalfactors(
factors(like
likeuse
useof(MIS)
of(MIS)technology...)
technology...)

Participative
Participativedecision
decisionmaking
makinginindecentralized
decentralizedorganizations
organizationsisispositively
positivelyrelated
relatedto
to
job
jobsatisfaction.
satisfaction.
 Analyze the behavioral implications
of different organizational designs
 Organization’s structure can have significant effects.
 A review of the evidence leads to a pretty clear conclusion: you
can’t generalize!
 Not everyone prefers the freedom & flexibility of organic
structures.

 Some people are most productive & satisfied when work tasks
are standardized & ambiguity minimized.
Summary and Implications for
Managers
End of the course