36. Organizational structures are a way to focus the activities of employees.
37. Leaders call on functional structures to focus both individuals and units on their
contribution to the organization’s tasks.
38. Functional structures facilitate integration across functional units but make the
development of technical skills and expert knowledge on the part of employees
difficult to achieve.
39. As organizations move beyond the small, start-up stage, they are likely to adopt a
simple divisional structure.
40. Functional structure refers to a way of reinforcing behaviors that respond to the
marketplace. All activities associated with a particular product or family of products
are brought together in a divisional unit.
41. Another divisional option, particularly for multinationals, is to adopt a geographically
focused structure.
42. The object of the divisional structure, whether it is focused on products, customer
groups, or geographic locations, is to reinforce a market-focused strategy.
43. Leaders must choose between a functional orientation on technical efficiencies or a
focus on marketplace responsiveness.
44. Leaders opt for a divisional structure in order to reinforce a strategy that
emphasizes efficiencies and depth of technical know-how and experience.
45. Matrix structures help support dual focus—on technical expertise and marketplace
responsiveness—but will only be successful in organizations that can manage
ambiguity, tension and conflict effectively.
46. Functional silos are characteristic features of functional structures but do not exist
in divisional structures.
47. Cross-functional teams can be used to achieve linkages across the various and
interdependent activities of an organization’s value chain.
48. Horizontally linked structures focus employees on the interrelated activities of the
value chain.
49. When structural change occurs early in a change process, employees can be
confused by its purpose, unsure of what new competencies are being required, and
unwilling—or unable—to make appropriate alterations in behavioral patterns.
50. Most jobs can be individually isolated and precisely measured without taking into
account complex interdependencies.
51. Bonuses based on the overall performance of the organization make a symbolic
statement recognizing the shared purpose and responsibility of all employees and
organizational units.
52. New technologies can be introduced as a way to support desired behavioral
changes.
53. Describe the advantages and disadvantages of a matrix structure.
54. What is the concept of value chain? How does it relate to organizational
structures?
55. What is the concept of pay for performance (PP)? What are some examples?
56. What are some alternatives to individually-based pay-for-performance?
57. Identify and explain different forms of individual pay-for-performance plans.
58. Explain five factors that may undermine effectiveness of individual pay-for-
performance plans.
a. Performance appraisals are inherently subjective, with supervisors
evaluating subordinates according to their own preconceived biases.
b. Emphasize individual rather than group goals that may lead to dysfunction
conflict in the organization.
c. Encourage a short-term orientation (the performance period being
evaluated) at the expense of long-term goals.
d. Merit pay raises become an annuity on which employees continue to draw
regardless of future performance.
59. Explain the concept of divisional structure and some of its benefits.
As organizations grow in both size and complexity, they often renew their strategy to focus
It is precisely that focused attention on the external marketplace that, it is hoped, allows
Scenario-Based Questions
You are the new CEO of a major HR firm, offering specialized HR services to
organizations wishing to outsource all or part of their HR functions. In the past, the firm
has been structured into several divisions, including Compensation, Recruitment, Training
and Development, and Legal Services. You have learned a lot from Spector’s approach to
organizational change and have been faithfully applying the different concepts, beginning
of course with mutual engagement and shared diagnosis. As part of Step 1, Organization
Redesign, you successfully piloted cross-functional teams and a new focus on customer
service which has now been rolled out as the strategic directive for the entire firm. In Step
2, you worked to ensure that employees and managers were trained in the newly
identified skills and competencies, and in Step 3, you did some essential people
alignment, including movement, removal and replacement of people in key positions. Now
your main task is to ensure that you have the right structures, systems and technologies in
place to reinforce the new behaviors.
60. Looking at the success of the pilot projects, you decide that a new structure is in
order. Option 1 is a structure in which different units offer full HR services clients
based on their location. This structure would be called:
a. functional.
b. divisional.
c. hybrid.
d. matrix.
e. horizontal.
61. Option 2 is structure focus employees on the interrelated activities of the supply
chain. This structure would be called:
a. functional.
b. divisional.
c. hybrid.
d. matrix.
e. horizontally-linked
62. In the past, your HR consultants all worked on salary and bonus, with the amount
of the bonus based on total billable hours for the year. In light of your new strategic
direction, what would be the best way to use monetary incentives?
a. retain the existing system – too much change at once is not good.
b. use a mixture of individual, team and organizational rewards.
c. use a team-based reward system to encourage collaboration.
d. use an organization-based reward system to symbolize the importance of
the strategic move.
63. In order to ensure the effectiveness of the new reward system, which of the
following criteria is most important?
a. develop new systems to simply the process
b. ensuring pay equity
c. ensuring everyone received the same amount, to reduce jealousy
d. developing a pay grade system is sticking to it
e. none of the above
64. In light of the strategic importance of team collaboration, you decide to offer a
$3,000 end-of-year Team Spirit award to the employee who, according to peer
ratings, has made the most significant contribution to collaborative relations in the
organization. In order to get the most benefit out of this award, you should:
a. announce the establishment of the award at the beginning of the year, so
that people can work toward it.
b. announce the award in the middle of the year.
c. not announce the award at all – keep it private and confidential so as not to
embarrass anyone.
d. announce the award and its recipient as a surprise feature of the end-of-year