1. Downsize your organization to realize major cost savings, and focus the
company around core competencies—but only if necessary, because
downsizing can have a significant negative impact on employee affect.
2. Consider the scarcity, dynamism, and complexity of the environment, and
balance the organic and mechanistic elements when designing an
organizational structure.
Career OBjectives
How can I get a better job?
This exercise contributes to:
Learning Objective: Identify seven elements of an organization’s structure
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Diverse and multicultural work environments; Reflective thinking
I’m running a small but growing business and need help figuring out how to keep people
flexible as we expand. What advice can you give me about designing job structures that
will help combine my success today with growth for tomorrow? — Anika
Dear Anika:
A surprising number of small businesses fail right at the point where they begin to grow.
There are many reasons, including financing deficits and competitors that copy their good
ideas. However, a common problem is that the structure the company began with is
simply not right for a larger firm.
There are ways to meet the challenge. Start by looking at individual jobs and their
responsibilities. Make a list for each job. When job roles and responsibilities aren’t
defined, you do pick up a great deal of flexibility, assigning employees to tasks exactly
when needed. Unfortunately, this flexibility also means it’s hard to determine which skills
are available, or to identify gaps between planned strategy and available human
resources.
Second, you may want to now define roles based on broad sets of competencies that span
multiple levels of organizational functioning. In this strategic competency model, job
roles and incentives are defined based on a clear structure. Here are the steps:
• Look at the top level and think about the future. In the competency model, you should
use the mission statement and overall organizational strategies to evaluate your
organization’s future needs.
• Once you’ve identified the organization’s future needs, figure out a smart way to assign
responsibilities to individuals. You’ll obviously need some specialization, but at the same
time, consider general skills that will be useful for both growth and long-term
sustainability.
• As your business grows, identify applicants with the potential to meet future needs, and
develop employee incentives to encourage broad skills profiles. You’ll want to structure
your plan so employees increase in competency as they move up the organization chart.
The most important thing to remember is that you aren’t creating a job structure just for
today—make sure it’s ready to grow and change with your business.
Grow well!
Sources: G. W. Stevens, “A Critical Review of the Science and Practice of Competency Modeling,” Human Resource Development
Review 12 (March 2013): 86–107; P. Capelli and J. R. Keller, “Talent Management: Conceptual Approaches and Practical
Challenges,” Annual Review of Organizational Psychology and Organizational Behavior 1 (March 2014): 305–31; and C.
Fernández-Aráoz, “21st Century Talent Spotting,” Harvard Business Review, June 2014,
https://hbr.org/2014/06/21st-century-talent-spotting.
An Ethical Choice
Flexible Structures, Deskless Workplaces
This exercise contributes to:
Learning Objective: Show why managers want to create boundaryless organizations
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Ethical understanding and reasoning; Reflective thinking
Once upon a time, students fresh from business schools couldn’t wait for that first cubicle
to call home, mid-level managers aspired to an office of their own, and executives
coveted the corner office. These days, the walls are coming down. As organization
structures change, so do their physical environments. Many organizations have been
trying to make the physical environment reflect the organization structures they adopt.
At online retailer Zappos, not even the CEO wants an office, and all 1,500 employees are
welcome throughout the open spaces. Firms like Google have workplace designs of
public rooms with lounge areas and large, multiperson tables. According to Edward
Danyo, manager of workplace strategy at pharmaceuticals firm GlaxoSmithKline, shared
environments create great work gains, including what he estimates is a 45 percent
increase in the speed of decision making. But there are ethical concerns for the
dismantling of the physical and mental organizational structure:
• Where will confidential discussions take place? In some contemporary workplace
designs, ad hoc conference rooms address the need for separate gatherings. This may not
be optimal if the walls are made of glass, if employees will feel stigmatized when called
into a meeting room, or if they become reluctant to approach human resources staff with
issues because of privacy concerns.
• How can differences in personality traits be overcome? Employees high in extraversion
will be more comfortable building collaborative relationships without assigned
workspaces, while introverted individuals may be uncomfortable without an established
office structure where they can get to know others over time.
• How can personal privacy be maintained? Zappos gives employees personal lockers,
asks employees to angle laptop screens away from neighbors, and tries to make open
spaces more private by encouraging ear buds to create a sound barrier between working
employees.
• How can you assure your clients of confidentiality? Even walled, soundproof rooms for
virtual or live meetings may not provide the desired level of security for clients who need
to know their business will stay on a need-to-know basis.
• How will expectations and accountabilities be enforced? In an environment without
offices and sometimes without job titles, there is an even greater need for clearly assigned
goals, roles, and expectations. Otherwise, open, collaborative structures may foster
diffusion of responsibility and confusion.
Sources: S. Henn, “‘Serendipitous Interaction’ Key to Tech Firm’s Workplace Design,” NPR, March 13, 2013,
www.npr.org/blogs/alltechconsidered/2013/03/13/174195695/serendipitous-interaction-key-to-tech-firmsworkplace-design; H. El
Nasser, “What Office? Laptops Are Workspace,” USA Today, June 6, 2012, 1B–2B; R. W. Huppke, “Thinking Outside the Cubicle,”
Chicago Tribune, October 29, 2012, 2-1, 2-3; “Inside the New Deskless Office,” Forbes, July 16, 2012, 34; and E. Maltby, “My Space
Is Our Space,” The Wall Street Journal, May 21, 2012, R9.
Class Exercise
1. Pair the students for a role-playing exercise.
2. Ask one of the students in the pair to play the part of a company executive and to
read the article found at
http://www.businessweek.com/managing/content/sep2008/ca20080912_135498.ht
m
3. He or she should prepare a plan to deliver the news to the other student about
downsizing. The other student is playing Marketing Support Administrator for the
firm.
4. The firm has suffered reduced income from sales during the recession. To reduce
expenses in comparison with the reduced revenue, some downsizing must be
initiated. The Marketing Support Administrator is one of 15 employees across the
company that must be released.
Teaching Notes
This exercise is applicable to face-to-face classes or synchronous online classes such as
BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See
http://www.baclass.panam.edu/imob/SecondLife for more information.
Personal Inventory Assessments
Organizational Structural Assessment
To learn more about how organizations are structured, complete the PIA.
Myth or Science?
“Employees Can Work Just as Well from Home”
This exercise contributes to:
Learning Objective: Analyze the behavioral implications of different organizational designs
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
This statement is true, but not unequivocally. Employees who work from home even part
of the time report they are happier and, as we saw in Chapter 3, happier employees are
likely to be more productive than their dissatisfied counterparts. From an organization’s
perspective, companies are realizing gains of 5 to 7 extra work hours a week for each
employee working from home. There are also cost savings, from reduced overhead for
office space and utilities to elimination of unproductive social time. Employers of a
home-based workforce can establish work teams and organizational reporting
relationships with little attention to office politics, opening the potential to more
objectively assign roles and responsibilities. These may be some of the reasons
organizations have increasingly endorsed the concept of telecommuting, to the point
where 3.1 million U.S. employees are now company-employed to work from home.
Although we can all think of jobs that may never be conducive to working from home
(such as many in the service industry), not all positions that could be based from home
should be. Research indicates the success of a work-from-home position depends on the
job’s structure even more than on its tasks. The amount of interdependence needed
between employees within a team or in a reporting relationship sometimes requires
epistemic interdependence, which is each employee’s ability to predict what other
employees will do. Organization consultants pay attention to how employee roles relate
in the architecture of the organization chart, realizing that intentional relationship
building is key. Thus, while an employee may complete the tasks of a job well by
working alone from home, the benefits of teamwork can be lost. We don’t yet fully
understand the impact of working at a physical distance without sharing time or space
with others, but it is perhaps the reason that Yahoo!, Best Buy, and other corporations are
reining their employees back into the office.
The success of a work-from-home program depends on the individual, the job, and the
culture of the organization. Work from home can be satisfying for employees and
efficient for organizations, but we are learning that there are limits.
Sources: M. Mercer, “Shirk Work? Working at Home Can Mean Longer Hours,” TriCities.com (March 4, 2013),
http://www.tricities.com/news/opinion_columns/article_d04355b8-83cb-11e2-bc31-0019bb30f31a.html; P. Puranam, M. Raveendran,
and T. Knudsen, “Organization Design: The Epistemic Interdependence Perspective,” Academy of Management Review, 37, no. (3)
(2012), pp. 419–-440; N. Shah, “More Americans Working Remotely,” The Wall Street Journal (March 6, 2013), p. A3; and R. E.
Silverman and Q. Fottrell, “The Home Office in the Spotlight,” The Wall Street Journal (February 27, 2013) p. B6.
Class Exercise
1. Divide the class into groups of three to five students each.
2. Have the teams prepare a presentation on the importance of face-to-face
interaction in the workplace and the benefits of teamwork. See for example
http://www.businessweek.com/articles/2013-02-25/why-wont-yahoo-let-employee
s-work-from-home
3. Ask the teams to present their findings and ask the remainder of the class to
discuss the reasons that a firm might consider bringing employees that had been
home-based back to the office.
Teaching Notes
This exercise is applicable to face-to-face classes or synchronous online classes such as
BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See
http://www.baclass.panam.edu/imob/SecondLife for more information.
Point/Counterpoint
The End of Management
This exercise contributes to:
Learning Objective: Analyze the behavioral implications of different organizational designs
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
Point
Management—at least as we know it—is dying. Formal organizational structures are
giving way to flatter, less bureaucratic, less formal structures. And that’s a good thing.
Innovative companies like Apple, Google, Facebook, Twitter, and Groupon were born
and now thrive thanks not to a multilayered bureaucracy, but to an innovative idea that
was creatively executed by a flexible group of people freely collaborating. Management
in those companies exists to facilitate, rather than control.
The scope of what managers do has broadened to include typing, taking notes, and
managing their own files/schedules, while the scope of what administrative assistants do
has broadened to include making social media posts and assuming technical duties. The
most innovative firms have questioned whether they need job titles at all, instead
emphasizing collaboration throughout the organization.
The best companies have eliminated offices altogether and encourage employees to
mingle and form teams according to their project interests. This suits younger workers
who aspire to work with the top players rather than report to them, and who value flexible
hours and work-from-home options. Job titles are gone, roles are ambiguous, and
reporting relationships morph by project.
“There’s a struggle right now between the old and the new,” noted Adam Leitman Bailey,
a New York real estate lawyer. “We don’t know what works. In the end, it’s what’s going
to be best for the talent we hire.” The talent is ready for the elimination of management as
we know it. The successful corporation of the future will have a flatter organizational
structure and accountability based on performance.
Counterpoint
There is no “right size fits all” approach to organizational structure. How flat, informal,
and collaborative an organization should be depends on many factors, but no matter what,
management structure is needed. Let’s consider two cases.
People lauded how loosely and informally Warren Buffett structured his investment firm,
Berkshire Hathaway, until it was discovered his CFO and heir apparent David Sokol was
on the take. Wouldn’t Buffett have known Sokol was compromised if he supervised more
closely or had structures in place to check such “freedom”? It’s hard to argue with
Berkshire Hathaway’s past successes, but they don’t prove the company is ideally
structured.
At Honeywell International, CEO David Cote seems relaxed and fun-loving (he rides a
Harley and wears a leather bomber jacket and jeans to work), but his hard-hitting work
ethic and firm hand on the reins are legendary. Cote’s control focus doesn’t end at the
executive suite. At the factories, job titles are painted literally on the floor to indicate who
needs to be present—and standing—at organizational meetings limited to 15 minutes by
the clock. Is Cote a control freak? Maybe, but he successfully merged three disparate
company cultures and more than 250 factories—the new Honeywell has climbed the
Fortune 500 ranks and pulls in over $40 billion in annual sales. Profits have increased
even faster than sales, in part due to Cote’s insistence on freezing raises and hiring only
two to three employees for every four to five who exit.
Berkshire Hathaway and Honeywell illustrate the strong need for management structure
in an ever-changing, diverse, worldwide marketplace.
Sources: A. Bryant, “Structure? The Flatter the Better,” The New York Times (January 17, 2010), p. BU2; Business section,
“Honeywell International: From Bitter to Sweet,” The Economist (April 14, 2012), http://www.economist.com/node/21552631; A.
Efrati and S. Morrison, “Chief Seeks More Agile Google,” The Wall Street Journal (January 22, 2011), pp. B1, B4; H. El Nasser,
“What Office? Laptops Aare Workspace,” USA Today (June 6, 2012); Fortune 500 rankings, from
http://money.cnn.com/magazines/fortune/fortune500/2012/full_list/; ICIS.com posting “Honeywell | Company Structure Information
from ICIS,” ICIS.com, http://www.icis.com/v2/companies/9145292/honeywell/structure.html; K. Linebaugh, “Honeywell’s Hiring Is
Bleak,” The Wall Street Journal (March 6, 2013), p. B3; A. Murray, “The End of Management,” The Wall Street Journal (August 21,
2010), p. W3; A. R. Sorkin, “Delegator in Chief,” The New York Times (April 24, 2011), p. B4; and S. Tully, “How Dave Cote Got
Honeywell’s Groove Back,” CNN Money (May 14, 2012), http://management.fortune.cnn.com/2012/05/14/500-honeywell-cote/.
Class Exercise
1. Create debate teams of three to five students each, with half the teams in your
class assigned the Point position and the other half the Counterpoint position.
2. Ask the students to prepare to defend the position represented in the exercise, with
the advice that they should seek additional ideas and resources to support their
positions.
3. On a defined day, select a team from each position to debate the conflict.
4. After the debate, ask the remaining students to comment for or against the
concept, regardless of the position prepared.
Teaching Notes
This exercise is applicable to face-to-face classes or synchronous online classes such as
BlackBoard 9.1, Breeze, WIMBA, and Second Life Virtual Classrooms. See
http://www.baclass.panam.edu/imob/SecondLife for more information.