Questions for Review
15-1. What are seven key elements to define an organization’s structure?
Answer: The seven key elements that define an organization’s structure are:
Work specialization
Departmentalization
Learning Objective: Identify seven elements of an organization’s structure
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
15-2. What are the characteristics of the functional, divisional, and matrix structures?
Answer: The functional structure groups employees by their similar specialties,
roles, or tasks. This structure allows specialists to become experts more easily. It
works well if the organization is focused on one product or service. The
divisional structure groups employees into units by product, service, customer, or
geographical market area. It is highly departmentalized and provides clear
Learning Objective: Identify the characteristics of the functional, divisional, and matrix
structures
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
15-3. What are the characteristics of the virtual structure, the team structure, and the
circular structure?
Answer: The essence of the virtual structure is typically a small, core
organization that outsources major business functions. It is highly centralized,
with little or no departmentalization. Virtual organizations create networks of
relationships that allow them to contract out manufacturing, distribution,
marketing, or any other business function where management feels that others can
Learning Objective: Identify the characteristics of a virtual structure, the team structure, and the
circular structure
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
15-4. How might downsizing affect organizational structures and employees?
Answer: Downsizing is a systematic effort to make an organization leaner by
closing locations, reducing staff, or selling off business units that don’t add value.
Despite the advantages of being a lean organization, the impact of downsizing on
Learning Objective: Describe the effects of downsizing on organizational structure and employees
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
15-5. How are mechanistic structures and organic structural models similar and
different?
Answer: A mechanistic structure is generally synonymous with the bureaucracy
in that it has highly standardized processes for work, high formalization, and more
Learning Objective: Contrast the reasons for mechanistic and organic structural models
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
15-6. What are the behavioral implications of different organizational designs?
Answer: It is impossible to generalize behavioral implications due to individual
such as:
1. Work specialization contributes to higher employee productivity, but it
2. The benefits of specialization have decreased rapidly as employees seek more
3. The effect of span of control on employee performance is contingent upon
4. Participative decision making in decentralized organizations is positively
Learning Objective: Analyze the behavioral implications of different organizational designs
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
Experiential Exercise
The Sandwich Shop
This exercise contributes to:
Learning Objective: Demonstrate how organizational structures differ, and contrast simple structure,
bureaucracies, and virtual structures
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
Divide the class into groups of at least four individuals.
As background: The managers of a new chain of sandwich shops will need to determine
what types of sandwiches consumers want and find recipes and ingredients. Ingredient
sources, prices, and other logistical requirements (like refrigeration) will need to be
determined, purchasing decisions will be ongoing, and supplier relationships will need to
be managed. Financing must also be arranged at this early phase. With this groundwork,
the company will move to the next stage of marketing, including pricing and the
development of advertising materials. Finally, selecting and training workers will occur.
Each group creates the following:
A Simple Structure
Determine what a simple structure would look like for this organization. Recall that a
simple structure is one in which there is little hierarchy, wide spans of control, and
centralized decision making. To whom would the various tasks described above be
A Bureaucracy
Determine what a bureaucratic structure would look like for this organization.
Bureaucracies are marked by more hierarchy, small spans of control, and specialized
A Virtual Structure
Determine what a virtual structure would look like for this organization if many of the
aspects of the business are outsourced. Consider which tasks can be adequately
Debriefing
After all groups have developed different structural options, convene for class discussion
for groups to describe how they created responsibilities for different individuals. Then the
Ethical Dilemma
Post-Millennium Tensions in the Flexible Organization
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: Ethical understanding and reasoning; Reflective thinking
The message from the business press has been consistent: don’t count on long-term
employment. For years, job seekers have been told they should expect to be responsible
for their own careers and prepare for the possibility that they will be changing jobs
frequently. A simple look at employment trends also confirms that highly routine and
well-defined jobs have been decreasing in number.
The shift has often been described in fairly positive terms. Managers work to create
organizations that have laudable characteristics like adaptability, flexibility, and
creativity. Author Micha Kaufman notes that doing well in contemporary business
environments means “having the flexibility to let go of the ideas of the past, the courage
to constantly reevaluate plans for the future, and the presence of mind to adapt to life, as
it is, in the moment.” There is a lot of appeal in creating your own future at work.
At the same time, many workers land in precarious positions. Researchers find that
individuals who feel insecure or uncertain about future employment experience higher
levels of psychological strain and worry. Insecure workers also get sick more frequently.
Contrary to the positive image of the freelance worker with boundless energy and
creativity, evidence shows that for many individuals, a lack of job security can result in
exhaustion and an apprehensive approach to work problems.
Corporate leaders ask themselves what their role in creating job security should be. Some
note that companies built around stability and security are less likely to compete
successfully and may go out of business. Many organizations try to maintain flexibility
and a certain level of security. For example, Scripps Health has maintained a pool of
internal transfer opportunities and training assignments for individuals whose job
functions are no longer needed. As a result, even within the highly volatile health care
industry, it has been able to avoid layoffs. However, systems that provide job security do
not come cheaply, nor are they feasible for all companies.
Sources: M. Kaufman, “The Wisdom of Job Insecurity,” Forbes, October 3, 2014, http://www.forbes.com/sites/michakaufman
2014/10/03/the-wisdom-of-job-insecurity-dont-be-lulled-by-fallingunemployment/; C. Van Gorder, “A No-Layoffs Policy Can Work,
Even in an Unpredictable Economy,” Harvard Business Review, January 26, 2015,
https://hbr.org/2015/01/a-no-layoffs-policycan-work-even-in-an-unpredictable-economy; J. Zumbrun, “Is Your Job ‘Routine’? If So,
It’s Probably Disappearing,” Wall Street Journal, April 8, 2015,
http://blogs.wsj.com/economics/2015/04/08/is-your-job-routine-if-so-its-probably-disappearing/; U. Kinnunen, A. Mäkikangas, S.
Mauno, N. De Cuyper, and H. De Witte, “Development of Perceived Job Insecurity across Two Years: Associations with Antecedents
and Employee Outcomes,” Journal of Occupational Health Psychology19, (2014):.243–58.
Questions
15-7. Do you think that stability is good or bad for employees?
Answer: Responses to this question will depend on the student’s opinions and
15-8. Do employers have an ethical responsibility to provide security for employees or
just a warning about a lack of security?
Answer: Responses to this question will depend on the student’s opinions and
15-9. If long-term employment security isn’t feasible, what alternatives might
employers provide to help employees make smoother transitions?
Answer: The answer to this question will vary since it is an opinion question.
Some students will suggest that organizations could provide services similar to
Case Incident 1
Creative Deviance: Bucking the Hierarchy?
This exercise contributes to:
Learning Objective: Contrast the reasons for mechanistic and organic structural models; Identify the
seven elements of an organization’s structure
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
One of the major functions of an organizational hierarchy is to increase standardization
and control for top managers. Using the chain of command, managers can direct the
activities of subordinates toward a common purpose. If the right person with a creative
vision is in charge of a hierarchy, the results can be phenomenal. Until Steve Job’s
regrettable passing in October of 2011, Apple had used a strongly top-down creative
process in which most major decisions and innovations flow directly through Jobs and
then are delegated to sub-teams as specific assignments to complete.
Then there is creative deviance, in which individuals create extremely successful
products despite being told by senior management to stop working on them. The
electrostatic displays used in more than half of Hewlett-Packard’s instruments, the tape
slitter that was one of the most important process innovations in 3M’s history, and
Nichia’s development of multi-billion-dollar LED bright lighting technology were all
officially rejected by the management hierarchy. In all these cases, an approach like
Apple’s would have shut down some of the most successful products these companies
ever produced. Doing “business as usual” can become such an imperative in a
hierarchical organization that new ideas are seen as threats rather than opportunities for
development.
It’s not immediately apparent why top-down decision making works so well for one
highly creative company like Apple, while hierarchy nearly ruined innovations at several
other organizations. It may be that Apple’s structure is actually quite simple, with
relatively few layers and a great deal of responsibility placed on each individual for his or
her own outcomes. Or it may be that Apple simply had a very unique leader who was able
to rise above the conventional strictures of a CEO to create a culture of constant
innovation.
Sources: C. Mainemelis, “Stealing Fire: Creative Deviance in the Evolution of New Ideas,” Academy of Management Review 35, no. 4
(2010), pp. 558–578; and A. Lashinsky, “Inside Apple,” Fortune (May 23, 2011), pp. 125–134.
Questions
15-10. Do you think it’s possible for an organization to deliberately create an
“anti-hierarchy” to encourage employees to engage in more acts of creative
deviance? What steps might a company take to encourage creative deviance?
Answer: This item can be assigned as a Discussion Question in
15-11. Why do you think a company like Apple is able to be creative with a strongly
hierarchical structure, whereas other companies find hierarchy limiting?
Answer: Most students will probably suggest that much of the success of
companies like Apple is a result of strong leadership. Founder and former CEO
15-12. Do you think Apple’s success was entirely dependent upon Steve Jobs’ role as
head of the hierarchy? What are the potential liabilities of a company’s being so
strongly connected to the decision making of a single individual?
Answer: Depending on their view of Steve Jobs, responses to this question will
Case Incident 2
Boeing Dreamliner: Engineering Nightmare or
Organizational Disaster?
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: Diverse and multicultural work environments; Reflective thinking
As a flight of imagination, Boeing’s 787 Dreamliner was an excellent idea: made of
composite materials, the plane would be lightweight enough to significantly reduce fuel
costs while maintaining a passenger load up to 290 seats. Airline carriers chose options
from a long list of unprecedented luxuries to entice the flying public and placed their
orders well ahead of the expected completion dates. And then the problems started.
An airplane like the 787 has a design about as complex as that of a nuclear reactor power
plant, and Boeing’s equally complex offshore organizational structure didn’t help the
execution. Boeing outsources 67 percent of its manufacturing and many of its
engineering functions. While the official assembly site is in Everett, Washington, parts
were manufactured at 100 supplier sites in countries across the globe, and some of those
suppliers subcontracted piecework to other firms. Because the outsourcing plan allowed
vendors to develop their own blueprints, language barriers became a problem back in
Washington as workers struggled to understand multilingual assembly instructions. When
components didn’t fit together properly, the fixes needed along the supply chain and with
engineering were almost impossible to implement. The first aircraft left the runway on a
test flight in 2009, but Boeing had to buy one of the suppliers a year later (cost: $1
billion) to help make the planes. The first customer delivery was still years away.
If Boeing and industry watchers thought its troubles were over when the first order was
delivered to All Nippon Airways (ANA) in 2011, three years behind schedule and after at
least seven manufacturing delays, they were wrong. Besides the continuing woes of
remaining behind schedule (848 planes have been ordered but only 6 percent have been
delivered), Boeing’s Dreamliner has suffered numerous mechanical problems. After the
plane’s technologically advanced lithium-ion batteries started a fire on one aircraft and
forced another into an emergency landing in January 2013, ANA and Japan Airlines
grounded their fleets. The FAA followed suit, grounding all 787s in the United States.
The remaining 50 flying Dreamliners worldwide were then confined to the tarmac until a
solution could be found.
This looked like an organizational structure problem, both at corporate headquarters and
abroad. However, there have been so many management changes during the 787’s history
that it would be difficult for anyone to identify responsibility for errors in order to make
changes in the team or the organizational structure. For the work done abroad,
restructuring reporting relationships in favor of smaller spans of control to heighten
management accountability and tie suppliers to the organizational structure of corporate
Boeing could be considered. Or “reshoring” to bring manufacturing physically close to
the final assembly site and under Boeing’s control while centralizing the organization
structure could be an option.
Sources: S. Denning, “The Boeing Debacle: Seven Lessons Every CEO Must Learn,” Forbes (January 17, 2013).
http://www.forbes.com/sites/stevedenning/2013/01/17/the-boeing-debacle-seven-lessons-every-ceo-must-learn/; E. Frauenheim,
“Homeward Bound,” Workforce Management (February, 2013), pp. 26-–31; C. Hymowitz, “Boeing CEO’s Task: Get the Dreamliner
Airborne Again,” Bloomberg BusinessWeek (January 24, 2013),.
http://www.businessweek.com/articles/2013-01-24/boeing-ceos-task-get-the-dreamliner-airborne-again/; D. Nosowitz, “Why Is
Boeing’s 787 Dreamliner Such a Piece of Crap?” Popsci (January 17, 2013),.
http://www.popsci.com/technology/article/2013-01/why-boeings-787-dreamliner-such-piece-crap; J. Ostrower and A. Pasztor, “Boeing
Plays Down 787 Woes; Net Falls 30%,” The Wall Street Journal (January 31, 2013), p. B3; and D. Terdiman, “Boeing’s Dreamliner
Struggles Despite Tech Superiority,” C/Net (February 24, 2012),
http://news.cnet.com/8301-13772_3-57385001-52/boeings-dreamliner-struggles-despite-tech-superiority/.
Questions
15-13. Do you think this is a case of the difficulty of launching new technology (there are
“bugs” in any system), or one of an unsuccessful launch?
Answer: Responses to this question will vary by student. Some students will
contend that most product launches require some minor adaptations initially.
15-14. What type of executive management structure do you think would be most
conducive to getting the Dreamliner past a component failure and back in flight?
Is this a different structure than you would suggest for fixing the ongoing
manufacturing problems? Sketch out the potential design.
Answer: Again responses to this question will vary by student. Most students
though will probably suggest some sort of top-down solution with appropriate
15-15. What organizational structure would you suggest to effectively tie in Boeing’s
managers and suppliers abroad? Sketch your ideas. (Goals for managers might
include facilitating teams, coordinating efforts, maintaining organizational
transparency, and creating conversations.)
Answer: This item can be assigned as a Discussion Question in
My Management Lab
Go to mymanagementlab.com for Auto-graded writing questions as well as the
following Assisted-graded writing questions:
15-16. Considering Case Incident 2, how would you have envisioned the best
organizational structure for Boeing during its development of the Dreamliner?
How might you change the structure during the production phase of the airplane?
15-17. Based on what you’ve discovered about your personality traits on the Big Five
Model through your organizational behavior studies in Chapter 5, in which
organizational structures might you work best?
15-18. MyManagementLab Only – comprehensive writing assignment for this chapter.
Instructor’s Choice
Applying the Concepts
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: Diverse and multicultural work environments; Reflective thinking
If one were to chart the growth spurts of Volkswagen over the past three decades, the
chart would look like a roller coaster. Plans were for former BMW boss Bernd
Pischetsrieder to fix ailing VW when he came aboard in 2002. However, the best laid
plans often go astray. VW’s share price is down almost 50% and profits fell by 36%.
What is wrong at VW? First, VW has always been able to charge more for its cars
because of quality, innovation, styling, and an implied lifetime guarantee. In recent years,
however, consumers have decided that the company is going to have to come up with
more value for the dollar if loyalty is to be retained. Second, sales in China’s booming
market (VW was one of the first car makers on the scene in this giant economy) have
plummeted and GM has driven VW from its number one ranking. Third, cost-cutting
moves have not worked. Fourth, VW uncharacteristically has labor pains. The CEO has
had little luck in reversing these problems because his consensus management techniques
are having little impact on VW’s change-resistant bureaucracy. Over half of the
company’s 100 managers are not used to making their own decisions. This spells even
more trouble for the company in the year ahead.
1. Using a search engine of your own choosing, investigate Volkswagen’s performance
over the past two years. Write a brief summary of their fortunes and misfortunes.
2. Visit the Volkswagen website at www.vw.com. From information supplied,
characterize the company’s existing structure.
3. Based on what you have observed in Steps 1 and 2 above, suggest a new
organizational structure for the company. Cite any assumptions that you made when
you developed your structure.
Instructor Discussion
Students will be able to find a wealth of information on VW (particularly negative
information because of their recent performance). A nice summary article appears in
BusinessWeek (see “Volkswagen Slips into Reverse,” dated August 9, 2004). Students are
free to pick any organizational form that they believe is best given the existing situation.
However, they should be aware that the current CEO is not having much success with
modern structures as the company seems to be very tradition-bound at present. Students
might also interview a local VW dealer for opinions.
Exploring OB Topics on the Web
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
1. The chapter discusses span of control and the various advantages and disadvantages
of wide versus narrow. Let us see how that looks in actual numbers. First, determine
how many hierarchical levels there are in at least three organizations of varying sizes
that you are currently involved with. One could be the college or university you
attend, another where you work, and finally a club or religious institution you belong
to. Or, for one of the choices, select a non-profit organization you have some interest
in (for example, Red Cross, MDS, American Cancer Society, etc.). Obtain their
hierarchical structure either by searching the Internet (most annual reports have
information on this), calling or visiting them, or drawing the structure yourself if you
are involved in the organization. Use www.google.com to help you search.
2. What factors influence virtual teams? For a short analysis, go to:
http://www.seanet.com/~daveg/articles.htm. Write a short paragraph or two outlining
why you would or would not like working in a virtual environment. Do you see a
time later in your career when you would prefer working in a virtual team? Why or
why not?