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McKee Chapter 9:
ORGANIZING FOR A COMPLEX WORLD: FORCES
AFFECTING ORGANIZATIONAL STRUCTURE AND
DESIGN
CHAPTER OBJECTIVES
9.1 Define organization, organizational structure, and classifications for organizations.
9.2 Understand how work is structured.
9.3 Describe how traditional concepts affect current views of organizational structure.
9.4 Assess how we can view organizational structures in nontraditional ways.
CHAPTER SUMMARY
We begin Chapter 9 by taking a look at different types of classifications for organizations
such as for-profit, not-for-profit, governmental, non-governmental, small business, local
organization, importer, exporter, private foundation, public charity, and virtual
organizations will be differentiated.
We also explore the concepts of span of control and span of leadership,
centralized versus decentralized decision making, and organizational chart in traditional
organizations. From there, we move to more nontraditional perspectives on
organizational structure, such as open systems theory. Mechanistic and organic
organizations are then contrasted. The utility of seeing organizations metaphorically is
explored for relevance in the work environment, such as the metaphors of the spider and
the starfish.
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Next, the chapter will examine common forms of ownership, such as sole
proprietorship, partnership, corporation, limited liability company, and S corporations.
Structural and legal relationships with entities outside of the organization proper are then
observed, such as licensing agreements, cooperative contracts, franchising, strategic
alliances, and wholly owned affiliates. .
CHAPTER OUTLINE
Teaching Objective: To increase awareness of how and why organizations are
structured, what structures are effective and which are not.
I. Why Study Organizational Structure?
1. Organization- A group of people assembled to perform activities that will
allow the entity to accomplish a set of strategic and tactical goals and to
A. Organizational Structure and Design in Real Life: Your School
1. Your school is an organization. Within its geographic and virtual structure,
B. Common Classifications for Organizations:
1. for-profit
2. not-for-profit
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8. exporter
II. How is Work Structured?
A. Jobs, Tasks, and Roles
1. Job – a group of tasks and responsibilities related to accomplishing
organizational objectives.
III. What Traditional Concepts Impact Organizational Structure Today?
A. Hierarchy in Organizational Structures
1. hierarchy – A way of organizing people and groups according to formal
authority
B. Span of Control in Organizational Structures
1. span of control – the number of jobs that report to a position at the next
higher level in a hierarchy
C. Centralized and Decentralized Decision Making
1. Centralized decision making – structural model in which the vast majority of
2. Decentralized decision making – structural model in which decision-making
power is distributed among the people closest to the relevant information,
D. Organizational Chart
1. Organizational chart – a visual representation of how roles, jobs, authority,
and responsibility are distributed within an organization
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IV. What Are Some Important Nontraditional Ways to View Organizations?
A. Open systems theory – a theory stating that any human system, such as an
organization, is constantly influenced by and is influencing its environment.
B. Mechanistic and Organic Organizations
1. Mechanistic organization – An organization that is typically hierarchical,
bureaucratic, and characterized by routine, specialized jobs and standard
operating procedures.
C. Morgan’s Metaphors for Organizations – metaphors allow us to describe
organizational structures and functioning in familiar and simple ways.
D. Organizations as Spiders and Starfish
V. What Are The Most Common Contemporary Organizational Structures?
A. “Tall” and “Flat” Organizational Structures
1. “tall” organizational structures – several levels of hierarchy
B. Departmentalized and Organizational Structure
1. Departmentalization – the process by which individuals or activities are
grouped together into departments according to function, geography, product,
process, or customer, as well as how the departments are coordinated and how
they fit within the larger organization.
2. Divisional Structures — a company chooses a divisional structure to support
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C. Matrix structure
1. a structure in which departments within an organization are linked directly to
one unit in the vertical organization and to another unit in the horizontal
D. Hybrid structure – a structure that incorporates more than one type of structure
in the overall organization.
E. Networked Organizational Structures and Power Dynamics
1. People are linked
VI. What Factors Affect the Design of Organizational Structures?
A. The Relationship Between Structure and Strategy
1. Structure follows strategy
B. The External Environment
1. Environmental uncertainty – a situation in which market conditions are
changing rapidly or are unclear.
2. Environmental uncertainty can be the result of many things, including
C. Technology – computer technologies have greatly influenced the structure of
organizations.
D. Organizational Size and Geography
1. Organizational Size- what actually constitutes a small, medium, or large
business, and how do the various internal and external groups work together
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VII. What Are Common Business Ownership Models and Legal Designations in the
United States??
A. Common forms of ownership include
1. Sole proprietorship – an ownership model in which a single individual owns
a business.
B. How Corporations, Not-for-Profits and Partnerships Can be Structured Legally: S
Corporation and LLC
1. S Corporations – a type of corporation that has 100 or fewer shareholders
and does not pay federal income taxes.
C. Structural and Legal Relationships with Outside Entities
1. Cooperative contracts – friendly business agreements that result from equity
joint ventures, which are also known as equity alliances.
2. Licensing Agreement – a business agreement in which the owner of
trademarked material authorizes an individual or company to use that material
VIII. What Is HR’s Role in Design and Structure?
A. Labor Unions- Protect workers against poor treatment and low wages
B. Job Analysis and Job Design
1. Job Analysis – The systematic process of gathering and analyzing
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3. Job Specification – a written document that lists all of the necessary
4. Benchmark Job – a job that is representative of other jobs that are similar in
nature.
IX. What Can We All Do to Work Effectively Within Our Organizations’ Structures?
A. Managing and leading the informal organization- social structures, social
DISCUSSION QUESTIONS
Discussion Questions for Objective 9.1:
1. Think about your family as an organization. Who is/are the leader(s)? Who makes
major decisions? How does your family organize household work?
Suggested Answer:
Student responses will vary. It entirely depends on the type and members in the family –
2. Does your family structure help create a resonant and supportive environment within
which family members can communicate openly, share roles, and cooperate?
How can you encourage this type of environment within your existing family structure?
Suggested Answer:
Discussion Questions for Objective 9.2:
1. Have you ever done a highly specialized job? What was it? What did you like and what
did you dislike about it?
Suggested Answer:
Student responses will vary. If a student s has done some sort of assembly line work –
2. Would you prefer to be a generalist or a specialist? Why?
Suggested Answer:
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Discussion Questions for Objective 9.3:
1. Have you ever worked in an environment that used centralized decision making? If so,
what did you like and dislike about it? Similarly, have you ever worked in an
environment in which decision making was decentralized? If so, what did you like and
dislike about it?
Suggested Answer:
Student responses will vary. One advantage of centralized decision making is that
responsibility and accountability are very clear—everyone knows who can decide what.
2. Draw an organizational chart for your family. In what ways does this chart demonstrate
“how things really work” in the family? In what ways does it not capture things like
communication, power relationships, and coordination of work and chores?
Suggested Answer:
Discussion Questions for Objective 9.4:
1. In what ways does the external environment influence the structure of your school as
an organization?
Suggested Answer:
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Student responses will vary. The recession of 2008 could have a number of effects on a
school’s structure. For instance, if enrolment is down, a school might consolidate some of
2. Think about your class as an organization that is part of an open system, including your
school and the outside environment. What external factors affect what you do in class?
How does your class process these factors internally (i.e., discussions, assignments, or
lectures)? Do the conclusions drawn from your internal class processes cycle back into
the external environment? How so (i.e., projects, presentations, academic clubs, volunteer
groups, or social advocacy groups)?
Suggested Answer:
Student responses will vary. External factors may be what happens in the world outside
presentation to the client (business) built in.
Discussion Questions for Objective 9.5:
1. Does a traditionally tall organizational structure appeal to you? Why or why not? What
is the purpose of establishing a cross-functional team within these types of structures?
Suggested Answer:
Student responses will vary. A major benefit of clear vertical structures is that
information sharing up and down the chain of command can be efficient. One drawback
2. In a matrix organization, you could have two bosses. What problems might arise in this
situation? How would you deal with these problems?
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Suggested Answer:
Student responses will vary. Most people are used to working within a single hierarchy.
In a basic matrix structure, people often report formally to two bosses. Even if the
Discussion Questions for Objective 9.6:
1. Organizational structure is not always easy to see when we interact with a company,
but it is important to understand when taking a job. Brainstorm a list of questions you
could ask an interviewer about the company’s organizational structure that would help
you to determine if it is a place you would like to work. Note: “What is this
organization’s structure?” is a given. See what else you can come up with.
Suggested Answer:
Student responses will vary. Typical questions could include: Is the decision making in
2. Describe how technology and environmental uncertainty have affected your school in
the past four years.
Suggested Answer:
Student responses will vary. Environmental uncertainty can be the result of many things,
Discussion Questions for Objective 9.7:
1. Interview a small business owner to find out what form of ownership model he or she
utilizes. Why did the business owner choose that particular form of ownership? What are
the pros and cons of the model he or she chose? How did this business owner become
educated about how to make this decision?
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2. Briefly describe a small business you would like to start. If you were setting up this
business, what form of ownership would you choose and why?
Suggested Answer:
Discussion Questions for Objective 9.8:
1. Find a job search site on the Internet and review job descriptions for several jobs you
might like to do at some point in your life. Discuss what is appealing about these jobs,
and what you would have to do to qualify for them. From this exercise briefly write a job
description of a job that you would like to attain in the future.
Suggested Answer:
2. Consider a job you have held, whether paid or unpaid. What aspects of the job and its
responsibilities did you like? Now consider what you could do to make enhancements to
that job. How would the job have appealed to you more with these enhancements?
Suggested Answer:
Discussion Questions for Objective 9.9:
1. Think about a department in your school or place of work that you do business with or
that you belong to (the finance department or the management department, for example).
Draw an organizational chart depicting the hierarchy, formal groups, and so forth. Now,
draw another chart that reflects the informal organization. The person(s) at the top should
be the ones that have the most information about what is really going on in the
department—people who can get things done. Discuss the implications of this chart,
along with the formal chart, for your engagement with this department.
Suggested Answer:
2. What informal lines of communication are used in this class among you, your peers,
your teaching assistant, and your professor? How do you utilize these lines of
communication to be successful in this class?
Suggested Answer:
Student responses will vary.
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END OF CHAPTER ACTIVITIES: EXPERIENCING LEADERSHIP
Leading in a Global World: A Union Made in Heaven?
Governments are among the most difficult organizations to run effectively for a number
of reasons. The governing body of a nation creates its organizational structure around its
particular form of government, whether democratic, socialist, or communist. However,
no matter the type of structure the government adopts, it still has the almost impossible
goal of trying to please most of the people most of the time. Now, imagine how difficult
it would be to please a collection of numerous countries that are trying to organize
themselves into a unified whole. That is what the European Union has attempted to do
since 1993.
1. In a group or on your own, research the EU’s organizational design.
• Does the EU have a single governing body or is it a collection of different bodies all
contributing their input to a central body? Is the decision making centralized or
2. Create an organizational chart for the EU. Start from the top governing body down to
individual country representation. Is it a departmentalized structure? If so, how would
you break it down into different departments?
Suggested Answer:
Student responses will vary. The EU has a collection of governing bodies consisting of
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Reflective thinking skills
Leading with Emotional Intelligence: Managing Up, Not Sucking Up
Managing up is a highly effective way for you to negotiate a healthy relationship with
your boss. It helps you create a working partnership between the two of you that requires
you to be emotionally intelligent and mindful.
1. Make a list of the different ways you can manage up in this class. Going beyond the
obvious “job description” stated in the syllabus, seek to understand what he or she may
be looking for you to do in order to enhance your learning experience and his or her
teaching experience. For example, how would knowing the professor’s personal
2. Once you have developed four or five managing up insights, make a to-do list of
behaviors that you will employ to manage up. For example, turning in assignments two
days early may allow your professor to stagger his or her grading, rather than grading all
assignments at once.
Suggested Answer:
Student responses will vary. A few ways you can manage up in class is to reach out – get
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Leading with Critical Thinking Skills: Government for and by the People
Governments, as mechanistic organizations, tend to be very bureaucratic and centralized
in their decision making and power structure. Organic organizations, in contrast, are more
1. Research your hometown government. Determine if it is a spider or a starfish
organization. Make a short list of organizational qualities that qualifies it as either a
spider or starfish.
2. Interview your parents about the efficiency and effectiveness of your hometown
government. Do they see it as bureaucratic or organic? Are decisions made centrally or
are decisions made by soliciting input from the town’s inhabitants? Ask your parents
what works well and what could be different. Ask them what changes they would suggest
to the town’s organizational design.
Suggested Answer:
Student responses will vary. One answer may be — My hometown is very small.
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Ethical Leadership: Friends in High Places
When organizations restructure themselves, they typically combine some business units
to reduce the complexity of reporting structures, merge skills and competencies, and
eliminate duplication in jobs and work tasks. This effort may begin with layoffs.
1. In a group or on your own, decide the hierarchy of the layoff list. Will seniority be a
consideration, opening you up to the old motto “Last in first out”? How will performance
be evaluated?
2. How do you explain your decision to your manager if you choose to include at least
two of his friends on your list? Do you have a reason to fear for your own job if you don’t
protect your manager’s friends? What alternatives do you have? How can HR help you in
your dilemma?
Suggested Answer:
Student responses will vary. Needless to say, deciding who gets to keep their job and who
doesn’t is a very stressful decision. There are several ways HR can help you in this
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ADDITIONAL SUPPORTING MATERIALS
VIDEOS:
• Rod Beckstrom – The Starfish and the Spider
“Rod Beckstrom is the co-author of The Starfish and the Spider: the Unstoppable Power
of Leaderless Organizations. The book analyzes in an entertaining way how a new form
INDIVIDUAL EXERCISES
1. Have students create an organizational chart for your college/university. Have them
identify the type of organization the university/college exhibits, the hierarchical structure
2.There are as many traditional organizations relying on centralized decision making as
there are non-traditional organizations that rely on de-centralized decision making out
3. Divide students into teams of 2 or 4. Give students the list of organizations on the left and ask
them to define them according to the types of organizations they have learned in the chapter on
the right. The list can be transferred to a PowerPoint slide or to a transparency. Ask them to
explain their choices.
– World Wildlife Fund
– The World Bank
– For-profit
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– Boulder Chamber of Commerce
– DeBeers Diamonds
– Multinational corporation
4. Divide the students into triads. Ask them to think of 4 specific organization: the army (any
army), the church (any church), the university (any university), and a family (any family).
Explain to them that each of these organizations has very unique traits. Give them the following
list (see below) and ask them to identify a positive trait and a negative trait for each type of
organization. Stress that while the traits are fairly subjective, they will need to explain their
selection of traits for each organization and give a specific example.
Organization Positive trait Negative trait
Army fast, effective decisions making lack of creativity
TEAM EXERCISE
You Are an Organization
Divide your class into teams of 4-6 people. Assign each team an organizational type.
Have teams build a fictitious organization around the parameters of their designated
organization from the list below. Be sure to stress that they be specific about their
structure and function.
For-Profit Organization
Not-for-Profit Organization
Governmental Organizations
(NGO)
Small Business
Local organization
International Organization
Multinational Corporation
Importer
Exporter
Public Charities
Virtual Organization
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ADDITIONAL RESEARCH
Toyota-GM Joint Venture
“The Vibe is produced in a joint venture auto plant with Toyota in Fremont, Calif.,
called New United Motor Manufacturing Inc. Ending production of the Vibe left G.M.’s
position with the plant in doubt, until recently, when it announced it would pull out of
Daimler Chrysler: A Marriage Not Made in Heaven
According to Edmunds AutoObserver, the failure of Daimler-Chrysler was based on
multiple factors. The first factor was that ego got in the way of honesty. The leaders of
both organizations insisted that it was and would be a partnership of equals, but they were