Whole Foods Case Study Questions Review the Whole Foods Case Study (pp. 1-6) and answer the questions connected to Chapters 13 and 14 as listed belo

Organizational Behavior – Week #7 Lecture 1

Structural Characteristics of Organizations

Greetings Class!  I hope this note finds you well!  As we embark on our first lecture of the week, I want you to do some basic housekeeping with respect to your gradebook. Please review your gradebook and ensure you’ve received grades for all prior assignments (except those submitted less than 48 hours ago). Within Blackboard, there’s a possibility of an “escape” if you’ve been granted an extension on an assignment and the grade is posted at a later date. To mitigate any issues with your final grades in a couple of weeks, it’s paramount that you identify issues this week and send me a private note with the discrepancy for my review and amendment as appropriate. Now, let’s delve into structural characteristics!  My goal with this lecture is to explore various structural characteristics that might be worthy of incorporation into your final project :) Let’s start with the basic definition of structural characteristics as defined by Hitt, Miller, and Colella: Structural Characteristics – The tangible, physical properties that determine the basic shape and appearance of an organization’s hierarchy. Sounds simple enough but let’s explore some of the more common structural characteristics:

·        Height – This refers to the number of hierarchical levels in an organization, from the Chief Executive Officer to the lower-level associates.  When talking about height of an organization, you generally hear the terms “tall” and “flat” used. Tall organizations have additional layers of management while flat organizations are leaner and work to minimize management layers. Let’s take a brief look at the Federal government. Would you consider the government a tall or flat organization? Obviously, the government is a somewhat tall organization but should it be?  Are there ways to eliminate layers, gain efficiencies, and improve results? Regardless of your opinion here, the height of an organization should periodically be reviewed by leaders of an organization to ensure it’s the best match for achieving the stated goals and objectives of the organization.

·        Span of Control – This refers to the number of individuals a manager directly oversees. It’s generally thought that broad spans of control are a good thing if you have skilled associates with the proper motivation to excel. A broad span of control prevents a manager from micromanaging his or her employees.

·        Departmentalization – The grouping of human and other resources into units, typically based on functional areas or markets. There are four major types of departmentalization as noted below:

·        Functional – In this form, resources are grouped by functions. Exhibit 13-2 on page 414 of the text illustrates a functional organization. Note that each function flows up to a Vice President and those Vice Presidents are held accountable for the success of their respective organizations. Benefits of the functional form include specialized knowledge and economies of scale. The major disadvantage is the isolation from other functions which can oftentimes result in “stove pipe”, or narrow-focused, thinking. If your organization is structured this way, it’s important to make a concerted effort to reach out and mold relationships with others from other functions.

·        Divisional – For an organization that operates in different regions or produces a number of products, this form might work best. As can be seen from Exhibit 13-3 on page 415 of the text, the divisional form is grouped by product or service area divisions. Better and more efficient coordination and communication coupled with what the text calls “rapid response time” are often benefits of this structure.  The divisional form’s disadvantages include lack of coordination/collaboration across divisions and diseconomies of scale.

·        Hybrid – This form is just what the name implies…a mix of functional and divisional structures.

·        Network – In this form, the majority of functional work is outsourced to other organizations. The text identifies homebuilders as the prime example of a network organization. Most established homebuilders subcontract much of their work to experts within various fields such as plumbers, electricians, painters, and landscapers to name a few. What might be the advantages or disadvantages of such an organization? One obvious benefit of a network organization is the reduction in employee benefits costs. For instance, healthcare and retirement costs are not a concern because the subs are contracted help and are responsible for their own benefits. A disadvantage might be the lack of control with respect to timing of work. For instance, a builder might want the subcontractor to show up tomorrow to keep the project on schedule, however, the subcontractor chooses to prioritize another job with another general contractor.

This might be a good time to take a sneak peek at the lecture in Week 8. To keep your creative juices flowing, I provided an example organization and intervention.  Part of the intervention includes redefining the team across product lines.  This would in fact be considered a divisional structure.  Now, what about your organization?  Might your organization benefit from a different structure?  The takeaway here is to be sure to consider structural factors when finalizing your intervention(s). References

Hitt, M. A., Miller, C. C., & Colella, A. (2015). Organizational Behavior (4th ed.). Hoboken, NJ: John Wiley & Sons, Inc.

Organizational Behavior – Week #7 Lecture 2

Person-Organization Fit

The focus for our second lecture this week is on what the text calls Person-Organization Fit.  In simple terms, this concept answers the question, “Is the individual a good “fit” for an organization?”  

Goals for this lecture are to:  

·        give you a common backdrop to reflect on that question regardless of the person or the organization, and,

·        arm you with the know-how to evaluate your own personal situation. This lecture should get you thinking analytically about your choice of organization both in the present and the future.

Let’s first talk about values. Formally defined as “abstract ideals that relate to proper life goals and methods for reaching those goals”, values are in essence what’s important to you.  For instance, most folks place a certain value on things important in their lives. What’s most important to you…family, money, faith, staying physically fit, having fun, traveling the world?  Hopefully you get the point here – we all come from different walks of life and value things differently. I hinted at the start that this might have some interactive components so here we go.  Take a blank sheet of paper and draw a line down the middle. Title the left column “Personal Values”. For the next 10-15 minutes or so, please list your personal values, what’s important to you. No value is too small to list. The idea here is to gather a comprehensive list. Don’t worry about the order of listing right now.  We’ll worry about that next. Okay, hopefully you now have a list of 10-15 items. The next step is to prioritize those values. As you work through this exercise, you’re likely to find there is overlap among the items. Don’t worry, that’s perfectly normal. What I recommend doing is “bucketing” the items in 4-5 major buckets.  Items that have significant overlap should go in the same bucket. Once you complete this step, you should have a prioritized list of your own personal values. The value at the top of the list is most important to you while the value listed at the bottom is the least important.  Now, on to the next step… At the top of the right-hand column, place the title “Organizational Values”. Take the next 10-15 minutes and list the values of your organization. Feel free to use company literature, vision/mission statements, website research, and your personal experiences to derive the information. Don’t worry if the company’s stated values and what you’ve experienced in the organization differ. What you’ve experienced is your reality and most important for this exercise. To review what you should have at this point – a single sheet of paper with prioritized personal values on the left side and organization values on the right side.  The next step is to compare the two.  Do your top 4-5 personal values match up or align with your organization’s values, or, are there huge disconnects between what you value and what your organization values?  If the answer is the former, you likely enjoy your work and feel right at home in your organization. If the answer is the latter, you likely experience displeasure at work and are often frustrated.  Let’s use an extreme example to illustrate:

Let’s take a twenty-year old male who works at Chick-fil-A, a fast food restaurant that specializes in all things chicken and whose founder is deeply religious and built the organization based on those religious principles. Chick-fil-A’s corporate purpose is, “To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.”  The young male lacks religious conviction and values partying and drinking alcohol with his friends at least 4-5 nights a week.  Does this sound like a good match of personal and organizational values? I think you get the point.

If your values are not aligned with that of your organization, you’re living in an unsustainable situation. At a minimum if you choose to stay in the situation, you’ll be a disgruntled employee which is not good for you and not good for the organization. Once you understand what your prioritized values are, I empower you to find that perfect person-organization fit and you’ll enjoy going to work every day! By the way, this technique is a great way to prepare for an interview. In most interviews, you’ll be asked why you want the job.  If you can passionately describe how your values are aligned with that of the organization and give a specific example, you’re well on your way to paving your future! Many of you are currently serving in the armed forces or are veterans. Let’s suppose a potential employer asks you why you want the job. You respond, “I personally value faith, family, and service to country. Through my research of your company, I found you take a deep interest in giving back to veterans of the armed forces. I want to be part of an organization that not only has exciting work but also values what’s important to me.” References

Hitt, M. A., Miller, C. C., & Colella, A. (2015). Organizational Behavior (4th ed.). Hoboken, NJ: John Wiley & Sons, Inc.

Our Giving Tradition. (2015). Retrieved January 30, 2015, from  http://www.chick-fil-a.com/Company/Responsibility-Giving-Tradition .

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CH. 13 organizational structure and culture

? knowledge objectives After reading this chapter, you should be able to:

1. Define key elements of organizational structure, including both structural and structuring dimensions.

2. Explain how corporate and business strategies relate to structure.

3. Explain how environment, technology, and size relate to structure.

4. Define organizational culture, and discuss the competing values cultural framework. 5. Discuss socialization.

6. Describe cultural audits and subcultures.

7. Explain the importance of a fit between individual values and organizational culture.

exploring behavior in action Growth and Structure Provide an Integrated Portfolio of Services at FedEx

Many companies have goals designed to achieve growth and diversification of the markets they serve, both product and geographical. These long-term goals are often maintained even during economic recessions such as that experienced at the end of the first decade of the twenty-first century. Growth can be achieved by developing new products and services internally or by acquiring other organizations. Growth by external acquisition has been popular because it is often a faster and less risky means of achieving the desired growth. FedEx’s corporate strategy involved both of these approaches. In 1971, Federal Express Corporation was founded in Little Rock, Arkansas. Early in its history, FedEx used internal development to achieve rapid growth. By 1983, Federal Express had achieved $1 billion in revenue; it made its first acquisition in 1984, Gelco Express International, launching its operations in the Asia Pacific region. Five years later,

Federal Express purchased Flying Tigers to expand its international presence. That same year, Roberts Express (now FedEx Custom Critical) began providing services to Europe. In 1995, FedEx acquired air routes from Evergreen International with authority to serve China and opened an Asia Pacific Hub in Subic Bay, Philippines, launching the FedEx AsiaOne Network. By 1996, FedEx Ground achieved 100 percent coverage in North America. In 1998, FedEx acquired Caliber Systems, Inc. and cre- ated FDX Corporation. This series of acquisitions made FedEx a $16 billion transportation powerhouse. But the acquisitions and growth continued. In 1999, Federal Express Corporation acquired Caribbean Transportation Services. In January 2000, FDX Corporation was renamed FedEx Corporation. Also in 2000, FedEx Trade Networks was created with the acquisitions of Tower Group International and World Tariff. In 2001, FedEx acquired American Freightways; in 2004, it acquired Kinko’s for $2.4 billion and also Parcel Direct; and it completed its acquisitions in 2007, with its purchase of Chinese shipping partner DTW Group in order to obtain more control over and access to services in secondary Chinese cities. As suggested by the large list of acquisitions, FedEx’s strat- egy to achieve growth was realized. It also diversified the com- pany’s portfolio of services. For example, it acquired Kinko’s to expand the company’s retail services through the 1,200-plus Kinko’s stores. In addition, by acquiring Parcel Direct, FedEx was able to expand services for customers in the e-tail and catalog segments. All of the companies acquired by FedEx Corp were carefully selected to ensure a corporate culture with a positive service-oriented spirit, thereby providing a good fit with FedEx. For several years, FedEx continued to be listed among Fortune’s 100 Best Companies to Work For and in the top 10 of Fortune’s World’s Most Admired Companies. However, it expe- rienced difficult times in the major economic recession and after 2009, it implemented changes to increase efficiency and reduce costs. Although still on the list in 2013, by 2014, FedEx was not to be found on Fortune’s list of the Best 100 companies to Work For. Because of the additional services, FedEx adopted a multidivisional struc- ture. FedEx Corporation provides strate- gic direction and consolidated financial reporting for the operating companies that are collectively under the FedEx name worldwide (FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks, and FedEx SupplyChain). Along with its competitive array of services, FedEx remains innovative and sensitive to its environment. For example, in 2010, it implemented a new service, Senseaware, a sensor-enabled device that provides real-time data on the location and other important informa- tion of a package. The device allows FedEx and customers to monitor the condition and travel of highly impor- tant and sensitive packages. In 2013, it expanded this service with a cryogenic probe that allows precise temperature measurements of heat or cold sensitive shipments. In addition, FedEx also has initiatives to promote a sustainable environment. In 2013, FedEx achieved $45 billion in annual revenues, and its stock value appreciated by 53 percent during that year. Analysts predict a bright future with FedEx’s focus on serving the e-commerce market. The global e-commerce market is projected to achieve $1 trillion in sales in 2016. The e-commerce market in the United States is projected to be $371 billion by 2017. FedEx Ground and FedEx SmartPost are poised to gain a significant share of this market. The growth in the size and scope of the company led FedEx to delegate significant authority to the divisions. Together, the various divisions are FedEx, but independently, each division offers flexible, specialized services that represent an array of logistics, supply chain, transportation, and business and related information services. Operating independently, each FedEx company manages its own specialized network of ser- vices. The FedEx Corporation acts as the hub, allowing its decentral- ized divisions to work together worldwide. FedEx coordinates the activities of operating divisions in ways that integrate them to pro- vide customers a unique and powerful portfolio of services globally

Sources: “About FedEx,” FedEx, at http://www.fedex.com. Accessed 2014; “FedEx Still Going Strong,” Seeking Alpha (January 21, 2014), http://seeking alpha.com; C. Tov, “FedEx: Will the Bullish Trend Continue in 2014?” Seeking Alpha (January 10: 2013), http://seeking alpha.com; “FedEx Expands SensAware Capabilities with Cyrogenic Probe,” FedEx newsroom, (October 16, 2013), http://news.van.fedex.com; T. Team,. “FedEx’s Ground Game Will Carry Earnings,” Forbes (June 17, 2013), http://www.forbes .com; “FedEx Meets Estimates but Gives Cautious Forecast,” New York Times (Dec. 17, FedEx Ground © AP World Wide Photos 2009), www.nytimes.com; Cliff Kuang, “If the Delivery Guy Drops Your Package, Sensea- ware Updates You Online,” Fast Company (Nov. 24, 2009), http://www.fastcompany.com; Stephanie N. Metha, “Smart Phones. Smart networks. Smart Packages?” Fortune (Nov.17, 2009), http://www.fortune.com; “FedEx Completes Acquisition of DTW Group,” BusinessWeek (Feb. 28, 2007), http://www.businessweek.com; Sarah Murray, “Putting the House in Order,” Financial Times (Nov. 8, 2006), http://www.ft.com; Dean Foust. “Tak- ing Off Like ‘a Rocket Ship,’” BusinessWeek (Apr. 3, 2006), http://www.businessweek.com. the strategic importance of Organizational Structure and Culture When considering the implementation of organizational strategies, we often focus on the roles of strong leaders, talented manag- ers and associates, and effective processes such as communication and conflict manage- ment. Although all these factors are impor- tant, as emphasized in prior chapters, they provide only part of the support to implement an organization’s strategy. The organiza- tion’s structure and culture also play crucial roles in strategy implementation. Organizational structure refers to the formal system of work roles and author- ity relationships that govern how associates and managers interact with one another.1 To properly implement a strategy, an organ- ization must build a structure ensuring that formal and informal activities and initiatives support strategic goals. Structure influences communication patterns among individuals and groups and the degree to which they have the discretion to be innovative. If, for example, a strategy calls for rapid responses in several dynamic and different markets, it is important to create divisions around those markets and delegate authority to managers in those divisions so that they can act when necessary, similar to the decentralized divi- sions created by FedEx as described in the Exploring Behavior in Action. Firms that fail to design and maintain effective structures experience problems. FedEx also coordi- nates activities across its divisions in order to achieve synergies among its various ser- vices and geographical markets. Doing this enhances FedEx’s performance. An appropriate culture is also required to implement strategy effectively and achieve strong overall performance. Organizational culture involves shared values and norms that influence behavior.2 It is a powerful force in organizations. For example, Google’s organizational culture has been touted as one reason for its phe- nomenal success. We examine the specific characteristics of Google’s culture later in this chapter. FedEx is known to have a special cul- ture as well. FedEx grew rapidly early in its existence by internally expanding its services and especially by reaching new geographi- cal markets. It then began to expand into international markets, partly by acquisition (e.g., its acquisition of Flying Tigers). It also used acquisitions to diversify the services that it offered. An example of this expan- sion was the acquisition of Kinko’s with its 1,200 retail outlets across the United States to support the diversification strategy and divisional structure. Over time, FedEx had to adopt a new structure in order to manage its diversified portfolio of services and geo- graphical markets. The new divisional struc- ture granted significant autonomy to each operating business (division) with corporate coordination across the divisions to achieve synergy in offering customers integrated ser- vices. FedEx was careful in its acquisitions to ensure that the acquired firms fit well with its positive customer-oriented culture. Both organ- izational structure and culture influence the behavior of managers and associates and therefore play a critical role in the success of an organization’s strategy and its overall organizational performance. In this chapter, we explore issues related to structure and culture. We open with a discussion of the fundamental ele- ments of structure, emphasizing how they influence the behavior and attitudes of man- agers and associates. Next, we discuss the link between strategy and structure, as well as the structural implications of environmen- tal characteristics, internal technology, and organizational size. In the second part of the chapter, we focus on culture. Cultural topics include the competing values model of culture, socialization, cultural audits, and subcultures. We close with a discussion of person–organization fit.

sometimes subtle. Second, structuring characteristics refer to policies and approaches used to directly prescribe the behavior of managers and associates.5 Structural Characteristics Structural characteristics, as mentioned, relate to the basic shape and appearance of an organi- zation’s hierarchy. The shape of a hierarchy is determined by its height, spans of control, and type of departmentalization. Height refers to the number of levels in the organization, from the CEO to the lower-level associates. Tall hierarchies often create communication problems, as information moving up and down the hierarchy can be slowed and distorted as it passes through many different levels.6 Managers and associates can be unclear on appropriate actions and behaviors as decisions are delayed and faulty information is disseminated, causing lower satisfaction and commitment. Tall hierarchies also are more expensive, as they have more levels of managers.7 A manager’s span of control is to the number of individuals who report directly to her. A broad span of control is possible when a manager can effectively handle many individuals, as is the case when associates have the skills and motivation they need to complete their tasks autonomously. Broad spans have advantages for an organization. First, they result in shorter hierarchies (see Exhibit 13-1), thereby avoiding communication and expense problems.8 Second, they promote high-involvement management because managers have difficulty micromanaging people when there are larger numbers of them. Broad spans allow for more initiative by associates.9 In making employment decisions, many individuals take these realities into consideration.

structuring characteristics The policies and approaches used to directly prescribe the behavior of managers and associates. height The number of hierarchical levels in an organization, from the CEO to the lower-level associates. span of control The number of individuals a manager directly oversees.

Spans of control can be too broad, however. When a manager has too many direct reports, she cannot engage in important coaching and development activi- ties. When tasks are more complex and the direct reports more interdependent, a manager often requires a relatively narrow span of control to be effective. It has been argued that a CEO’s span of control should not exceed six people because of the complexity and interdependency of work done by direct reports at this level.10 Many older companies have removed layers of management and increased spans of control in recent years, whereas younger companies avoided unnecessary layers and overly narrow spans from the beginning.11 Because of their profound effects on behavior and attitudes among associates and managers, spans of control are of concern to many organizations such as PricewaterhouseCoopers (PwC).12 Through their Saratoga Institute, managers and consultants at PwC track spans of control in various industries and use the resulting insights in various reports and consulting engagements. They reported a few years ago that the median span for all managers in all industries was seven. An earlier Wall Street Journal report indicated an average span of nine. Yet, the Saratoga Institute reports that managerial spans of control have been increasing in recent years due to reductions in the number of managers in the recent global economic recession.13 In order to maintain efficiency and reduce their risks, spans of control have remained at higher levels even after the economy improved. Departmentalization describes the approach used in grouping resources within an organization. As highlighted in the opening case, one of the two basic options is the functional form of departmentalization, in which resources related to a particular functional area are grouped together (see Exhibit 13-2). The functional form provides several potential advantages, including deep specialized knowledge in each functional area (because functions are the focus of the firm) and economies of scale within functional areas (resources can be shared by all individuals working within each functional area).14 This form, however, also has a potential major weakness: managers and associates in each functional department can become isolated from those who work in other departments, which harms coordinated action and causes slow responses to major industry changes that require two or more func- tional areas to work together.15 Lateral relation mechanisms, discussed in a later section, can help to overcome this weakness. If an organization has multiple products or services or operates in multiple geographical areas, it can group its resources into divisions (see Exhibit 13-3). The divisional form offers several benefits, such as better coordination among individuals in functional areas. Functional resources have been divided among the divisions, and associates and managers in the smaller functional departments within each division tend to coordinate with one another relatively departmentalization The grouping of human and other resources into units, typically based on functional areas or markets.

easily. With smaller departments, people tend to be closer to one another, and there are fewer barriers (formal or informal) to direct communication. A second, related benefit is rapid response to changes in the industry that call for a coordination response across function (sometimes referred to as cross-functional). Because associates and managers in the various functional areas coordinate more effectively, response times are often faster. A third benefit is tailoring to the different product/service or geo- graphical markets. This occurs because the people in each division are dedicated to their own markets.16 The divisional form is not without its drawbacks, however. Two of the most important are (1) lack of collaboration across the product/service or geographic markets (individuals in one division can become isolated from those in other divisions) and (2) diseconomies of scale within functional areas (individuals in a given functional area but working on different markets cannot share resources as they can in the functional structure).17 As described in the Exploring Behavior in Action feature, FedEx developed a diverse set of businesses offering a portfolio of services. To manage these businesses efficiently and to offer customers the most effective ser- vices, FedEx implemented a divisional structure. Hybrid forms also exist, with some functional areas divided across divisions, while others remain intact at the corporate level, often for cost reasons. Network organizations are another option, where many or most functional areas are outsourced to other organizations.18 Home- builders are usually network organizations, as they often do not complete their own architec- tural work and typically outsource to subcontractors much of the actual construction work. Nike is generally considered to be a network organization because it outsources manufacturing and other types of work. Most multinational firms are structured as network organizations with decentralized, autonomous subsidiaries in different countries and multiple suppliers in different regions of the world.19 The network approach has been emphasized by a number of firms in recent years, at least to some degree. Its chief benefit lies in allowing a firm to focus on what it does best while outsourcing the rest.20 Quality control, however, is sometimes an issue, and coordination of internal and external efforts is often a substantial problem. Effective information technology that facilitates coordination across organizational boundaries is crucial. Structuring Characteristics Research has shown that organizational structure is a determinant of perform

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