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© 2008 The McGraw-Hill Companies, Inc. All rights reserved

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ChapterChapterChapterChapter

McGraw-Hill/Irwin

Organizational Organizational Structure Structure

andandCommunicationCommunication

66

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Introduction Introduction

Organization structure determines who works togetherIt is the way managers design their firms to

achieve their organization’s mission and goalsOrganizational communication flows

through its structure, which affects:behaviorhuman relationsperformance

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The transition from an economy based on materials to an economy based on flows of

information has created considerable challenges for organizational structure, and

communication.

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Principles of Organization Principles of Organization (1 of 3)(1 of 3)

Division of Labor and DepartmentalizationDivision of labor, or work specialization – refers to

the degree to which tasks are subdivided into separate jobs

Departmentalization – grouping of related activities into units

Chain of Commandline of authority from the top to the bottom of the

organization, which is shown in an organization chart

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Principles of Organization Principles of Organization (2 of 3)(2 of 3)

Span of Managementrefers to number of employees reporting to a

managerCentralized and Decentralized Authority

With centralized authority, top managers make important decisions

With decentralized authority, middle and first-line managers make important decisions where the action is

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Principles of Organization Principles of Organization (3 of 3)(3 of 3)

CoordinationWith the division of labor and departmentalization

comes the need to coordinate the work of all departments

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Questions and Answers for Questions and Answers for Designing Organizational Structure:Designing Organizational Structure:

Questions Answers

How should we subdivide work? Division of Labor and Departmentalization

Who should departments and individuals report to?

Chain of Command

How many individuals should report to each manager?

Span of Management

At what level should decisions be made?

Centralization vs. Decentralization

How do we get everyone to work together as a team?

Coordination

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Formal Organization Structure Formal Organization Structure

PresidentPresident

Vice PresidentProduction

Vice PresidentFinance

Vice PresidentMarketing

ManagerA

ManagerB

ManagerC

ManagerD

ManagerE

ManagerF

ManagerG

ManagerH

ManagerI

Vertical downward communication

Vertical upward communication

Exhibit 6.2

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Informal Organization Structure Informal Organization Structure

PresidentPresident

Vice PresidentProduction

Vice PresidentProduction

Vice PresidentFinance

Vice PresidentFinance

Vice PresidentMarketing

Vice PresidentMarketing

ManagerA

ManagerA Manager

B

ManagerB Manager

C

ManagerC Manager

D

ManagerD Manager

E

ManagerE Manager

F

ManagerF Manager

G

ManagerG Manager

H

ManagerH

Horizontal communication

networks

Exhibit 6.2

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Common Types Common Types of Departmentalizationof Departmentalization (1 of 4) (1 of 4)

Divisional Territory Matrix

Product Customer

Functional

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Common Types of Common Types of Departmentalization Departmentalization (2 of 4) (2 of 4)

Functional Departmentalizationinvolves organizing departments around essential

input activities, such as:production and operationsfinance and accountingmarketing and saleshuman resources

Product (Service) Departmentalizationinvolves organizing departments around goods

and services provided

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Common Types of Common Types of Departmentalization Departmentalization (3 of 4) (3 of 4)

Customer Departmentalizationinvolves organizing departments around the

needs of different types of customers with unique needs calling for different sales staffs and products

Divisional Departmentalization (M-Form)the firm develops independent lines of business

that operate as separate companies, all contributing to the corporation profitability

Territory (Geographic) Departmentalizationinvolves organizing departments in each area in

which the enterprise does business

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Common Types of Common Types of Departmentalization Departmentalization (4 of 4) (4 of 4)

Matrix Departmentalizationcombines the functional and product

departmental structuresCombination

many large companies have more than one form of departmentalization

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Contemporary Organization Design Contemporary Organization Design

VirtualOrganizations

BoundarylessOrganizations

E-Organizations

LearningOrganizations

Team Organizationsand

Reengineering

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American and Japanese Organization American and Japanese Organization Structures Structures

Division of labor tends to be a bit less specialized in Japan

Both countries use the same types of departmentalization

American organizations tend to be quicker to hire, lay off, and to change jobs than the Japanese

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Organizational Communication Organizational Communication

Organizational communication – the compounded interpersonal communication process across an organization

Communication flows in an organization are:VerticalHorizontal

Grapevine (multidirectional)

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Vertical and Horizontal Vertical and Horizontal Communication Communication

Vertical CommunicationThe flow of information

both up and down the chain of command

Formal communicationRecognized as officialStatus and power are not

equal among participants in vertical communication

Horizontal Communication

• The flow of information between colleagues and peers

• Informal communication

• Does not follow the chain of command

• Not recognized as official

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Grapevine Communication Grapevine Communication

Grapevine – the informal vehicle through which messages flow throughout the organization

“When the grapevine allows employees to know about a management decision almost before it is made, management must be doing something right.”

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Communication Networks Communication Networks

Communication networks – sets of employees who have stable contact through which information is generated and transmitted

Two major types of communication networks: 1. within organizations 2. within departments and small groups

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Message Transmission Channels Message Transmission Channels

Oral Communication

Written Communication

Nonverbal Communication

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Oral Communication Media Oral Communication Media

Face-to-Face Telephone

Meetings Presentations

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Written Communication Written Communication (1 of 2)(1 of 2)

With increased use of e-mail, managers substitute face-to-face communication with e-mail

Communication Objective GuidelinesMemosLettersReportsBulletin board noticesPostersComputers/e-mailFax

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Written Communication Written Communication (2 of 2)(2 of 2)

Writing skills Grammar – rules for use of the eight parts

of speech To simplify grammar, we use subjects,

predicates, modifiers, and connectives

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Nonverbal Communication Nonverbal Communication

FacialExpressions

VocalQualities

Gestures Posture

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Emotions Emotions (1 of 2)(1 of 2)

Emotional labor – requires the expression of desired emotions during interpersonal relations

• Universal emotions:– happiness– surprise– fear– sadness– anger– disgust

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Emotions Emotions (2 of 2) (2 of 2)

Understanding FeelingsFeelings are subjective – they tell you people’s

attitudes and needsFeelings are usually disguised as factual

statementsFeelings are neither right nor wrong but behavior

isGender DifferencesGlobal Differences

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Dealing with Emotional Employees Dealing with Emotional Employees

Calming the emotional personUse reflecting responses

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Criticism Criticism

Getting Criticism Giving Criticism

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Guidelines for Giving Effective Guidelines for Giving Effective Criticism Criticism

Give more praise than criticismCriticize immediatelyCriticism should be performance orientedGive specific and accurate criticismOpen on a positive note and close by

repeating what action is needed