Chapter 8 Organization Structure and Design EXPLORING MANAGEMENT

Chapter 8Organization Structure

and Design

EXPLORING MANAGEMENT

Chapter 8

• What is organizing as a managerial responsibility?

• What are the most common types of organization structures?

• What are the trends in organizational design?

8.1

Organizing

• Organizing is one of the management functions

• Organization charts describe the formal structures of organizations

• Organizations also operate with informal structures

• Informal structures have good points and bad points

ORGANIZING

Management Functions

• Organizing– Arranges people and resources to work

toward a goal

ORGANIZING

Organizational Charts• Structure

– system of tasks, reporting relationships, and communication that links people and positions within an organization.

• Organization Charts – describe the formal structure, how an

organization should ideally work.

•Positions and titles show work responsibilities.

Division of work

•Lines between positions show who reports to whom in the chain of command.

Supervisory relationships

•The number of persons reporting to a supervisor.

Span of control

•Lines between positions show routes for formal communication flows.

Communication channels

•Which job titles are grouped together in work units, departments, or divisions.

Major subunits

•Staff specialists that support other positions and parts of the organization.

Staff positions

•The number of management layers from top to bottom.

Levels of management

ORGANIZING

Organizational Charts

What You Can Learn from an Organization Chart

ORGANIZING

Formal Structure

ORGANIZING

Formal Structure• Division of Labor

– People and groups performing different jobs.

• Formal Structure– The official structure of the organization.

• Informal Structure – The unofficial relationships that develop

among an organization’s members.

ORGANIZING

Informal Structure• Informal Structure

– Unofficial but important working relationships between members.

ORGANIZING

Informal Structure• Informal Structures have good and

bad points– Social network analysis identifies

communication relationships– Good points include problem solving,

support, friendship and fill gaps in the formal structure

– Bad points include rumors, inaccurate information and resistance to change

8.2

Common Types of Structures

• Functional structures group together people using similar skills

• Divisional structures group together people by products, customers or locations

• Matrix structures combine the functional and divisional structures

• Team structures use many permanent and temporary teams

• Network structures extensively use strategic alliances and outsourcing

COMMON ORGANIZATIONAL STRUCTURES

Functional Structures

• Functional Structures group people with similar skills– Departmentalization

• Grouping people and jobs into a work unit

– Functional Structure• Work units have similar skills and tasks such as

finance, marketing, production and human resources.

– Work best in smaller or stable organizations



Potential Advantages of Functional Structures • Economies of scale make efficient use of

human resources. • Functional experts are good at solving

technical problems. • Training within functions promotes skill

development. • Career paths are available within each

function.



Common functional structure



Functional Chimneys or Silos• Communication and performance

decrease across functions


Divisional Structures

• Divisional structures group together people who work on a similar product, work in the same geographical region, or serve the same customers



Common divisional structures



Potential Advantages of Divisional Structures • Expertise focused on special products,

customers, regions • Better coordination across functions within

divisions • Better accountability for product or service

delivery • Easier to grow or shrink in size as conditions

change


Matrix Structures

Matrix Structures combine functional and divisional structures• uses permanent cross functional teams to try

to gain the advantages of both the functional and divisional approaches


Matrix Structures


Matrix Structures Potential advantages of Matrix structures• Performance accountability rests with

program, product, or project managers. • Better communication exists across

functions.• Teams solve problems at their levels.• Top managers spend more time on strategy.


Team Structures

Team Structures• Make use of permanent and temporary cross

functional teams• Improved problem solving and project

management


Team Structures

Team structure example


Team Structures

Possible advantages of Team structures• Team assignments improve communication,

cooperation, and decision-making. • Team members get to know each other as

persons, not just job titles. • Team memberships boost morale, and

increase enthusiasm and task involvement.


Network Structures

Network structures• Consist of a central core with networks of

relationships with contractors• Contractors and network partners supply

essential services


Network Structures

Network structure example


Network Structures

Possible advantages of Network structures

• Lower costs due to fewer full-time employees.

• Better access to expertise through specialized alliance partners and contractors.

• Easy to grow or shrink with market conditions.


Network Structures

Virtual Organizations• Network that depends on information

technology to link alliances and essential services

8.3

Organizational Design Trends• Organizations are becoming flatter, with

fewer levels of management• Organizations are increasing decentralization• Organizations are increasing delegation and

empowerment• Organizations are becoming more horizontal

and adaptive• Organizations are using more alternative

work schedules

ORGANIZATIONAL DESIGN TRENDS

Organizational Design

Organizational Design• Aligns structure to best accomplish

mission and respond to external environment



Span of control• How many people report to a manager

– Narrow• manger supervises few people

– Wide• manger supervises larger number of people• flatter organizations have wide span of control




Decentralized Decision-making

Centralization• Top management keeps strong decision-

making control

Decentralization• Decision-making is distributed throughout

the organization


Increased Delegation

Delegation• Giving others the right to make decisions and

take action• Steps

1. Assign responsibility—explain task and expectations to others.

2. Grant authority—allow others to act as needed to complete task.

3. Create accountability—require others to report back, complete task.

Empowerment

Empowerment • Gives people freedom to do their jobs as they

think best.• When delegation is done well it leads to

empowerment.


Horizontal and Adaptive Organizations

Bureaucracy• Formal authority

– Rules– Order– Fairness

• Mechanistic Designs– Bureaucratic– Centralized– Vertical structure



• Organic Designs– Adaptable– Decentralized– Horizontal Structure



ORGNIZATIONAL DESIGN TRENDS

Alternative Work Schedules

Alternative schedules increase flexibility and increase satisfaction for employers and employees• Compressed workweek• Flextime• Job sharing• Telecommuting

Documents

Chapter 8 Organization Structure and Design EXPLORING MANAGEMENT