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INTRODUCTION TO BUSINESS
CHAPTER 8Organizational Structure
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Purpose and Types of Organizational Structure Organizational Structure: identifies
responsibilities for each job position and the relationships among those positions. Chain of command: identifies the job position
to which each type of employee must report. How Organizational Structure Varies Among
Firms Span of control: the number of employees
managed by each manager.
Line Organization Versus Line-and-Staff Organization
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Draw your Org. Chart
Consultants will be on a “staff” line (dotted)
Consultants will be an expense
Try to incorporate your “duties/interests” on the chart (i.e. person coordinating financial section would be your CFO, acct., or bookkeeper)
Keep it simple (template on PPT and word)
O rg an iza tio n a l c h a rt
T yp e n am e h e reT yp e t it le h e re
T yp e n am e h e reT yp e t it le h e re
T yp e n am e h e reT yp e t it le h e re
T yp e n am e h e reT yp e t it le h e re
Departmentalizing by Function
Copyright by Paradigm Publishing, Inc.
Copyright by Paradigm Publishing, Inc.
Accountability in an Organizational Structure Role of the Board of Directors
Board of directors: a set of executives who are responsible for monitoring the activities of the firm’s president and other high-level managers.
Inside board members: board members who are also managers of the same firm.
Outside board members: board members who are not managers of the firm.
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Accountability in an Organizational Structure
Conflicts of Interest within the Board Resolving Conflicts of Interest Board Committees
Compensation Committee Nominating Committee Audit Committee
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Distributing Authority Among the Job Positions Centralization
Centralized: most authority is held by the high-level managers.
Decentralization Decentralized: authority is spread among
several divisions or managers. Autonomy: divisions can make their own
decisions and act independently.
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Distributing Authority among the Job Positions
Advantages Reduces operating expenses Shortens the decision-making process Improves the morale of employees
Disadvantages Forces some managers to make major decisions An excessive amount of responsibility assigned
to middle and supervisory managers
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Structures That Allow More Employee Input Matrix Organization: an organizational
structure that enables various parts of the firm to interact to focus on specific projects.
Intrapreneurship: the assignment of particular employees of a firm to generate ideas, as if they were entrepreneurs running their own firms.
Structures That Allow More Employee InputA Matrix Organization for a Special Project to Design a New Computer System
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Structures That Allow More Employee Input
A firm’s informal organizational structure allows employees to exchange information about the firm on an informal basis.
Copyright by Paradigm Publishing, Inc.
Copyright by Paradigm Publishing, Inc.
Methods of Departmentalizing Tasks
Departmentalize: assign tasks and responsibilities to different departments
Departmentalize by Function Departmentalize by Product Departmentalize by Location Departmentalize by Customer
