CHAPTER 8 – ORGANIZATIONAL STRUCTURE

i. Purpose & types of Organizational Structure

ii. Accountability in an Organizational Structure

iii. Distributing Authority among the job positions

Introduction

The typically hierarchical arrangement of lines of

authority, communications, rights and duties of an organization. Organizational structure determines how the roles, power and responsibilities are assigned

, controlled, and coordinated, and how information flows between the different levels of management.

Purpose of Organizational Structure

• Duties and responsibilities can be understood by every member

• Turning groups of individuals into teams and getting everyone pointed the same direction

• Helping to orient new employees to the company and supplying them with career and succession plans

• Understanding the complex nature of the structures and helping to simplify relationship

• Empowering people to understand the strategic vision of the company by defining dependencies and relationship

Types of Organizational Structure

• The Functional Structure• The Divisional Structure• The Matrix Structure• The Line & Staff Structure• The Project Structure

THE FUNCTIONAL STRUCTURE

• Functional structure – this kind of organizational structure classifies people according to the function they perform in the organization.

• The functional structure works well for small businesses in which each department can rely on the talent and knowledge of its workers and support itself.

• However, a functional structure is that the coordination and communication between departments can be restricted by the organizational boundaries of having the various departments working separately.

Grouping by similar work specialties

THE DIVISIONAL STRUCTURE

A type of  organizational configuration that groups together those employees who are responsible for a particular product type or market service according to work flow.

The divisional structure of a business tends to increase flexibility, and it can also be broken down further into product, market and geographic structures.

THE MATRIX STRUCTURE

This is a structure, which has a combination of function and product structures.

This combines both the best of both worlds to make an efficient organizational structure. Most complex organizational structure.

A Grid of Functional & Divisional for Two Chains of Command

THE LINE AND STAFF STRUCTURE

Line and structure combines the line structure where information and approvals come from top to bottom, with staff departments for support and specialization.

Line and staff organizational structures are more centralized. Managers of line and staff have authority over their subordinates, but staff managers have no authority over line managers and their subordinates.

Line and staff management has two separate hierarchies:

(1)the line hierarchy in which the departments are revenue generators (manufacturing, selling), and their managers are responsible for achieving the organization's main objectives by executing the key functions (such as policy making, target setting, decision making)

(2)the staff hierarchy, in which the departments are revenue consumers, and their managers are responsible for activities that support line functions (such as accounting, maintenance, personnel management).

THE PROJECT STRUCTURE Organizational units to complete projects of a long

duration.

Each project is vitally important to the organization.

The size of the project team varies from one project to another.

The activities of a project team are coordinated by the project manager who has the authority to obtain advice and assistance of experts

The core concept of project organization is to gather a team of specialist to work on and complete a particular project.

THE PROJECT STRUCTURE

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t A

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t B

F in an ce M a nu fa c tu ring

V ice P re s id en t P ro je c t C

P re sid e n t

ACCOUNTABILITY IN ORGANIZATIONAL STRUCTURE

Accountability is the responsibility to complete a job, either personally or by

delegation, along with the duty to report that the job has been completed.

• To meet these responsibilities, the new employee must also have the authority to achieve them.

• Authority is delegated along with the responsibility. The manager, however, is still ultimately responsible. By assigning some of his or her responsibilities, the manager transfers or creates accountability.

• If the employee does not exercise the responsibility properly, the manager can always withdraw the authority. Delegation without control is abdication.

Distributing Authority among the job positions

• In practice, the process of management works in conjunction with the process of delegation.

• Since management is the process of getting results through others, delegation facilitates that process by assigning responsibilities, delegating authority, and exacting accountability by employees.

Distributing Authority among the job positions

• The accomplishment of the assigned responsibilities should equal the defined objectives. The manager then develops standards of performance with each key employee.

• The successful accomplishment of the standards of performance should equal the assigned responsibilities.

• It continues with the appraisal of key subordinates rated against the agreed-upon standards of performance and closes with evaluation and feedback to the beginning of the next budget cycle.