9chapter powerpoint presentation by charlie cook © copyright the mcgraw-hill companies, inc., 2003....

99Chapter

PowerPoint Presentation by Charlie Cook© Copyright The McGraw-Hill Companies, Inc., 2003. All rights reserved.

Managing Organizational Managing Organizational StructureStructure

© Copyright McGraw-Hill. All rights reserved. 9–2

Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives

• After studying the chapter, you should be able to:After studying the chapter, you should be able to:Identify the factors that influence managers’ Identify the factors that influence managers’

choice of an organizational structure.choice of an organizational structure.Explain how managers group tasks into jobs Explain how managers group tasks into jobs

that are motivating and satisfying for that are motivating and satisfying for employees.employees.

Describe the types of organizational Describe the types of organizational structures managers can design, and explain structures managers can design, and explain why they choose one structure over another.why they choose one structure over another.

Explain why there is a need to both Explain why there is a need to both centralize and decentralized authority.centralize and decentralized authority.


Learning Objectives (cont’d)Learning Objectives (cont’d)Learning Objectives (cont’d)Learning Objectives (cont’d)

Explain why managers must coordinate and Explain why managers must coordinate and integrate between jobs, functions, and integrate between jobs, functions, and divisions as an organization grows.divisions as an organization grows.

Explain why managers who seek new ways to Explain why managers who seek new ways to increase efficiency and effectiveness are increase efficiency and effectiveness are using strategic alliances and network using strategic alliances and network structures.structures.


Chapter OutlineChapter OutlineChapter OutlineChapter Outline

• Designing Organizational StructureDesigning Organizational StructureThe Organizational EnvironmentThe Organizational EnvironmentStrategyStrategyTechnologyTechnologyHuman ResourcesHuman Resources

• Grouping Tasks into Jobs: Job DesignGrouping Tasks into Jobs: Job DesignJob Enlargement and Job EnrichmentJob Enlargement and Job EnrichmentThe Job Characteristics ModelThe Job Characteristics Model

• Grouping Jobs into Functions and DivisionsGrouping Jobs into Functions and DivisionsFunctional StructureFunctional Structure


Chapter Outline (cont’d)Chapter Outline (cont’d)Chapter Outline (cont’d)Chapter Outline (cont’d)

• Grouping Jobs into Functions and Divisions Grouping Jobs into Functions and Divisions (cont’d)(cont’d)Functional StructureFunctional StructureDivisional Structure: Product, Market, GeographicDivisional Structure: Product, Market, GeographicMatrix and Product Team DesignsMatrix and Product Team DesignsHybrid StructureHybrid Structure

• Coordinating Functions and DivisionsCoordinating Functions and DivisionsAllocating AuthorityAllocating AuthorityTypes of Integrating MechanismsTypes of Integrating MechanismsStrategic Alliances, B2B Network Structures, and Strategic Alliances, B2B Network Structures, and

ITIT


Organizational StructureOrganizational StructureOrganizational StructureOrganizational Structure

• Organizational ArchitectureOrganizational ArchitectureThe organizational structure, control The organizational structure, control

systems, culture, and human resource systems, culture, and human resource management systems that together management systems that together determine how efficiently and effectively determine how efficiently and effectively organizational resources are used.organizational resources are used.


Designing Organizational StructureDesigning Organizational StructureDesigning Organizational StructureDesigning Organizational Structure

• OrganizingOrganizingThe process by which managers establish The process by which managers establish

working relationships among employees to working relationships among employees to achieve goals.achieve goals.

• Organizational StructureOrganizational StructureFormal system of task and reporting Formal system of task and reporting

relationships showing how workers use relationships showing how workers use resources.resources.

• Organizational designOrganizational designThe process by which managers make specific The process by which managers make specific

choices that result in a particular kind of choices that result in a particular kind of organizational structure.organizational structure.


Factors Affecting Organizational StructureFactors Affecting Organizational StructureFactors Affecting Organizational StructureFactors Affecting Organizational Structure

Figure 9.1


Determinants of StructureDeterminants of StructureDeterminants of StructureDeterminants of Structure

• The Organizational EnvironmentThe Organizational EnvironmentThe quicker the environment changes, the The quicker the environment changes, the

more problems face managers.more problems face managers.Structure must be more flexible (i.e., Structure must be more flexible (i.e.,

decentralized authority) when environmental decentralized authority) when environmental change is rapid.change is rapid.



• StrategyStrategyDifferent strategies require the use of Different strategies require the use of

different structures.different structures.• A differentiation strategy needs a flexible structure, A differentiation strategy needs a flexible structure,

low cost may need a more formal structure.low cost may need a more formal structure.

• Increased vertical integration or diversification also Increased vertical integration or diversification also requires a more flexible structure.requires a more flexible structure.



• TechnologyTechnologyThe combination of skills, knowledge, tools, The combination of skills, knowledge, tools,

equipment, computers and machines used in equipment, computers and machines used in the organization.the organization.

More complex technology makes it harder for More complex technology makes it harder for managers to regulate the organization.managers to regulate the organization.



• Technology (cont’d)Technology (cont’d)Technology can be measured by:Technology can be measured by:

• Task variety: the number of new problems a manager Task variety: the number of new problems a manager encounters.encounters.

• Task analyzability: the availability of programmed Task analyzability: the availability of programmed solutions to a manager to solve problems.solutions to a manager to solve problems.

High task variety and low analyzability High task variety and low analyzability present many unique problems to managers.present many unique problems to managers.

• Flexible structure works best in these conditions.Flexible structure works best in these conditions.

Low task variety and high analyzability allow Low task variety and high analyzability allow managers to rely on established procedures.managers to rely on established procedures.


Types of TechnologyTypes of TechnologyTypes of TechnologyTypes of Technology

• Small Batch TechnologySmall Batch TechnologySmall quantities of one-of-a-kind products are Small quantities of one-of-a-kind products are

produced by the skills of the workers who produced by the skills of the workers who work together in small groups.work together in small groups.

• Appropriate structure is decentralized and flexible.Appropriate structure is decentralized and flexible.

• Mass Production TechnologyMass Production TechnologyAutomated machines that are programmed Automated machines that are programmed

to make high volumes of standard products.to make high volumes of standard products.• Formal structure is the best choice for workers who Formal structure is the best choice for workers who

must perform repetitive tasks.must perform repetitive tasks.


Types of TechnologyTypes of TechnologyTypes of TechnologyTypes of Technology

• Continuous Process TechnologyContinuous Process TechnologyTotally mechanized systems of automatic Totally mechanized systems of automatic

machines.machines.• A flexible structure is necessary to allow workers to A flexible structure is necessary to allow workers to

react quickly to unexpected problems.react quickly to unexpected problems.

• Information Technology (IT)Information Technology (IT)Knowledge managementKnowledge management

• The sharing and integrating of expertise within and The sharing and integrating of expertise within and between functions and divisions through realtime, between functions and divisions through realtime, interconnected IT that allows for new kinds of tasks interconnected IT that allows for new kinds of tasks and job reporting relationships.and job reporting relationships.



• Human ResourcesHuman ResourcesHighly skilled workers whose jobs require Highly skilled workers whose jobs require

working in teams usually need a more working in teams usually need a more flexible structure.flexible structure.

Higher skilled workers (e.g., CPA’s and Higher skilled workers (e.g., CPA’s and doctors) often have internalized professional doctors) often have internalized professional norms.norms.

• Managers must take into account all four Managers must take into account all four factors (environment, strategy, technology and factors (environment, strategy, technology and human resources) when designing the human resources) when designing the structure of the organization.structure of the organization.


Job DesignJob DesignJob DesignJob Design

• Job DesignJob DesignThe process by which managers decide how The process by which managers decide how

to divide tasks into specific jobs.to divide tasks into specific jobs.The appropriate division of labor results in an The appropriate division of labor results in an

effective and efficient workforce. effective and efficient workforce.

• Job SimplificationJob SimplificationThe process of reducing the tasks each The process of reducing the tasks each

worker performs.worker performs.• Too much simplification and boredom results.Too much simplification and boredom results.


Job DesignJob DesignJob DesignJob Design

• Job EnlargementJob EnlargementIncreasing the number of tasks for a given Increasing the number of tasks for a given

job to reduce boredom.job to reduce boredom.

• Job EnrichmentJob EnrichmentIncreasing the degree of responsibility a Increasing the degree of responsibility a

worker has over a job.worker has over a job.can lead to increased worker involvement.can lead to increased worker involvement.


The Job Characteristics ModelThe Job Characteristics ModelThe Job Characteristics ModelThe Job Characteristics Model

Figure 9.2Source: Adapted from J. R. Hackman and G. R. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980).


Job Characteristics ModelJob Characteristics ModelJob Characteristics ModelJob Characteristics Model

Job Characteristic

Skill variety Employee uses a wide range of skills.

Task identity Worker is involved in all tasks of the job from beginning to end of the production process

Task significance Worker feels the task is meaningful to organization.

Autonomy Employee has freedom to schedule tasks and carry them out.

Feedback Worker gets direct information about how well the job is done.


Grouping Jobs into FunctionsGrouping Jobs into FunctionsGrouping Jobs into FunctionsGrouping Jobs into Functions

• Functional StructureFunctional StructureAn organizational structure composed of all An organizational structure composed of all

the departments that an organization the departments that an organization requires to produce its goods or services.requires to produce its goods or services.

AdvantagesAdvantages• Encourages learning from others doing similar jobs.Encourages learning from others doing similar jobs.

• Easy for managers to monitor and evaluate workers.Easy for managers to monitor and evaluate workers.

DisadvantagesDisadvantages• Difficult for departments to communicate with others.Difficult for departments to communicate with others.

• Preoccupation with own department and losing sight Preoccupation with own department and losing sight of organizational goals.of organizational goals.


The The Functional Functional

Structure of Structure of Pier 1 Pier 1

ImportsImports

The The Functional Functional

Structure of Structure of Pier 1 Pier 1

ImportsImports

Figure 9.3


Divisional StructuresDivisional StructuresDivisional StructuresDivisional Structures

• Divisional StructureDivisional StructureAn organizational structure composed of An organizational structure composed of

separate business units within which are the separate business units within which are the functions that work together to produce a functions that work together to produce a specific product for a specific customerspecific product for a specific customer

• Divisions create smaller, manageable parts of a firm.Divisions create smaller, manageable parts of a firm.

• Divisions develop a business-level strategy to Divisions develop a business-level strategy to compete.compete.

• Divisions have marketing, finance, and other Divisions have marketing, finance, and other functions.functions.

• Functional managers report to divisional managers Functional managers report to divisional managers who then report to corporate management.who then report to corporate management.


Types of Divisional StructuresTypes of Divisional StructuresTypes of Divisional StructuresTypes of Divisional Structures

• Product StructureProduct StructureCustomers are served by self-contained Customers are served by self-contained

divisions that handle a specific type of divisions that handle a specific type of product or service.product or service.

• Allows functional managers to specialize in one Allows functional managers to specialize in one product areaproduct area

• Division managers become experts in their areaDivision managers become experts in their area

• Removes need for direct supervision of division by Removes need for direct supervision of division by corporate managerscorporate managers

• Divisional management improves the use of Divisional management improves the use of resources resources


Product, Product, Market, and Market, and Geographic Geographic StructuresStructures

Product, Product, Market, and Market, and Geographic Geographic StructuresStructures

Figure 9.4


Viacom’s 2001 Viacom’s 2001 Product Product

StructureStructure

Viacom’s 2001 Viacom’s 2001 Product Product

StructureStructure

Figure 9.5


Types of Divisional Structures (cont’d)Types of Divisional Structures (cont’d)Types of Divisional Structures (cont’d)Types of Divisional Structures (cont’d)

• Geographic StructureGeographic StructureEach regional or a country or area with Each regional or a country or area with

customers with differing needs is served by a customers with differing needs is served by a local self-contained division producing local self-contained division producing products that best meet those needs.products that best meet those needs.

Global geographic structureGlobal geographic structure• Different divisions serve each world region when Different divisions serve each world region when

managers find different problems or demands across managers find different problems or demands across the globe.the globe.

• Generally, occurs when managers are pursuing a Generally, occurs when managers are pursuing a multidomestic strategymultidomestic strategy


Types of Divisional Structures (cont’d)Types of Divisional Structures (cont’d)Types of Divisional Structures (cont’d)Types of Divisional Structures (cont’d)

• Market (Customer) StructureMarket (Customer) StructureEach kind of customer is served by a self-Each kind of customer is served by a self-

contained divisioncontained divisionGlobal market (customer) structureGlobal market (customer) structure

• Customers in different regions buy similar products so Customers in different regions buy similar products so firms can locate manufacturing facilities and product firms can locate manufacturing facilities and product distribution networks where they decide is best.distribution networks where they decide is best.

• Firms pursuing a global strategy will use this type of Firms pursuing a global strategy will use this type of structure.structure.


Global Geographic and Global Product Global Geographic and Global Product StructuresStructures

Global Geographic and Global Product Global Geographic and Global Product StructuresStructures

Figure 9.6


Matrix Design StructureMatrix Design StructureMatrix Design StructureMatrix Design Structure

• Matrix StructureMatrix StructureAn organizational structure that An organizational structure that

simultaneously groups people and resources simultaneously groups people and resources by function and product.by function and product.

• Results in a complex network of superior-subordinate Results in a complex network of superior-subordinate reporting relationships.reporting relationships.

• The structure is very flexible and can respond rapidly The structure is very flexible and can respond rapidly to the need for change.to the need for change.

• Each employee has two bosses (functional manager Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy and product manager) and possibly cannot satisfy both.both.


Matrix StructureMatrix StructureMatrix StructureMatrix Structure

Figure 9.7


Product Team Design StructureProduct Team Design StructureProduct Team Design StructureProduct Team Design Structure

• Product Team StructureProduct Team StructureThe members are permanently assigned to The members are permanently assigned to

the team and empowered to bring a product the team and empowered to bring a product to market.to market.

Avoids problems of two-way communication Avoids problems of two-way communication and the conflicting demands of functional and the conflicting demands of functional and product team bosses.and product team bosses.

Cross-functional team is composed of a Cross-functional team is composed of a group of managers from different group of managers from different departments working together to perform departments working together to perform organizational tasks.organizational tasks.


Product Team StructureProduct Team StructureProduct Team StructureProduct Team Structure

Figure 9.7


Hybrid StructuresHybrid StructuresHybrid StructuresHybrid Structures

• Hybrid StructureHybrid StructureThe structure of a large organization that has The structure of a large organization that has

many divisions an simultaneously uses many many divisions an simultaneously uses many different organizational structuresdifferent organizational structures

• Managers can select the best structure for a Managers can select the best structure for a particular divisionparticular division—o—one division may use a functional ne division may use a functional structure, another division may have a geographic structure, another division may have a geographic structure.structure.

• The ability to break a large organization into smaller The ability to break a large organization into smaller units makes it easier to manage.units makes it easier to manage.


Target’s Hybrid StructureTarget’s Hybrid StructureTarget’s Hybrid StructureTarget’s Hybrid Structure

Figure 9.8


Coordinating Functions:Coordinating Functions:Allocating AuthorityAllocating Authority

Coordinating Functions:Coordinating Functions:Allocating AuthorityAllocating Authority

• AuthorityAuthorityThe power to hold people accountable for The power to hold people accountable for

their actions and to make decisions their actions and to make decisions concerning the use of organizational concerning the use of organizational resources.resources.

• Hierarchy of AuthorityHierarchy of AuthorityAn organization’s chain of command, An organization’s chain of command,

specifying the relative authority of each specifying the relative authority of each manager.manager.

• Span of Control: refers to the number of workers a Span of Control: refers to the number of workers a manager manages.manager manages.


Allocating Authority (cont’d)Allocating Authority (cont’d)Allocating Authority (cont’d)Allocating Authority (cont’d)

• Span of ControlSpan of ControlThe number of subordinates that report directly The number of subordinates that report directly

to a managerto a manager

• Line ManagerLine ManagerManagers in the direct chain of command who Managers in the direct chain of command who

have authority over people and resources lower have authority over people and resources lower down.down.

Primarily responsible for the production of goods Primarily responsible for the production of goods or services. or services.

• Staff ManagerStaff ManagerManagers who are functional-area specialists Managers who are functional-area specialists

that give advice to line managers.that give advice to line managers.


The Hierarchy The Hierarchy of Authority of Authority and Span of and Span of Control at Control at

McDonald’s McDonald’s CorporationCorporation

The Hierarchy The Hierarchy of Authority of Authority and Span of and Span of Control at Control at

McDonald’s McDonald’s CorporationCorporation

Figure 9.9Source:


Tall and Flat OrganizationsTall and Flat OrganizationsTall and Flat OrganizationsTall and Flat Organizations

• Tall structures have many levels of authority Tall structures have many levels of authority and narrow spans of control.and narrow spans of control.As hierarchy levels increase, communication As hierarchy levels increase, communication

gets difficult creating delays in the time gets difficult creating delays in the time being taken to implement decisions.being taken to implement decisions.

Communications can also become garbled as Communications can also become garbled as it is repeated through the firm.it is repeated through the firm.

• Flat structures have fewer levels and wide Flat structures have fewer levels and wide spans of control.spans of control.Structure results in quick communications Structure results in quick communications

but can lead to overworked managers.but can lead to overworked managers.


Flat OrganizationsFlat OrganizationsFlat OrganizationsFlat Organizations

Figure 9.10a


Tall OrganizationsTall OrganizationsTall OrganizationsTall Organizations

Figure 9.10b


Organizational StructureOrganizational StructureOrganizational StructureOrganizational Structure

• Managers should carefully evaluate:Managers should carefully evaluate:Do the organization have the right number of Do the organization have the right number of

middle managers?middle managers?Can the structure be altered to reduce Can the structure be altered to reduce

levels?levels?

• Centralized and Decentralized of AuthorityCentralized and Decentralized of AuthorityDecentralization puts more authority at lower Decentralization puts more authority at lower

levels and leads to flatter organizations.levels and leads to flatter organizations.• Works best in dynamic, highly competitive Works best in dynamic, highly competitive

environment.environment.

• Stable environment favor centralization of authority.Stable environment favor centralization of authority.


Integrating MechanismsIntegrating MechanismsIntegrating MechanismsIntegrating Mechanisms

Figure 9.11


Forms of Integrating MechanismsForms of Integrating MechanismsForms of Integrating MechanismsForms of Integrating Mechanisms

Figure 9.12Source:


Strategic AlliancesStrategic AlliancesStrategic AlliancesStrategic Alliances

• Strategic AllianceStrategic AllianceAn agreement in which managers pool or share An agreement in which managers pool or share

firm’s resources and know-how with a foreign firm’s resources and know-how with a foreign company and the two firms share in the rewards company and the two firms share in the rewards and risks of starting a new venture.and risks of starting a new venture.

• Network Structure:Network Structure:A series of strategic alliances that an organization A series of strategic alliances that an organization

creates with suppliers, manufacturers, and creates with suppliers, manufacturers, and distributors to produce and market a product.distributors to produce and market a product.

Network structures allow firms to bring resources Network structures allow firms to bring resources together in a boundary-less organization.together in a boundary-less organization.


B2B Network Structures and ITB2B Network Structures and ITB2B Network Structures and ITB2B Network Structures and IT

• Boundaryless OrganizationBoundaryless OrganizationAn organization whose members are linked An organization whose members are linked

by computers, faxes, computer-aided design by computers, faxes, computer-aided design systems, and video-conferencing and who, systems, and video-conferencing and who, rarely, if ever, see one another face-to-face.rarely, if ever, see one another face-to-face.

• Knowledge Management SystemKnowledge Management SystemA company-specific virtual information A company-specific virtual information

system that allows workers to share their system that allows workers to share their knowledge and expertise and find others to knowledge and expertise and find others to help solve problems.help solve problems.

Source:


B2B Network Structures and IT B2B Network Structures and IT (cont’d)(cont’d)

B2B Network Structures and IT B2B Network Structures and IT (cont’d)(cont’d)

• Business to Business (B2B ) networkBusiness to Business (B2B ) networkA group of organizations that join together A group of organizations that join together

and use IT to link themselves to potential and use IT to link themselves to potential global suppliers to increase efficiency and global suppliers to increase efficiency and effectiveness.effectiveness.

Source:

9chapter powerpoint presentation by charlie cook © copyright the mcgraw-hill companies, inc., 2003....

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