Download - 11-Organizational Structures and Processes
© 2004 by Nelson, a division of Thomson Canada Limited 1
Chapter 11
Organizational Structures and Processes
© 2004 by Nelson, a division of Thomson Canada Limited 2
What Would You Do? Exide Technologies is currently
organized geographically Share prices are decreasing Debt load is increasing Which organizational structure
should Exide have?
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Learning Objectives:Designing Organizational StructuresAfter reading these next three sections, you’ll have a better understanding of the importance of organizational structure because you should be able to:
1. describe the departmentalization approach to organizational structure2. explain organizational authority3. discuss the different methods for job design
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Departmentalization Functional Product Customer Geographic Matrix
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Functional Departmentalization
Exhibit 11.1
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Functional DepartmentalizationAdvantages
creates highly skilled specialists
lowers costs through reduced duplication
communication and coordination problems are lessened
Disadvantages cross-department
coordination can be difficult
may lead to slower decision making
produces managers with narrow experiences
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Product Departmentalization
Easy Food Market
Cheese Milk Ice cream
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Product DepartmentalizationAdvantages
managers specialize but have broader experience
easier to assess work-unit performance
decision making is faster
Disadvantages duplication often
increases costs difficult to
coordinate across departments
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Customer Departmentalization
American Express
Cards Travel Financial Services Business Services
Adapted from Exhibit 11.3
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Customer DepartmentalizationAdvantages
focuses on customer needs
products and services tailored to specific customers
Disadvantages duplication of
resources difficult to achieve
coordination across departments
decisions that please the company but may hurt the company
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Geographic Departmentalization
Coca-Cola Enterprises
Central NorthAmerica
Eastern North America
Western NorthAmerica Europe
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Geographic DepartmentalizationAdvantages
responsive to demand of different markets
reduce costs by locating resources close to customers
Disadvantages duplication of
resources difficult to
coordinate across departments
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Matrix DepartmentalizationA hybrid structure in which two or more forms of departmentalization are used together
most common forms combine product and functional
employees report to two bosses increased cross-functional interaction significant interaction between functional
and project managers required
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Matrix DepartmentalizationAdvantages
efficiently manage large, complex tasks
effectively manage large, complex tasks
Disadvantages requires high
levels of coordination
increased conflict levels
requires high level of management skills
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Organizational Authority Chain of command Line versus staff authority Delegation of authority Degree of centralization
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Chain of Command The vertical line of
authority in an organization clarifies who reports to whom
Unity of command workers report to only one boss violated by matrix structure
Span of control Number of people reporting to a
specific supervisor
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Line Versus Staff Authority Line authority-function
the right to command immediate subordinates in the chain of command
an activity that contributes directly to creating or selling a company’s products
Staff authority-function the right to advise but not command
others an activity that supports line activities
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Delegation of AuthorityThe assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible Three transfers from manager to subordinate
transfer of full responsibility of assignment transfer of authority over required resources transfer of accountability
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How to Be a More Effective Delegator1. Trust your staff to do a good job2. Avoid seeking perfection3. Give effective instructions4. Know your true interests5. Follow up on progress
Adapted from Exhibit 11.7
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How to Be a More Effective Delegator6. Praise the efforts of your staff7. Don’t wait until the last minute to
delegate8. Ask questions, expect answers and
assist employees9. Provide sufficient resources10. Delegate to the lowest possible
levelAdapted from Exhibit 11.7
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Degree of Centralization Centralization of authority
most authority is held at the upper levels of the organization
Decentralization significant authority is found in lower levels
of the organization Standardization
Solving problems by applying rules, procedures, and processes
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Job Design Job specialization Job rotation Job enlargement Job enrichment
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Job Design Job specialization
breaking jobs into smaller tasks simple, easy-to-learn, and economical can lead to low job satisfaction, high
absenteeism, and turnover Job rotation
periodically moving workers from one job to another
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Job Design Job enlargement
increasing the number of tasks performed by a worker
Job enrichment adding more tasks and authority to a
worker’s job
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Learning Objectives:Designing Organizational Processes
After reading these next two sections, you should be able to:
4. explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes)5. describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes)
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Intraorganizational Processes Reengineering
Empowerment
Behavioural informality
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Reengineering Fundamental rethinking of business
processes Intended to achieve dramatic
improvements in performance Changes the organization’s
orientation form vertical to horizontal Changes task interdependence
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Task Interdependence The extent to which collective
action is required to complete an entire piece of work
Three types pooled sequential reciprocal
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Empowerment
Permanently passing decision-making authority and responsibility from managers to workers workers need information and
resources to make good decisions workers should be rewarded for
taking initiative
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Behavioural InformalityBehavioural informality
spontaneity casualness interpersonal
familiarity
Behavioural formality
routine and regimen
specific rules impersonal
detachment
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Interorganizational Processes Modular organizations
Virtual organizations
Boundaryless organizations
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Modular Organization
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Virtual Organization
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Boundaryless Organization
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What Really Happened? Exide Technologies
implemented a product structure around global business units
Problems associated with product structure caused a return to a geographic structure
Exide is still searching for the proper structure