Module 8OrganizationOrganizationStructure and DesignStructure and Design

Module 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.

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 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

COMMON ORGANIZATIONAL STRUCTURES

Functional StructuresPotential 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 ORGANIZATIONAL STRUCTURES

Functional Structures

Common functional structure

COMMON ORGANIZATIONAL STRUCTURES

Functional Structures

Functional Chimneys or Silos

• Communication and performance decrease across functions

COMMON ORGANIZATIONAL STRUCTURES

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 ORGANIZATIONAL STRUCTURES

Divisional Structures

Common divisional structures

COMMON ORGANIZATIONAL STRUCTURES

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

COMMON ORGANIZATIONAL STRUCTURES

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

COMMON ORGANIZATIONAL STRUCTURES

Matrix Structures

COMMON ORGANIZATIONAL STRUCTURES

Matrix Structures Potential advantages of Matrix structures•Performance accountability rests with program, product, or project managers. •Teams enable better communication and cooperation across functions. •Teams make more decisions and solve more problems at their levels. •Top managers spend more time on strategic issues. •A cross-functional team brings together members from different functional departments.

COMMON ORGANIZATIONAL STRUCTURES

Team Structures

Team Structures•Make use of permanent and temporary cross functional teams•Improved problem solving and project management

COMMON ORGANIZATIONAL STRUCTURES

Team Structures

Team structure example

COMMON ORGANIZATIONAL STRUCTURES

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 ask involvement.

COMMON ORGANIZATIONAL STRUCTURES

Network Structures

Network structures•Consist of a central core with networks of relationships with contractors•Contractors and network partners supply essential services

COMMON ORGANIZATIONAL STRUCTURES

Network Structures

Network structure example

COMMON ORGANIZATIONAL STRUCTURES

Network Structures

Strategic Alliances•Cooperation with other firms to pursue mutual interests

• Outsourcing alliances – purchase services for other organizations

• Supplier alliances – preferred supplier/customer relationships that promote smooth transactions

COMMON ORGANIZATIONAL STRUCTURES

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 offering more alternative work schedules

ORGANIZATIONAL DESIGN TRENDS

Organizational Design

Organizational Design

• Aligns structure to best accomplish mission and respond to external environment

ORGANIZATIONAL DESIGN TRENDS

Organizational Design

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

ORGANIZATIONAL DESIGN TRENDS

Organizational Design

ORGANIZATIONAL DESIGN TRENDS

Decentralized Decision-making

Centralization

• Top management keeps strong decision-making control

Decentralization

• Decision-making is distributed throughout the organization

ORGANIZATIONAL DESIGN TRENDS

Increased DelegationDelegation• 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.

ORGANIZATIONAL DESIGN TRENDS

Horizontal and Adaptive Organizations

Bureaucracy• Formal authority

– Rules– Order– Fairness

• Mechanistic Designs– Bureaucratic– Centralized– Vertical structure

ORGANIZATIONAL DESIGN TRENDS

Horizontal and Adaptive Organizations

• Organic Designs– Adaptable– Decentralized– Horizontal Structure

ORGANIZATIONAL DESIGN TRENDS

Horizontal and Adaptive Organizations

ORGNIZATIONAL DESIGN TRENDS

Alternative Work Schedules

Alternative schedules increase flexibility and increase satisfaction for employers and employees

•Compressed workweek

•Flextime

•Job sharing

•Telecommuting

Module 8 Case

• Nike – Spreading out to stay together