Organizational Organizational StructureStructure

Organizational Organizational StructureStructure

Human Relations

Why be concerned with Why be concerned with organizational structure?organizational structure?

Human Relations

Organizing follows strategy. Strategy Organizing follows strategy. Strategy defines defines whatwhat to do; organizing defines to do; organizing defines howhow to do it. to do it.

Organizing follows strategy. Strategy Organizing follows strategy. Strategy defines defines whatwhat to do; organizing defines to do; organizing defines howhow to do it. to do it.

OrganizingOrganizing

• Tasks are subdivided into individual jobs.Tasks are subdivided into individual jobs.• Division of labor concept.Division of labor concept.• Employees perform only the tasks relevant to Employees perform only the tasks relevant to

their specialized function.their specialized function.• Jobs tend to be small, but they can be Jobs tend to be small, but they can be

performed efficiently.performed efficiently.

• Tasks are subdivided into individual jobs.Tasks are subdivided into individual jobs.• Division of labor concept.Division of labor concept.• Employees perform only the tasks relevant to Employees perform only the tasks relevant to

their specialized function.their specialized function.• Jobs tend to be small, but they can be Jobs tend to be small, but they can be

performed efficiently.performed efficiently.

Human Relations

Organization StructureOrganization Structure

Defines: Defines: how tasks are divided, resources are deployed, and how tasks are divided, resources are deployed, and

departments are coordinated.departments are coordinated. the set of formal tasks.the set of formal tasks. the formal reporting relationships.the formal reporting relationships. the design of systems to ensure effective the design of systems to ensure effective

coordination of employees across departments.coordination of employees across departments.

Defines: Defines: how tasks are divided, resources are deployed, and how tasks are divided, resources are deployed, and

departments are coordinated.departments are coordinated. the set of formal tasks.the set of formal tasks. the formal reporting relationships.the formal reporting relationships. the design of systems to ensure effective the design of systems to ensure effective

coordination of employees across departments.coordination of employees across departments.

Human Relations

Four Points About Four Points About the Organization the Organization

ChartChartVisual representationVisual representation

Set of formal tasksSet of formal tasks

Formal reporting relationships

Formal reporting relationships

Framework for vertical control

Framework for vertical control

Human Relations

Chain of CommandChain of Command

Unbroken line of authority that links all persons in an Unbroken line of authority that links all persons in an organization.organization.

Shows who reports to whom.Shows who reports to whom. Associated with two underlying principles.Associated with two underlying principles.

- Unity of Command – everyone reports to just one person.- Unity of Command – everyone reports to just one person.

- Line of Authority is clearly defined.- Line of Authority is clearly defined.

Unbroken line of authority that links all persons in an Unbroken line of authority that links all persons in an organization.organization.

Shows who reports to whom.Shows who reports to whom. Associated with two underlying principles.Associated with two underlying principles.

- Unity of Command – everyone reports to just one person.- Unity of Command – everyone reports to just one person.

- Line of Authority is clearly defined.- Line of Authority is clearly defined.

Human Relations

AuthorityAuthority Formal and legitimate right of a manager to make Formal and legitimate right of a manager to make

decisions, issue orders, and to allocate resources to decisions, issue orders, and to allocate resources to achieve organizationally desired outcomes.achieve organizationally desired outcomes.

Authority is distinguished by three Authority is distinguished by three characteristicscharacteristics::

1.1. Authority is vested in organizational positions, not Authority is vested in organizational positions, not people.people.

2.2. Authority is accepted by subordinates. Authority is accepted by subordinates.

3.3. Authority flows down the vertical hierarchy.Authority flows down the vertical hierarchy.

Formal and legitimate right of a manager to make Formal and legitimate right of a manager to make decisions, issue orders, and to allocate resources to decisions, issue orders, and to allocate resources to achieve organizationally desired outcomes.achieve organizationally desired outcomes.

Authority is distinguished by three Authority is distinguished by three characteristicscharacteristics::

1.1. Authority is vested in organizational positions, not Authority is vested in organizational positions, not people.people.

2.2. Authority is accepted by subordinates. Authority is accepted by subordinates.

3.3. Authority flows down the vertical hierarchy.Authority flows down the vertical hierarchy.

Human Relations

ResponsibilityResponsibility

The duty to perform the task or activity an The duty to perform the task or activity an employee has been assigned.employee has been assigned.

Managers need authority commensurate with Managers need authority commensurate with responsibility.responsibility.

The duty to perform the task or activity an The duty to perform the task or activity an employee has been assigned.employee has been assigned.

Managers need authority commensurate with Managers need authority commensurate with responsibility.responsibility.

Human Relations

AccountabilityAccountability

Mechanism through which authority and Mechanism through which authority and responsibility are brought into alignment.responsibility are brought into alignment.

People are subject to reporting and justifying People are subject to reporting and justifying task outcomes to those above them in the task outcomes to those above them in the chain of command.chain of command.

Can be built into the organization structure.Can be built into the organization structure.

Human Relations

DelegationDelegation

The process managers use to transfer The process managers use to transfer authority and responsibility.authority and responsibility.

The process managers use to transfer The process managers use to transfer authority and responsibility.authority and responsibility.

The organization encourages managers The organization encourages managers to delegate authority to the to delegate authority to the

lowest possible level.lowest possible level.

The organization encourages managers The organization encourages managers to delegate authority to the to delegate authority to the

lowest possible level.lowest possible level.

1

2

Human Relations

Span of ManagementSpan of Management

The number of employees The number of employees reporting to a supervisor.reporting to a supervisor.

Traditional view, seven or so per Traditional view, seven or so per manager.manager.

Many organizations today, 30 or Many organizations today, 30 or more per manager.more per manager.

Generally if supervisors must be Generally if supervisors must be closely involved with employees, closely involved with employees, span should be small.span should be small.

The number of employees The number of employees reporting to a supervisor.reporting to a supervisor.

Traditional view, seven or so per Traditional view, seven or so per manager.manager.

Many organizations today, 30 or Many organizations today, 30 or more per manager.more per manager.

Generally if supervisors must be Generally if supervisors must be closely involved with employees, closely involved with employees, span should be small.span should be small.

Human Relations

Factors Associated withFactors Associated withLarge Spans of ControlLarge Spans of Control

Work is stable or routine.Work is stable or routine. Similar task is performed by everyone.Similar task is performed by everyone. A single location.A single location. Employees are highly trained.Employees are highly trained. Rules and procedures are available.Rules and procedures are available. Support systems and personnel are Support systems and personnel are

available for supervisor.available for supervisor. Little time is required in nonsupervisory Little time is required in nonsupervisory

activities.activities. Personal preferences and styles of Personal preferences and styles of

management favor a large span.management favor a large span.

Work is stable or routine.Work is stable or routine. Similar task is performed by everyone.Similar task is performed by everyone. A single location.A single location. Employees are highly trained.Employees are highly trained. Rules and procedures are available.Rules and procedures are available. Support systems and personnel are Support systems and personnel are

available for supervisor.available for supervisor. Little time is required in nonsupervisory Little time is required in nonsupervisory

activities.activities. Personal preferences and styles of Personal preferences and styles of

management favor a large span.management favor a large span.

Human Relations

Tall versus Flat StructureTall versus Flat Structure

Span of control used in an organization determines Span of control used in an organization determines whether the structure is tall or flat.whether the structure is tall or flat.

Tall structure has a narrow span and more Tall structure has a narrow span and more hierarchical levels.hierarchical levels.

Flat structure has a wide span, is horizontally Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels.dispersed and fewer hierarchical levels.

The trend has been toward wider spans of control.The trend has been toward wider spans of control.

Span of control used in an organization determines Span of control used in an organization determines whether the structure is tall or flat.whether the structure is tall or flat.

Tall structure has a narrow span and more Tall structure has a narrow span and more hierarchical levels.hierarchical levels.

Flat structure has a wide span, is horizontally Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels.dispersed and fewer hierarchical levels.

The trend has been toward wider spans of control.The trend has been toward wider spans of control.

Human Relations

Tall vs. Flat StructureTall vs. Flat Structure

Human Relations

Centralization and DecentralizationCentralization and Decentralization

The hierarchical level at which decisions are made.The hierarchical level at which decisions are made. The hierarchical level at which decisions are made.The hierarchical level at which decisions are made.

Human Relations

DecentralizationDecentralization

Facilities at different locations.Facilities at different locations. Decision authority is pushed down the chain Decision authority is pushed down the chain

of command to lower levels.of command to lower levels.

Facilities at different locations.Facilities at different locations. Decision authority is pushed down the chain Decision authority is pushed down the chain

of command to lower levels.of command to lower levels.

Human Relations

Decentralization Tends to---Decentralization Tends to---

Make greater use of human resources.Make greater use of human resources. Reduce burdens of top managers.Reduce burdens of top managers. Cause decisions to be made close to the action.Cause decisions to be made close to the action. Permit rapid response to changes.Permit rapid response to changes.

Make greater use of human resources.Make greater use of human resources. Reduce burdens of top managers.Reduce burdens of top managers. Cause decisions to be made close to the action.Cause decisions to be made close to the action. Permit rapid response to changes.Permit rapid response to changes.

Human Relations

Centralization versus Centralization versus DecentralizationDecentralization

Greater change and uncertainty in the environment Greater change and uncertainty in the environment are usually associated with decentralization.are usually associated with decentralization.

The amount of centralization or decentralization The amount of centralization or decentralization should fit the firm’s strategy.should fit the firm’s strategy.

In times of crisis or risk of company failure, In times of crisis or risk of company failure, authority may be centralized at the top.authority may be centralized at the top.

Greater change and uncertainty in the environment Greater change and uncertainty in the environment are usually associated with decentralization.are usually associated with decentralization.

The amount of centralization or decentralization The amount of centralization or decentralization should fit the firm’s strategy.should fit the firm’s strategy.

In times of crisis or risk of company failure, In times of crisis or risk of company failure, authority may be centralized at the top.authority may be centralized at the top.

Human Relations

Factors that Influence Factors that Influence Centralization/DecentralizationCentralization/Decentralization

Amount of change and uncertainty.Amount of change and uncertainty. Corporate culture.Corporate culture. Size of organization.Size of organization. Cost and risk of failure.Cost and risk of failure. Efficiency of communication and control Efficiency of communication and control

systems.systems.

Amount of change and uncertainty.Amount of change and uncertainty. Corporate culture.Corporate culture. Size of organization.Size of organization. Cost and risk of failure.Cost and risk of failure. Efficiency of communication and control Efficiency of communication and control

systems.systems.

Human Relations

Downward CommunicationDownward Communication

• Messages sent from top management down to Messages sent from top management down to subordinates.subordinates.

• Most familiar and obvious flow of formal Most familiar and obvious flow of formal communication.communication.

• Encompasses the following:Encompasses the following: 1. Implementation of goals and strategies.1. Implementation of goals and strategies. 2. Job instructions and rationale.2. Job instructions and rationale. 3. Procedures and practices.3. Procedures and practices. 4. Performance feedback.4. Performance feedback. 5. Indoctrination.5. Indoctrination.

• Messages sent from top management down to Messages sent from top management down to subordinates.subordinates.

• Most familiar and obvious flow of formal Most familiar and obvious flow of formal communication.communication.

• Encompasses the following:Encompasses the following: 1. Implementation of goals and strategies.1. Implementation of goals and strategies. 2. Job instructions and rationale.2. Job instructions and rationale. 3. Procedures and practices.3. Procedures and practices. 4. Performance feedback.4. Performance feedback. 5. Indoctrination.5. Indoctrination.

Upward Communication Upward Communication • Messages that flow from the lower to the higher

levels in the organizations.• Five types of information communicated upward: 1. Problems and exceptions. 2. Suggestions for improvement. 3. Performance reports. 4. Grievances and disputes. 5. Financial and accounting information.

• Messages that flow from the lower to the higher levels in the organizations.

• Five types of information communicated upward: 1. Problems and exceptions. 2. Suggestions for improvement. 3. Performance reports. 4. Grievances and disputes. 5. Financial and accounting information.

Human Relations

Horizontal CommunicationHorizontal Communication

• Lateral or diagonal exchange of messages among Lateral or diagonal exchange of messages among peers or coworkers.peers or coworkers.

• Horizontal communications three categories:Horizontal communications three categories: 1. Intradepartmental problem solving.1. Intradepartmental problem solving. 2. Interdepartmental coordination.2. Interdepartmental coordination. 3. Change initiatives and improvements.3. Change initiatives and improvements.

• Lateral or diagonal exchange of messages among Lateral or diagonal exchange of messages among peers or coworkers.peers or coworkers.

• Horizontal communications three categories:Horizontal communications three categories: 1. Intradepartmental problem solving.1. Intradepartmental problem solving. 2. Interdepartmental coordination.2. Interdepartmental coordination. 3. Change initiatives and improvements.3. Change initiatives and improvements.

Human Relations

The GrapevineThe Grapevine

• Will always exists in organizations.Will always exists in organizations.• Used to fill in information gaps.Used to fill in information gaps.• Tends to be more active during periods of change.Tends to be more active during periods of change.• About 80% of topics are business related.About 80% of topics are business related.• About 70-90% of details of grapevine are accurate.About 70-90% of details of grapevine are accurate.

• Will always exists in organizations.Will always exists in organizations.• Used to fill in information gaps.Used to fill in information gaps.• Tends to be more active during periods of change.Tends to be more active during periods of change.• About 80% of topics are business related.About 80% of topics are business related.• About 70-90% of details of grapevine are accurate.About 70-90% of details of grapevine are accurate.

Human Relations

Approaches To Structural DesignApproaches To Structural DesignSlide 1 of 2Slide 1 of 2

Approaches To Structural DesignApproaches To Structural DesignSlide 2 of 2Slide 2 of 2

Matrix ApproachMatrix Approach

Functional and divisional chains of command Functional and divisional chains of command simultaneously.simultaneously.

Dual lines of authority.Dual lines of authority. Functional hierarchy of authority runs vertically.Functional hierarchy of authority runs vertically. Divisional hierarchy runs laterally.Divisional hierarchy runs laterally. Violates the unity of command concept.Violates the unity of command concept.

Functional and divisional chains of command Functional and divisional chains of command simultaneously.simultaneously.

Dual lines of authority.Dual lines of authority. Functional hierarchy of authority runs vertically.Functional hierarchy of authority runs vertically. Divisional hierarchy runs laterally.Divisional hierarchy runs laterally. Violates the unity of command concept.Violates the unity of command concept.

Human Relations

Network ApproachNetwork Approach

Organization divides major functions into Organization divides major functions into separate companies brokered by a small separate companies brokered by a small headquarters organization.headquarters organization.

"Where is the organization?""Where is the organization?" Especially appropriate for international Especially appropriate for international

operations.operations. Held together with phones, faxes, and other Held together with phones, faxes, and other

electronic technology.electronic technology.

Organization divides major functions into Organization divides major functions into separate companies brokered by a small separate companies brokered by a small headquarters organization.headquarters organization.

"Where is the organization?""Where is the organization?" Especially appropriate for international Especially appropriate for international

operations.operations. Held together with phones, faxes, and other Held together with phones, faxes, and other

electronic technology.electronic technology.

Human Relations

Organization GrowthOrganization Growth

As organizations grow and evolve two things happen:As organizations grow and evolve two things happen: New positions and departments are added.New positions and departments are added. Senior managers have to find a way to tie all Senior managers have to find a way to tie all

departments togetherdepartments together.

As organizations grow and evolve two things happen:As organizations grow and evolve two things happen: New positions and departments are added.New positions and departments are added. Senior managers have to find a way to tie all Senior managers have to find a way to tie all

departments togetherdepartments together.

Human Relations

Evolution of Organization StructuresEvolution of Organization Structures

Human Relations