Lecture 2 OB - Organizational Structure - Functional Structure
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Transcript of Lecture 2 OB - Organizational Structure - Functional Structure
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Organizational Structure
1. Functional Structure
Lecture 2Unit 3 Organizations and Behaviour
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Why Study Organizational Structure
Good organizational structure leads to
efficiency, and less conflicts
Bad organization leads to inefficiency and
conflicts
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Conflicts
Personal
Structural
There are 2 types of conflicts !
Due to personality
Due to organizational structure
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Organizational Structures
1. Simple Structure
2. Team Structure
3. Functional Structure4. Matrix Structure
5. Divisional Structure (FederalDecentralization)
6. Simulated Decentralization
6. Other Structure System/Network
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Others Topics we will cover
7. Issues in Organization structure
7.1 Formal and Informal
7.2 Centralized and Decentralized7.3 Tall and flat
7.4. Span of control
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Simple Structure
Simple structure is no structure
Doing everything, help each other
Most businesses start in this structure
family like
But it cannot grow!
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Team Structure
Humans have used team for hundreds of
thousands of years.
In hunting !
What differential team structure fromsimple structure are roles.
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Functional Structure
Functional structure organizes employees
around specific skills or resources
Organizations usually have some forms of
functional structure at some level
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Purchasing Sales and Marketing
Human ResourcesFinance
CEO
Chevrolet
Production
Example of a Functional Structure
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Functional Structure
Human beings have used functional
structure for thousands of years.
But modern discussion of Functional structure is by Henri Fayol,
a French mining engineer, and later director of a mine.
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Henri Fayol
His book
"Administration Industrielle et Gnrale",
1915
French Mining Engineer
And later director of a mine
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The Theoretical Basis
of Functional StructureAdam Smith
The WealthofNations, 1776
Productivity gain through
Divisionof Labour
Pins manufacturing.
10 persons, 10,000 pins..
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I. Laissez fair - free
market , free trade
II. Division ofLabourAdam Smith
The Wealth of Nations, Adam Smith, 1776
It contains 2 major ideas
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Division of Labour
The Wealth of Nations, 1776
The greatest important in the productivepowers of labor, and the greatest part of
skills, dexterity and judgment with which is
any where directed or applied, seem to havebeen the effect ofdivisionoflabour
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Mine of Henri Fayol
Directeur
General
StorageSortingConveyingdigging Sell
Simple enough for functional structure to work
well
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A Possible Structure of a
automotive companyCEO
Quality
ControlAssembly
Incoming
InspectionPurchasing Sales
Assembly 1
Assembly 2
Assembly 3
Information
TechnologyHuman
Resources
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Functional Structure
Amanufacturing factory is usually organized by
function
Purchasing
Incoming InspectionProcess 1
Process 2
Out going inspection
Storage
DeliveryFinance
Human Resources
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Others Functional Structure
Functional structure is used in
- a school
- an university- a hospital
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Function = Department
e.g.
Marketing Department is a function.It performs the function of marketing
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Advantages of Functional Structure
1. Clarity
everyone has a home.
2. Least Psychological Demands
Functional structure makes the least
psychological demands on people. They are
highly secure in their work and their
relationship.
3. It functions
- if the tasks are simple and routine.
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Disadvantages of
Functional Structure1. Poor Decision MakingIt is difficult for anyone, up to and including the top functionalpeople, to understand the task of the whole.
People do not know what other function is doing. They think theirDepartment is the most important
As soon as its approaches a degree of size or complexity frictionbuild up.
And if this happens, it requires a lot of coordination: meetings,committees, trouble shooters (Symptoms ofdysfunctioning)
Silos2.0 Slow CommunicationSlow in communication
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Disadvantages
of Functional Structure
3. 0 Poor Management Development
Functional structure also does poorly in
developing, preparing, and testing men.
Functional structure tends to make a man
unfit for management - emphasis is on
functional skills rather than on results and
performance.
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Poor Management
DevelopmentMy personal experience:
When a person has been doing the same
function for a long time, he/she becomes
very rigid, narrow minded, and stubborn.
He/she is very nervous if he/she is
asked to do a job outside their functions.
The problem becomes more profound with
old age.
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Function and Dysfunction
Functional structure functions if the tasks
are simple, routine and repetitive, or the
organization is too big.
Functional structure dysfunctions if the
Tasks are complex, non-routine, orChanging, or the organization is too big
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How to overcome the limitations
We will discuss in the next lecture
1. add a team structure
2. add a divisional structure