Organisation Design 2

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2008 The McGraw-Hill Companies, Inc. All rights reserved

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Chapter

McGraw-Hill/Irwin

Organizational

Structure,design

andCommunication

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Organization Design Design refers to a plan for the construction of

any object or system.

Organization design refers to the

construction or change of a structure withinwhich the work of the organization takes

place.

Organization design refers to managerialdecisions that determine the structure and

processes which in turn control the activities

in an organization.


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Organization Design These processes include authority and

responsibility relationships, communication

networks, planning and controlling

mechanisms. Organization design begins with the

formulation of a strategy

The strategy is derived from clear, concisestatements of vision, mission and from the

organizations basic philosophy.


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Organ izat ion s truc ture Defines the formal relationships among

people and specifies both their authorities

and responsibilities.

An organization is the structural frameworkfor carrying out the functions of planning,

decision-making, controlling, directing,

communication, motivation, etc.


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The three levels of management


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..

Organizat ion s truc turedetermines whoworks together

It is the way managers design their firms to

achieve their organizations mission and goals

Organizat ional commun icat ionflows

through its structure, which affects:

behaviorhuman relations

performance


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The transition from an economy based on

materials to an economy based on flows of

information has created considerable

challenges for organizational structure, andcommunication.


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Principles of Organization (1 of 3)

Division of Labor and DepartmentalizationDivision of labor, or work specialization refers to

the degree to which tasks are subdivided intoseparate jobs

Departmentalization grouping of relatedactivities into units

Chain of Command

line of authority from the top to the bottom of theorganization, which is shown in an organizationchart


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Span of Management refers to number of employees reporting to a

manager

Centralized and Decentralized AuthorityWith centralized authority, top managers make

important decisions

With decentralized authority, middle and first-line

managers make important decisions where the

action is


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CoordinationWith the division of labor and departmentalization

comes the need to coordinate the work of all

departments


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Questions and Answers for

Designing Organizational Structure:

Questions Answers

How should we subdivide work? Division of Labor and

Departmentalization

Who should departments and

individuals report to?

Chain of Command

How many individuals should report to

each manager?

Span of Management

At what level should decisions be

made?

Centralization vs.

Decentralization

How do we get everyone to work

together as a team?

Coordination


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Formal Organization Structure

President

Vice President

Production

Vice President

Finance

Vice President

Marketing

Manager

A

Manager

B

Manager

C

Manager

D

Manager

E

Manager

F

Manager

G

Manager

H

Manager

I

Vertical downwardcommunication

Vertical upwardcommunication

Exhibit 6.2

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Informal Organization Structure

President

Vice PresidentProduction

Vice PresidentFinance

Vice PresidentMarketing

ManagerA

ManagerB

ManagerC

ManagerD

ManagerE

ManagerF

ManagerG

ManagerH

Horizontal

communication

networks

Exhibit 6.2

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Common Types

of Departmentalization (1 of 4)

Divisional TerritoryMatrix

Product Customer

Functional

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Common Types of

Departmentalization (2 of 4)Functional Departmentalization involves organizing departments around essential

input activities, such as: production and operations

finance and accounting marketing and sales

human resources

Product (Service) Departmentalization

involves organizing departments around goodsand services provided

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Common Types of

Departmentalization (3 of 4)Customer Departmentalization

involves organizing departments around theneeds of different types of customers with uniqueneeds calling for different sales staffs and

productsDivisional Departmentalization (M-Form)

the firm develops independent lines of businessthat operate as separate companies, all

contributing to the corporation profitability

Territory (Geographic) Departmentalization

involves organizing departments in each area in

which the enterprise does business

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Common Types of

Departmentalization (4 of 4)Matrix Departmentalizationcombines the functional and product

departmental structures

Combinationmany large companies have more than one form

of departmentalization

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Matrix organisation2

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Contemporary Organization Design

Virtual

Organizations

Boundaryless

Organizations

E-Organizations

Learning

Organizations

Team Organizations

andReengineering

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American and Japanese Organization

Structures

Division of labor tends to be a bit lessspecialized in Japan

Both countries use the same types of

departmentalizationAmerican organizations tend to be quicker to

hire, lay off, and to change jobs than the

Japanese

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Organizational Communication

Organizational communication

thecompounded interpersonal communicationprocess across an organization

Communication flows in an organization are:Vertical

Horizontal

Grapevine (multidirectional)

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Vertical and Horizontal

Communication

Vertical Communication

The flow of information

both up and down the

chain of commandFormal communication

Recognized as official

Status andpowerare not

equal among participants

in vertical

communication

HorizontalCommunication

The flow of

information betweencolleagues andpeers

Informal

communication

Does not follow thechain of command

Not recognized as

official

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Grapevine Communication

Grapevine

the informal vehicle throughwhich messages flow throughout the

organization

When the grapevine allows employees toknow about a management decision almost

before it is made, management must be

doing something right.

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Communication Networks

Communication networks

sets ofemployees who have stable contact throughwhich information is generated andtransmitted

Two major types of communication networks:

1. within organizations

2. within departments and small groups

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Message Transmission Channels

Oral Communication

Written Communication

Nonverbal

Communication

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Oral Communication Media

Face-to-Face Telephone

Meetings Presentations

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Written Communication (1 of 2)

With increased use of e-mail, managerssubstitute face-to-face communication with e-mail

Communication Objective GuidelinesMemos

Letters

Reports

Bulletin board notices

Posters

Computers/e-mail

Fax

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Written Communication (2 of 2)

Writing skills Grammarrules for use of the eight parts of

speech

To simplify grammar, we use subjects,predicates, modifiers, and connectives

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Nonverbal Communication

FacialExpressions VocalQualities

Gestures Posture

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Emotions (1 of 2)

Emotional labor

requires the expression

of desired emotions

during interpersonalrelations

Universal emotions:

happiness

surprise

fear sadness

anger

disgust

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Emotions (2 of 2)

Understanding FeelingsFeelings are subjectivethey tell you peoples

attitudes and needs

Feelings are usually disguised as factualstatements

Feelings are neither right nor wrong but behavior

is

Gender Differences

Global Differences

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Dealing with Emotional Employees

Calming the emotional person

Use reflecting responses

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Criticism

Getting Criticism Giving Criticism

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Guidelines for Giving Effective

Criticism

Give more praise than criticism

Criticize immediately

Criticism should be performance oriented

Give specific and accurate criticism

Open on a positive note and close by

repeating what action is needed

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Summary

Organization structure is essential to achievethe organizational goals.

The organization structure basically shows

the relationships between different jobs the concept of organization design and

structure

hierarchy, division of work, unity ofcommand, authority & responsibility, span of

control, centralization & decentralization&

departmentation.

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Organisation Design 2

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