organizing chapter of management

7/28/2019 organizing chapter of management

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Chapter 8

Organization Structure

and Design

EXPLORING MANAGEMENT


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Chapter 8

What is organizing as a managerial

responsibility?

What are the most common types of

organization structures?

What are the trends in organizational

design?


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8.1

Organizing

Organizing is one of the management functions

Organization charts describe the formalstructures of organizations

Organizations also operate with informal

structures

Informal structures have good points and bad

points


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Organizing is one of the management

functions

Organizing

Arranges people and resources to work

toward a goal


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Organizing is one of the management

functions

Key managing decisions include those

that:

Divide up work to be done

Staff jobs with talented people

Position resources for best utilization

Coordinate activities

Planning sets goals through organizing


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ORGANIZING

Organization charts describe the

formal structures of organizations

Organization structure system of tasks, reporting relationships,

and communication that links peopleand positions within an organization.

Organization Charts describe the formal structure, how an

organization should ideally work.


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Positions and titles show work responsibilities.Division of work

Lines between positions show who reports to whom in the chain

of command.Supervisory relationships

The number of persons reporting to a supervisor.Span of control

Lines between positions show routes for formal communication

flows.Communication channels

Which job titles are grouped together in work units,

departments, or divisions.Major subunits

Staff specialists that support other positions and parts of the

organization.Staff positions

The number of management layers from top to bottom.Levels of management

ORGANIZING

Organizational Charts

What You Can Learn from an Organization Chart


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ORGANIZING

Formal Structure


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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 organizations members.

ORGANIZING


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ORGANIZING

Organizations also operate with

informal structures

Informal Structure Unofficial but important working relationships

between members.

ORGANIZING


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ORGANIZING

Informal structures have good

points and bad points 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 structureand help compensate for its inadequacies

Bad points include rumors, inaccurateinformation and resistance to change, anddistract members from work

Eavesdropping; alert listening


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8.2

Common Types of Structures

Functional structures group together people

using similar skills

Divisional structures group together people

by products, customers or locations

Matrix structures combine the functional and

divisional structures

Team structures use many permanent andtemporary teams

Network structures extensively use strategic

alliances and outsourcing


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8.2

Common Types of Structures

Departmentalization Grouping people and jobs into a work unit

COMMON ORGANIZATIONAL STRUCTURES


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Functional structures group

together people using similar skills

Functional Structures group people with

similar skills

Functional Structure

Work units have similar skills and tasks such as

finance, marketing, production and human

resources.

Works best in smaller or stable organizations


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Functional Structures

Potential Advantages of Functional Structures:

Economies of scale make efficient use of humanresources.

Functional experts are good at solving technicalproblems.

Training within functions promotes skilldevelopment.

Career paths are available within each function.


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Functional Structures

Common functional structure


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Disadvantages of Functional Structures

Functional Chimneys or Silos

Communication, coordination andperformance decrease across functions

Focus on

functional goals

rather than broadorg goals

Accountability issue


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Divisional structures group together people

by products, customers or locations

Divisional structures group together

people who work on a similar product,

work in the same geographical region, or

serve the same customers


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Divisional Structures

Common divisional structures


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Divisional Structures

Potential Advantages of Divisional Structures:

Expertise focused on special products, customers,regions

Better coordination across functions withindivisions

Better accountability for product or service delivery

Easier to grow or shrink in size as conditionschange


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Matrix Structures

Matrix Structures combine functional anddivisional structures

uses permanent cross functional teams to try togain the advantages of both the functional anddivisional approaches

Workers belong to at least two formal groups atthe same time a functional group and a projectgroup

They report to two bosses functional head andproject head


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Matrix Structures

Teams are horizontal

Functions

are

vertical


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Matrix Structures

Potential advantages of Matrix structures:

Performance accountability rests withprogram, product, or project managers.

Better communication exists acrossfunctions.

Teams solve problems at their levels.

Top managers spend more time on strategy.


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Matrix Structures

Potential disadvantages of Matrix structures:

Two-boss system

May be costly as it needs more managers

Team meetings can be time consuming



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Team structures use many permanent

and temporary teams

Team Structures

Make use of permanent and temporary cross

functional teams

Improved problem solving and project

management


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Team Structures

Team structure example


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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, andincrease enthusiasm and task involvement.



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Network structures extensively use

strategic alliances and outsourcing

Network structures

Consist of a central core with networks of

relationships with contractors

Contractors and network partners supply

essential services


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Network Structures

Network structure example


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Network Structures

Possible advantages of Network structures:

Lower costs due to fewer full-time employees.

Better access to expertise through specializedalliance partners and contractors.

Easy to grow or shrink with market conditions.

However, too much outsourcing has its owncost


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Network Structures

Virtual Organizations

Network that depends oninformation technology to

link alliances and essential

services


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8.3

Organizational Design Trends

Organizations are becoming flatter, with fewerlevels of management

Organizations are increasing decentralization

Organizations are increasing delegation andempowerment

Organizations are becoming more horizontal

and adaptive

Organizations are using more alternative work

schedules


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ORGANIZATIONAL DESIGN TRENDS

Organizational Design


Aligns structure to bestaccomplish mission and

respond to external

environment



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Organizations are becoming flatter, with

fewer levels of management

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


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Less efficient, less flexible, and less

customer sensitive

Simplification reduces cost, improvesproductivity, and enhances employee

satisfaction


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Decentralized Decision-making

Centralization

Top management keeps strong decision-

making control

Decentralization

Decision-making is distributed throughoutthe organization


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Increased Delegation

Delegation

Giving others the right to make decisions and takeaction

Steps1. Assign responsibilityexplain task and expectations

to others.

2. Grant authorityallow others to act as needed tocomplete task.

3. Create accountabilityrequire others to report back,complete task.

Authority should equal responsibility


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Empowerment

Empowerment

Gives people freedom to do their jobs as they

think best.

When delegation is done well, it leads toempowerment.



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O G O S G S

Organizations are becoming more horizontal

and adaptive

Bureaucracy

Formal authority Rules

Order Fairness

Mechanistic Designs

Bureaucratic Centralized

Vertical structure

Fit between form and external environment


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Horizontal and Adaptive Organizations

Organic Designs

Adaptable Decentralized

Horizontal Structure

Better suits un-predictable situations


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Horizontal and Adaptive Organizations

ORGNIZATIONAL DESIGN TRENDS


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Organizations are using more alternative

work schedules

Alternative schedules increase flexibility

and increase satisfaction for employers

and employees

Compressed workweek

Flextime

Job sharing

Telecommuting

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