1. Organization Structures
Week Five – Part One
Organization Structures

2. Learning Objectives
Understand the basic principles of organization management
What is an organization chart, and types of organization structures
Understand the relationship between organization structure, culture and the environment
Understand the importance of cooperation and coordination

3. Basic principles of organization management
Structuring an organization
Setting up teams or departments
Assigning responsibility and authority
Establishing procedures for accomplishing the organization objectives
Allocating resources of the organization

4. What is an organization chart?
Is a visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom.

5. Example of Organization Chart

6. Example of Organization Chart

7. Types of Organization Structures
Tall Organization Structure
Definition: In which the pyramidal organization chart would be quite tall because of the various levels of management
Flat Organization Structure
Definition: In which an organization structure that has few layers of management and a broad span of control.

8. Tall Organization Structure
In its simplest form, a tall structure results in one long chain of command similar to the military.
As an organization grows, the number of management levels increases and the structure grows taller.
In a tall structure, managers form many ranks and each has a small area of control.
Tall structures have more management levels than flat structures

9. Flat Organization Structure
Flat organizations focus on empowering employees rather than adhering to the chain of command.
By encouraging autonomy and self-direction, flat structures attempt to tap into employees’ creative talents and to solve problems by collaboration.

10. Example of Tall Organization Structure

11. Example of Flat Organization Structure

12. Pros & Cons of Tall Organization
The pros of tall structures lie in clarity and managerial control. The narrow span of control allows for close supervision of employees.
Tall structures provide a clear, distinct layers with obvious lines of responsibility and control and a clear promotion structure.
Challenges begin when a structure gets too tall. Communication begins to take too long to travel through all the levels. These communication problems hamper decision-making and hinder progress.

13. Pros & Cons of Flat Organization
Flat organizations offer more opportunities for employees to excel while promoting the larger business vision. That is, there are more people at the “top” of each level.
For flat structures to work, leaders must share research and information instead of hoarding it. If they can manage to be open, tolerant and even vulnerable, leaders excel in this environment.
Flatter structures are flexible and better able to adapt to changes. Faster communication makes for quicker decisions, but managers may end up with a heavier workload. Instead of the military style of tall structures, flat organizations lean toward a more democratic style.

14. Pros & Cons of Flat Organization
The heavy managerial workload and large number of employees reporting to each boss sometimes results in confusion over roles.
Bosses must be team leaders who generate ideas and help others make decisions. When too many people report to a single manager, his job becomes impossible.
Employees often worry that others manipulate the system behind their backs by reporting to the boss; in a flat organization, that means more employees distrusting higher levels of authority.

15. Departmentalization
Definition: The dividing of organizational functions into separate units.
The advantages include the following:
1) Employees can develop skills in depth and progress within a department as they master more skills.
2) The company can achieve economies of scale by centralizing all the resources it needs and locate various experts in that area.
3) Employees can coordinate work within the function, and top management can easily direct and control various departments’activities.

16. Departmentalization The disadvantages may include the following:
Departments may not communicate well.
Employees may identify with their department’s goals rather than the organization’s.
The company’s response to external changes may be slow
People may not trained to take different managerial responsibilities; rather, they tend to become narrow specialist
Department members may engage to group think(they think alike), it may need input from outside to become more creative

17. Activity Draw out your own company organization chart each student.
(a) Flat organization Structure
(b) Tall organization Structure

18. Major Choices in structuring organizations
Centralization versus Decentralization
Breath of span of control
Tall organization structure versus Flat organization structure
Type of departmentalization
By Product
By Customer Group
By Geographic
By Process
By Hybrid forms

19. Benchmarking
Definition: Comparing an organization’s practices, processes, and products against the world’s best.
As we’ve noted, today’s organizations look to other organizations for help in areas where ( any of their departments in an organization) do not generate world- class quality
For example, Olympia College is a ISO 9001 private institute in Malaysia.

20. What are the major concepts an organization involved in interfirm communications?
Networking uses communications technology and other means to link organizations and allow them to work together on common objectives.
Benchmarking tells firms how their performance measures up to that of their competitors in specific functions. The company may then outsource to companies that perform its weaker functions more effectively and efficiently.

21. Inverted Organization
Definition:
An organization that has contact people at the top and the chief executive officer (CEO) at the bottom of the organization chart.
It means that Management layers are few, and the manager’s job is to assist and support frontline people, not boss around. It is different from the traditional organizational structure

22. Organizational Culture
Definition:
Widely shared values within an organization that provide unity and cooperation to achieve common goals
For Example:
McDonald’s restaurant has the same feel, look and atmosphere; in short, it is same organizational culture. McDonald’s that the culture emphasizes that quality, service, cleanliness and value

23. There are two organizational system
Formal Organization
The structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts.
Informal Organization
The system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization

24. ATTENTION. Important question as below
ATTENTION!!! Important question as below!!! It may come out in your FINAL EXAM!!! Please copy down in your note book, thank you!

25. Important Questions!!!
1) What are the principles of organization management? 2) What are the four major choices in structuring organizations? 3) The advantages and disadvantages of Departmentalization? (any three of each) 4) (a) What is an organization chart? (b) Types of organization structure and explain it

26. Important Questions!!!
5) Definition of inverted organization 6) Definition of benchmarking 7) What are the major concepts involved in interfirm communications? 8) (a) What is organizational culture? (b) What is the difference between the formal and informal organization of a firm?