1. Chapter 8 Organizing - To Create Structures
Planning Ahead
What is organizing as a management function?
What are the traditional organization structures?
What are the new developments in organization structures?
What organizing trends are changing the workplace?
Schermerhorn - Chapter 8

2. Organizing as a Management Function
What is Organization Structure
system of tasks, workflow, reporting relationships and communication channels that link together workgroups
Schermerhorn - Chapter 8

3. Organizing as a Management Function
Formal Structure
official working relationships often represented by an organizational chart
Schermerhorn - Chapter 8

4. Organizing as a Management Function
Informal Structure
unofficial working relationships
important in understanding organizations
sometimes work against best interest of organizations
Schermerhorn - Chapter 8

5. Traditional Organization Structures
Functional
people performing similar tasks are formally grouped together
workers share technical expertise, interests and responsibilities
Majors in this class are functional majors, accounting, cis, marketing, economics, others but not management.
Schermerhorn - Chapter 8

6. Traditional Organization Structures
Advantages of Functional Structures
economies of scale
task assignments consistent with expertise
high-quality technical problem solving
in-depth training and skill development
clear career paths
Schermerhorn - Chapter 8

7. Traditional Organization Structures
Disadvantage of Functional Structures
functional chimneys problem
lack of problem solving across functions
Each major in this class needs to be good across functions and even across organizations, and across levels in organizations.
Schermerhorn - Chapter 8

8. Traditional Organization Structures
Divisional Structures
groups together employees who work on the same product or service in the same geographic area
Schermerhorn - Chapter 8

9. Traditional Organization Structures
Advantages of Divisional Structures
more flexibility
improved coordination
clear points of responsibility
expertise focused on specific customers, products and regions
greater ease in restructuring
Schermerhorn - Chapter 8

10. Traditional Organization Structures
Disadvantages of Divisional Structures
reduce economies of scale
increase costs through duplication of resources across divisions
create unhealthy rivalries
Schermerhorn - Chapter 8

11. Traditional Organization Structures
Matrix Structure
combination of functional and divisional structures
used in
manufacturing
service industries
professional fields
nonprofit sector
Schermerhorn - Chapter 8

12. Traditional Organization Structures
Advantages of Matrix Structure
better inter-functional cooperation
increased flexibility in restructuring
better customer services
better performance accountability
improved decision making
improved strategic management
Schermerhorn - Chapter 8

13. Traditional Organization Structures
Disadvantages of Matrix Structures
two-boss system is susceptible to power struggles
workers may suffer task confusion
focused team loyalties to detriment of organization
Schermerhorn - Chapter 8

14. Development in Organization Structures
Team Structures
Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks.
Often use cross-functional teams.
Schermerhorn - Chapter 8

15. Developments in Organization Structures
Advantages of Team Structures
Eliminates barriers between operating departments.
Improved morale due to cross-functional interactions.
Improved quality and speed of decision making.
Increased enthusiasm for work.
Schermerhorn - Chapter 8

16. Developments in Organization Structures
Disadvantages of Team Structures
conflicting loyalties among members
spend a lot of time in meetings
Schermerhorn - Chapter 8

17. Developments in Organization Structures
Network Structures
central core that is linked through networks of relationships with outside suppliers of essential services
Boundary-less organizations
virtual corporations -- have no central office
Outsource many if not all major functions
Production, accounting, marketing, cis etc.
Schermerhorn - Chapter 8

18. Developments in Organization Structures
Advantages of Network Structures
operate with fewer full-time employees
reduced overhead
increased operating efficiency
work together across great distances instead of face-to-face
Schermerhorn - Chapter 8

19. Developments in Organization Structures
Disadvantages of Network Structures
Coordination of the entire system of relationships
Potential loss of control over outsourced activities.
Potential lack of loyalty among infrequently used contractors.
Schermerhorn - Chapter 8

20. Developments in Organization Structures
Boundary-less organizations
Organizations in which teamwork and intense communication take the place of formal lines of authority.
Break down internal boundaries.
Key requirements:
Absence of hierarchy
Empowerment of team members
Acceptance of impermanence
Schermerhorn - Chapter 8

21. Developments in Organization Structures
Virtual organization
A special form of boundary-less organization.
Operates in a shifting network of external strategic alliances that are engaged as needed, and typically supported by extensive IT utilization.
Schermerhorn - Chapter 8

22. Developments in Organization Structures
Organizing Trends in the Modern Workplace
Wider Spans of Control
chains of command are shortened
managers have responsibility for larger number of subordinates
Financial bonanza
Elimination of bureaucracies
Flat organizational structures
Schermerhorn - Chapter 8

23. Developments in Organization Structures
Organizing Trends in the Modern Workplace
Shorter Chains of Command
organizations are reducing levels of management
Less Unity of Command
increases in cross-functional teams, task forces and horizontal structure
Schermerhorn - Chapter 8

24. Developments in Organization Structures
Organizing Trends in the Modern Workplace
More Delegation and Empowerment
delegation
assigns responsibility
grants authority to act
creates accountability
Problem in US you are made responsible for things you can’t always control—Japan and other countries don’t do this.
Schermerhorn - Chapter 8

25. Developments in Organization Structures
Organizing Trends in the Modern Workplace
More Delegation and Empowerment
empowerment
freedom to contribute ideas
increase job satisfaction
better job performance
Schermerhorn - Chapter 8

26. Developments in Organization Structures
Organizing Trends in the Modern Workplace
Decentralization with Centralization
empowerment allows for more decentralization
advances in information technology allow for retention of centralized control
Schermerhorn - Chapter 8

27. Developments in Organization Structures
Organizing Trends in the Modern Workplace
Reduced use of Staff
Specialized staff—people who perform a technical service or provide special problem-solving expertise to other parts of the organization.
Personal staff—people working in “assistant-to” positions that provide special support to higher-level positions.
Schermerhorn - Chapter 8

28. Schermerhorn - Chapter 8
The next slide is for an exercise. The information was studied earlier in the class under types of strategies.
The information in this slide should be useful in giving you hints as to the differences between Porter’s generic strategies and how you can change your organizational structure to match the needs of a strategy.
Remember structure follows strategy.
Schermerhorn - Chapter 8

29. Requirements for Generic Competitive Strategies
Commonly Required Generic Common Organizational
Strategy Requirements Skills and Resources
Overall Cost Leadership • Sustained capital investment and access to capital
• Process engineering skills
• Intense supervision of labor
• Products designed for ease of manufacture
• Low-cost distribution system
Differentiation • Strong marketing abilities
• Product engineering
• Creative flair
• Strong capability in basic research
• Corporate reputation for quality or technological leadership
• Long tradition in the industry or unique combination of skills drawn from other businesses
• Strong cooperation from channels
Focus • Combination of the above policies directed at the particular strategic target
• Tight cost control
• Frequent, detailed control reports
• Structured organization and responsibilities
• Incentives based on meeting strict quantitative targets.
• Strong coordination among functions in R&D, product development, and marketing
• Subjective measurement and incentives instead of quantitative measures
• Amenities to attract highly skilled labor, scientists, or creative people
• Combination of the above policies directed at the particular strategic target
Schermerhorn - Chapter 8