1. Management Second Canadian Edition
Chuck Williams Alex Z. Kondra Conor Vibert
Slides Prepared by: Kerry Rempel, Okanagan College
© 2008 by Nelson, a division of Thomson Canada Limited

2. Organizational Structures and Processes
Chapter 11
Organizational Structures and Processes
© 2008 by Nelson, a division of Thomson Canada Limited

3. What Would You Do?
Alex MacBeath of Grant Thornton credits their growth and success to the following factors:
They are first and foremost a professional services firm
Strict attention to client service and evolving client needs
A focus on people
© 2008 by Nelson, a division of Thomson Canada Limited

4. Learning Objectives: Designing Organizational Structures
After reading the next three sections, you should be able to:
1. describe the departmentalization approach to organizational structure
2. explain organizational authority
3. discuss the different methods for job design
© 2008 by Nelson, a division of Thomson Canada Limited

5. Departmentalization Functional Product Customer Geographic Matrix
Functional – organizes work and workers into separate units responsible for particular business function or areas of expertise
Product – organizes work and workers into separate units responsible for producing particular products or services
Customer – organizes work and workers into separate units responsible for particular kinds of customers
Geographic – organizes work and workers into separate units responsible for doing business in particular geographical areas
Matrix – is a hybrid structure in which two or more forms of departmentalization are used together
© 2008 by Nelson, a division of Thomson Canada Limited

6. Functional Departmentalization
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Exhibit 11.1

7. Functional Departmentalization
Advantages
creates highly skilled specialists
lowers costs through reduced duplication
communication and coordination problems are lessened
Disadvantages
cross-department coordination can be difficult
may lead to slower decision making
produces managers with narrow experiences
© 2008 by Nelson, a division of Thomson Canada Limited

8. Product Departmentalization
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9. Product Departmentalization
Advantages
managers specialize but have broader experience
easier to assess work-unit performance
decision making is faster
Disadvantages
duplication often increases costs
difficult to coordinate across departments
© 2008 by Nelson, a division of Thomson Canada Limited

10. Customer Departmentalization
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Adapted from Exhibit 11.3

11. Customer Departmentalization
Advantages
focuses on customer needs
products and services tailored to specific customers
Disadvantages
duplication of resources
difficult to achieve coordination across departments
decisions that please the company but may hurt the company
© 2008 by Nelson, a division of Thomson Canada Limited

12. Geographic Departmentalization
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13. Geographic Departmentalization
Advantages
responsive to demand of different markets
reduce costs by locating resources close to customers
Disadvantages
duplication of resources
difficult to coordinate across departments
© 2008 by Nelson, a division of Thomson Canada Limited

14. Matrix Departmentalization
A hybrid structure in which two or more forms of departmentalization are used together
most common forms combine product and functional
employees report to two bosses
increased cross-functional interaction
significant interaction between functional and project managers required
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15. Matrix Departmentalization
Advantages
efficiently manage large, complex tasks
effectively manage large, complex tasks
Disadvantages
requires high levels of coordination
increased conflict levels
requires high level of management skills
© 2008 by Nelson, a division of Thomson Canada Limited

16. Organizational Authority
Chain of command
Line versus staff authority
Delegation of authority
Degree of centralization
Authority is the right to give commands, take action, and make decisions to achieve organizational objectives.
© 2008 by Nelson, a division of Thomson Canada Limited

17. Chain of Command The vertical line of authority in an organization
clarifies who reports to whom
Unity of command
workers report to only one boss
violated by matrix structure
Span of control
Number of people reporting to a specific supervisor
© 2008 by Nelson, a division of Thomson Canada Limited

18. Line Versus Staff Authority
Line authority-function
the right to command immediate subordinates in the chain of command
an activity that contributes directly to creating or selling a company’s products
Staff authority-function
the right to advise but not command others
an activity that supports line activities
© 2008 by Nelson, a division of Thomson Canada Limited

19. Delegation of Authority
The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible
Three transfers from manager to subordinate
transfer of full responsibility of assignment
transfer of authority over required resources
transfer of accountability
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20. How to Be a More Effective Delegator
1. Trust your staff to do a good job
2. Avoid seeking perfection
3. Give effective instructions
4. Know your true interests
5. Follow up on progress
© 2008 by Nelson, a division of Thomson Canada Limited
Adapted from Exhibit 11.9

21. How to Be a More Effective Delegator
6. Praise the efforts of your staff
7. Don’t wait until the last minute to delegate
8. Ask questions, expect answers, and assist employees
9. Provide sufficient resources
10. Delegate to the lowest possible level
© 2008 by Nelson, a division of Thomson Canada Limited
Adapted from Exhibit 11.9

22. Degree of Centralization
Centralization of authority
most authority is held at the upper levels of the organization
Decentralization
significant authority is found in lower levels of the organization
Standardization
Solving problems by applying rules, procedures, and processes
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23. Job Design Job specialization Job rotation Job enlargement
Job enrichment
Job design – the number, kind, and variety of tasks that individual workers perform in doing their jobs.
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24. Job Design Job specialization breaking jobs into smaller tasks
simple, easy-to-learn, and economical
can lead to low job satisfaction, high absenteeism, and turnover
© 2008 by Nelson, a division of Thomson Canada Limited

25. Job Design Job rotation Job enlargement Job enrichment
periodically moving workers from one job to another
Job enlargement
increasing the number of tasks performed by a worker
Job enrichment
adding more tasks and authority to a worker’s job
© 2008 by Nelson, a division of Thomson Canada Limited

26. Learning Objectives: Designing Organizational Processes
After reading these next two sections, you should be able to:
4. explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes)
5. describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes)
© 2008 by Nelson, a division of Thomson Canada Limited

27. Types of Organizations
Mechanistic
Mechanistic Organizations – are characterized by specialized jobs and responsibilities; precisely defined, unchanging roles; and a rigid chain of command based on centralized authority and vertical communication.
Organic Organizations – are characterized by broadly defined jobs and responsibility; loosely defined, frequently changing roles; and decentralized authority and horizontal communication based on task knowledge.
Organic
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28. Intraorganizational Processes
Reengineering
Empowerment
Behavioural informality
An Intraorganizational process is the collection of activities that take place within an organization to transform inputs into outputs that customers value.
© 2008 by Nelson, a division of Thomson Canada Limited

29. Reengineering Fundamental rethinking of business processes
Intended to achieve dramatic improvements in performance
Changes the organization’s orientation form vertical to horizontal
Changes task interdependence
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30. Task Interdependence
The extent to which collective action is required to complete an entire piece of work
Three types
pooled
sequential
reciprocal
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31. Empowerment
Permanently passing decision-making authority and responsibility from managers to workers
workers need information and resources to make good decisions
workers should be rewarded for taking initiative
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32. Behavioural Informality
spontaneity
casualness
interpersonal familiarity
Behavioural formality
routine and regimen
specific rules
impersonal detachment
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33. Interorganizational Processes
Modular organizations
Virtual organizations
Boundaryless organizations
An Interorganizational process is a collection of activities that occur among companies to transform inputs into outputs that customers value.
© 2008 by Nelson, a division of Thomson Canada Limited

34. Modular Organization
Except for the core business activities that they can perform better, faster, and cheaper than others, modular organizations outsource all remaining business activities to outside companies. These outsourced activities can be added or dropped as needed, much like adding pieces to a three-dimensional puzzle.
© 2008 by Nelson, a division of Thomson Canada Limited
Exhibit 11.12

35. Modular Organizations
Advantages
Can cost significantly less to run
Allows the company to focus on the core activities they do best
Disadvantages
Loss of control when outsourcing key business activities
May end up outsourcing a competitive advantage
© 2008 by Nelson, a division of Thomson Canada Limited

36. Virtual Organization
A Virtual organization is part of a network in which many companies share skills, costs, capabilities, markets, and customers with each other. Virtual organization work with some companies in the network alliance, but not all.
© 2008 by Nelson, a division of Thomson Canada Limited
Exhibit 11.13

37. Virtual Organizations
Advantages
Allow companies to share costs
Fast and flexible
Should provide better products and services because each is “best” at what they do
Disadvantages
Loss of control when outsourcing key business activities
Requires tremendous managerial skills to make a network of independent organizations work well together
© 2008 by Nelson, a division of Thomson Canada Limited

38. Boundaryless Organization
A Boundaryless organization break down the vertical, horizontal and geographic boundaries in organizations.
© 2008 by Nelson, a division of Thomson Canada Limited
Exhibit 11.14

39. Boundaryless Organizations
Advantages
A focus on results instead of reporting makes much better use of employee skills, knowledge, and abilities
Lead to much closer relationships with the external environment
Disadvantages
Transition can be threatening to managers and employees
There is no clear way to achieve a boundaryless organization
© 2008 by Nelson, a division of Thomson Canada Limited

40. What Really Happened?
Grant Thornton maintains it’s differences through:
Leaders managing through influence, not position
A collaborative culture that facilitates knowledge sharing
Shared workspaces
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