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Designing Organizational Structures 15 Chapter © 2004 by Nelson, a division of Thomson Canada Limited.

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Presentation on theme: "Designing Organizational Structures 15 Chapter © 2004 by Nelson, a division of Thomson Canada Limited."— Presentation transcript:

1 Designing Organizational Structures 15 Chapter © 2004 by Nelson, a division of Thomson Canada Limited.

2 2 Learning Goals 1.What are the five structural building blocks that managers use to design organizations? 2.What are the five types of departmentalization? 3.How can the degree of centralization/ decentralization be altered to make an organization more successful?

3 3© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goals (cont’d) 4. How do mechanistic and organic organizations differ? 5.What is the difference between line positions and staff positions? 6.What is the goal of re-engineering? 7.How does the informal organization affect the performance of a company? 8.What trends are influencing the way businesses organize?

4 4© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 1 What are the five structural building blocks that managers use to design organizations?

5 5© 2004 by Nelson, a division of Thomson Canada Limited. Organizing: the process of coordinating and allocating a firm’s resources so that the firm can carry out its plans and achieve its goals

6 6© 2004 by Nelson, a division of Thomson Canada Limited. Structural Building Blocks 1.Division of Labour –specialization of tasks 2.Departmentalization –creating an organization chart 3.Managerial Hierarchy –chain of command –delegation of authority

7 7© 2004 by Nelson, a division of Thomson Canada Limited. Structural Building Blocks (cont’d) 4.Span of Control –narrow span –wide span 5.Centralization of Decision Making –degree of centralization vs. decentralization

8 8© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 2 What are the five types of departmentalization?

9 9© 2004 by Nelson, a division of Thomson Canada Limited. Departmentalization: the process of grouping jobs together so that similar or associated tasks and activities can be coordinated

10 10© 2004 by Nelson, a division of Thomson Canada Limited. Types of Departmentalization 1.Functional 2.Product 3.Process 4.Customer 5.Geographic

11 11© 2004 by Nelson, a division of Thomson Canada Limited. Functional

12 12© 2004 by Nelson, a division of Thomson Canada Limited. Product or Service Offered

13 13© 2004 by Nelson, a division of Thomson Canada Limited. Process

14 14© 2004 by Nelson, a division of Thomson Canada Limited. Customer

15 15© 2004 by Nelson, a division of Thomson Canada Limited. Geographic

16 16© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 3 How can the degree of centralization/ decentralization be altered to make an organization more successful?

17 17© 2004 by Nelson, a division of Thomson Canada Limited. Centralization: the degree to which formal authority is concentrated in one area or level of an organization

18 18© 2004 by Nelson, a division of Thomson Canada Limited. Decentralization: the process of pushing decision-making authority down the organizational hierarchy, giving lower-level workers more responsibility

19 19© 2004 by Nelson, a division of Thomson Canada Limited. Factors Affecting Decision-Making Authority Size of the organization Speed of change in its environment Managers willing to share power Employees willing and able to take more responsibility Organization’s geographic dispersion

20 20© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 4 How do mechanistic and organic organizations differ?

21 21© 2004 by Nelson, a division of Thomson Canada Limited. Mechanistic Organization: an organization characterized by a relatively high degree of work specialization, rigid departmentalization, many layers of management, narrow spans of control, centralized decision- making, and a long chain of command.

22 22© 2004 by Nelson, a division of Thomson Canada Limited. Organic organization: an organization characterized by a relatively now degree of work specialization, loose departmentalization, few levels of management, wide spans of control, decentralized decision-making, and a short chain of command

23 Mechanistic vs. Organic Structure Structural Characteristic MechanisticOrganic Job specializationHighLow DepartmentalizationRigidLoose Management hierarchy Tall (many levels) Short (few levels) Span of controlNarrowWide Decision-making authority CentralizedDecentralized Chain of commandLongShort

24 24© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 5 What is the difference between line positions and staff positions?

25 25© 2004 by Nelson, a division of Thomson Canada Limited. Line Positions: all positions in the organization directly concerned with producing goods and services and which are directly connected from top to bottom Typically found in areas such as: –production –marketing –finance

26 26© 2004 by Nelson, a division of Thomson Canada Limited. Staff Positions: positions in an organization held by individuals who provide the administrative and support services that line employees need to achieve the firm’s goals Typically found in areas such as: –legal counseling –public relations –human resource management

27 27© 2004 by Nelson, a division of Thomson Canada Limited. Common Organizational Structures Line organization –clear chain of command Line-and-staff organization –both line and staff positions Committee structure –group authority and responsibility Matrix structure (project management) –combines functional and product departmentalization

28 28© 2004 by Nelson, a division of Thomson Canada Limited. Matrix Structure Advantages –teamwork –efficient use of resources –flexibility –ability to balance conflicting objectives –higher performance –opportunities for personal and professional growth Disadvantages –power struggles –confusion among team members –lack of cohesiveness

29 29© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 6 What is the goal of re-engineering?

30 30© 2004 by Nelson, a division of Thomson Canada Limited. Re-engineering: the complete redesign of business structures and processes in order to improve operations

31 31© 2004 by Nelson, a division of Thomson Canada Limited. Goal of Re-engineering Redesign business processes to achieve improvements in: –cost control –product quality –customer service –speed

32 32© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 7 How does the informal organization affect the performance of a company?

33 33© 2004 by Nelson, a division of Thomson Canada Limited. Informal Organization: the network of connections and channels of communication based on the informal relationships of individuals inside an organization

34 34© 2004 by Nelson, a division of Thomson Canada Limited. Informal Organizations Give employees more control over their work environment by delivering a continuous stream of company information, helping employees stay informed Informal relationships can be: –between people at the same hierarchical level –between people at different levels and in different departments

35 35© 2004 by Nelson, a division of Thomson Canada Limited. Functions of the Informal Organization Friendships and social contact Information and sense of control over their work environment Source of status and recognition

36 36© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 8 What trends are influencing the way businesses organize?

37 37© 2004 by Nelson, a division of Thomson Canada Limited. Trends in Organizational Structure Virtual corporation –technology –opportunism –excellence –trust –no borders Structural issues for global mergers


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