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Chapter 8 1 Designing Organizational Structures Prepared by Norm Althouse University of Calgary Prepared by Norm Althouse University of Calgary Copyright.

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Presentation on theme: "Chapter 8 1 Designing Organizational Structures Prepared by Norm Althouse University of Calgary Prepared by Norm Althouse University of Calgary Copyright."— Presentation transcript:

1 Chapter 8 1 Designing Organizational Structures Prepared by Norm Althouse University of Calgary Prepared by Norm Althouse University of Calgary Copyright © 2011 by Nelson Education Ltd.

2 Chapter 8 Learning Outcomes 2 1 Identify the five structural building blocks that managers use to design organizations. 2 Examine the tools companies use to establish relationships within their organizations. 3 Show how the degree of centralization/decentralization can be altered to make an organization more successful. 4 Describe the differences between a mechanistic and organic organization. 5 Discuss the contemporary organizational structures companies are using. 6 Summarize why companies are using team-based organizational structures. 7 Explain how the informal organization affects the performance of the company. 8 List some of the trends that are influencing the way businesses organize. Copyright © 2011 by Nelson Education Ltd.

3 Chapter 8 Organizational Structures 3 In today’s dynamic business environment, business structures need to be designed so that the organization can quickly respond to new competitive threats and changing customer needs. In today’s dynamic business environment, business structures need to be designed so that the organization can quickly respond to new competitive threats and changing customer needs. Organizational Structures Organizational Structures Copyright © 2011 by Nelson Education Ltd.

4 Chapter 8 Building Organizational Structures 4 Division of Labour DelegationDelegation Departmental- ization Copyright © 2011 by Nelson Education Ltd. Span of Control Centralization of Decision Making

5 Chapter 8 Structural Building Blocks Copyright © 2008 by Nelson, a division of Thomson Canada Limited5 1.Division of Labour –specialization of tasks 2.Departmentalization –creating an organization chart 3.Delegation (formerly: Managerial Hierarchy) –chain of command –delegation of authority 4.Span of Control –narrow span –wide span 5.Centralization of Decision Making –degree of centralization vs. decentralization

6 Chapter 8 Five Types of Departmentalization 6 Functional Based on the primary functions performed Product Based on the goods/services produced or sold Process Based on the production process used Customer Based on the primary type of customer served Geographic Based on the geographic segmentation of organizational units Copyright © 2011 by Nelson Education Ltd.

7 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited7 Functional Organization

8 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited8 Product (or Service) Organization

9 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited9 Organization by Process

10 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited10 Organization by Customer

11 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited11 Geographic Organization

12 Chapter 8 Organizational Chart Example 12 Copyright © 2011 by Nelson Education Ltd.

13 Chapter 8 Managerial Hierarchy 13 Middle Management Supervisory Management Top Management Power Employees Copyright © 2011 by Nelson Education Ltd.

14 Chapter 8 Chain of Command 14 The line of authority that extends from one level of an organization’s hierarchy to the next, from top to bottom, and makes clear who reports to whom. Chain of Command Copyright © 2011 by Nelson Education Ltd.

15 Chapter 8 Span of Control 15 The number of employees a manager directly supervises; also called span of management. Span of Control (span of management) Span of Control (span of management) Copyright © 2011 by Nelson Education Ltd. Narrow Span: few subordinates Narrow Span: few subordinates Wide Span: many subordinates Wide Span: many subordinates

16 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited16 Nature of the task Location of the workers Ability of the manager to delegate responsibility Amount of interaction and feedback between workers and manager Level of skill and motivation of the workers Factors Determining Optimal Span of Control Optimal Span of Control

17 Chapter 8 Degree of Centralization 17 The degree to which formal authority is concentrated in one area or level of an organization. Centralization The process of pushing decision-making authority down the organizational hierarchy. Decentralization Copyright © 2011 by Nelson Education Ltd.

18 Chapter 8 Mechanistic Versus Organic Organization 18 Copyright © 2011 by Nelson Education Ltd.

19 Chapter 8 Flat Versus Tall Organizational Structures 19 Copyright © 2011 by Nelson Education Ltd.

20 Chapter 8 Common Organizational Structures 20 An organizational structure with direct, clear lines of authority and communication flowing from the top managers downward. Line Organization An organizational structure that includes both line and staff positions. Line-and-Staff Organization Copyright © 2011 by Nelson Education Ltd.

21 Chapter 8 Line versus Staff Positions 21 All positions in the organization directly concerned with producing goods and services and that are directly connected from top to bottom All positions in the organization directly concerned with producing goods and services and that are directly connected from top to bottom Line Position Positions held by individuals who provide the administrative and support services that the line employees need to achieve the firm’s goals Positions held by individuals who provide the administrative and support services that the line employees need to achieve the firm’s goals Staff Position Copyright © 2011 by Nelson Education Ltd.

22 Chapter 8 Common Organizational Structures 22 An organizational structure in which authority and responsibility are held by a group rather than an individual. An organizational structure in which authority and responsibility are held by a group rather than an individual. Committee Structure An organizational structure that combines functional and product departmentalization by bringing together people from different functional areas to work on a special project. An organizational structure that combines functional and product departmentalization by bringing together people from different functional areas to work on a special project. Matrix Organization Copyright © 2011 by Nelson Education Ltd.

23 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited23 Matrix Structure

24 Chapter 8 Teams Work Groups: Groups that share resources and coordinate efforts to help members better perform their individual jobs. Work Teams: Similar to work groups, but also requires the pooling of knowledge, skills, abilities, and resources to achieve a common goal. 24 Copyright © 2011 by Nelson Education Ltd.

25 Chapter 8 Copyright © 2008 by Nelson, a division of Thomson Canada Limited25 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

26 Chapter 8 Group Decision Making 26 Copyright © 2011 by Nelson Education Ltd.

27 Chapter 8 27 Self-Managed Work Teams Manage themselves without formal supervision, take responsibility for goal setting, planning work activities Cross-Functional Teams Made up of employees from same hierarchical level, but different functional areas Problem-Solving Teams Generate ideas and alternatives and may recommend a course of action Types of Teams Copyright © 2011 by Nelson Education Ltd.

28 Chapter 8 Functions of the Informal Organization Source of friendships and social contact Helps employees feel better informed and connected with what is going on Provides informal status and recognition Aids the socialization of new employees 28 Copyright © 2011 by Nelson Education Ltd.

29 Chapter 8 Trends in Organizational Structures 29 Virtual Teams Copyright © 2011 by Nelson Education Ltd. Outsourcing Structuring for Global Mergers Virtual Corporation Re-engineering Organizational Structure


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