Organizing Organizational Structures

Organizing Organizing is one of the four management functions (what are the other three?) “What parts connect to one another?” “How should processes and people come together?” “Whose ideas have to flow where?”

Edward Jones Edward Jones works because of strong central management with small, individually controlled units underneath it. The brokers in each branch have the power to control clients, finances, and other day-to-day operations.

Organizing What do organizations that regularly get above-average returns and do better than their competitors have in common? Empowerment, Support for employees Responsiveness to client or customer needs Flexibility with constantly changing environments Constantly looking for improvements.

What is Organizing? Organizing is the process of arranging people and other resources to work together to accomplish a goal. Planning is the first step. Once a plan is set, the manager’s role shifts to organization…how to get the job done. Who does what? Who is in charge? How do different parts of the organization relate to each other?

Organization Structure This is the formal arrangement of an organization. Tasks, workflows, reporting relationships, and communication channels are laid out. Has to be made clear to everyone.

Organization Structure As environments are always changing, these structures also have to change.

Formal Structures These are best expressed in an organizational chart. Shows positions and titles. Shows “lines of authority” and communication between them. Reading one tells you:

Formal Structures Division of work: Positions and titles show work responsibilities Supervisory relationships: Lines show who reports to whom. Communication channels: Lines show formal communication flows. Major subunits: Positions reporting to a common manager are shown. Levels of management: Vertical layers of management are shown.

Informal Structures What do you think these are? Leads to informal learning. Good in times of change. These informal structures help people get through change.

Informal Structures Of course, there are some bad effects of these structures also. What do you think some are?

Traditional Organizational Structures The first concept we need to know is departmentalization. This is when organizations group together people and jobs into work units. But how do organizations decide to group employees?

Functional Structures The most simple is to group together people who do similar tasks and who have similar skills. This allows people who have similar interests, technical expertise, and responsibilities to work with each other.

President Vice-President Marketing Vice-President Production Vice-President Finance Vice-President Human Resources Branch Manager Manager Loans Manager Operations Manager Investments Manager Trusts Bank Branch Administrator Director Medical Staff Director Clinics Director Nursing Director Patient Services

Functional Structures These work well for small organizations that make only one or a few products or services. Also work well in stable environments. This usually means that problems are predictable. Demands for change and innovation are limited. Here are the advantages: 1. Economies of scale 2. Task assignments are consistent with expertise and training 3. High-quality technical problem solving 4. In-depth training and skill development within functions 5. Clear career paths within functions.

Functional Structures There are also disadvantages. A common one is figuring out responsibilities for things like cost overruns, quality, being on time, and innovation. There is also something called functional chimneys problem. Let’s look at what this means.

Apple Apple uses a very strong functional structure. There is no “Apple China,” or “Apple Canada,” or “Apple Europe.” There is “Apple Japan, but that is the only example. Very weird organization.

Functional Chimneys Problem President Vice-President Marketing Vice-President Production Vice-President Finance Vice-President Human Resources

Divisional Structures This system groups people together who: -work on the same product or process, -serve similar customers, -located in the same area/region. What are some benefits of doing this?

Benefits of Divisional Structures This allows: -More flexibility in responding to environmental changes -Improved coordination across functional departments -Clear points of responsibility for product or service delivery -Expertise focused on specific customers, products, and regions. -Easier to change size by adding or deleting divisions.

TypeFocusExample Product Good or service produced Geographical Location of activity Customer Customer or client serviced Process Activities part of same process General Manager Drugs and ToiletriesGrocery Products President European DivisionAsian Division Agency Administrator Senior CitizensProblem Youth Catalogue Sales Manager Order FulfillmentProduct Purchasing

Disadvantages of Divisional Structures Economies of Scale are reduced. Costs increased because of duplication of resources. Rivalries created by competition for resources.

Product Structures Groups together people and jobs related to a single product or service. This focuses the business. Makes it easier to see costs, profits, problems, successes, etc. GMC is an example of this for General Motors. GMC

Product Structures (Bombardier)

Geographical Structures Groups together people and jobs performed in the same location. More common when companies differentiate products in different areas. They have duplicated services (finance, HR, etc) and they have control of their own areas.

Geographical Structures (McDonalds)

Customer Structures Groups together people and jobs that serve the same customers or clients. Different customers have different needs. Rogers, Rogers Business, Bell Business RogersRogers BusinessBell Business

Process Structures Groups jobs and activities that are part of the same processes. “Work Processes” include any tasks that are related, that provide something of value to the customer. Includes product-purchasing, order fulfillment, systems-support.

Matrix Structures Combines features of functional and divisional structures. Focuses on project teams. Two bosses, one within the team and one within the function.

Matrix Structures General Manager Engineering Manager Manufacturing Manager Manager of Projects Sales Manager Project A Manager Project C Manager Project B Manager

Matrix Structures (Benefits) Better co-operation across functions Improved decision making (it is at team level) Increased flexibility Better customer service. Better performance accountability. Improved Strategic Management.

Matrix Structures (Negatives) More than one direct boss. -Leads to power struggles, confusion for employees. “Groupitis” Increased costs if leaders have to be added to the structure.

Directions in Organizational Structures Today’s business environment requires a lot of things. Speed to market More focus on customers Constant improvements to productivity Better use of technology Others???

Directions in Organization Structures There has been a constant trend away from rigid hierarchies. This has been replaced with more employee- focused structures. Boss Managers Worker Managers Worker

Team Structures Organizations that use these use both permanent teams and temporary teams. They solve problems, complete special projects, and day-to-day tasks. The most common form of team is called the cross-functional team. These include members from different functional departments. This is done to try to stop the functional chimney problem.

Team Structures Project teams are designed for special tasks. Once the task is complete, the team goes away. What are some special tasks that could see a project team be created?

Advantages of Team Structures Make communication easier. Decision-making is easier and faster. Barriers are broken down between departments. People get to know each other. Morale goes up. (People feel involved and a part of a team) Knowledge and experiences are shared,

Disadvantages of Team Structures Possibility of conflicting loyalties. Time management and group process issues. Teams spend a lot of time with each other…