Chapter 5 Intro to Organizational Structure Business Management 12 Stewart

Defining Organizational Structure How job tasks are divided, grouped and coordinated within an organization Organizational Design A process of developing or changing an organization’s structure It is comprised of six key elements: (i) work specialization; (ii) departmentalization; (iii) chain of command; (iv) span of control; (v) centralization and decentralization; (vi) formalization Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-2 Copyright © 2011 Pearson Canada Inc. 2

Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-3 Copyright © 2011 Pearson Canada Inc. 3

Organizational Structure Work Specialization (division of labour) The degree to which tasks are divided into separate jobs Individuals specialize in doing part of a job rather than the entire job Human diseconomies such as boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover can occur from overspecialization Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-4 Copyright © 2011 Pearson Canada Inc. 4

Departmentalization Functional Process Product Customer Geographical Grouping jobs by functions performed Product Grouping jobs by product line Geographical Grouping jobs on the basis of territory or geography Process Grouping jobs on the basis of product or customer flow Customer Grouping jobs by type of customer and needs 5

Exhibit 5-2a Functional Departmentalization Plant Manager Manager, Manager, Manager, Manager, Manager, Engineering Accounting Manufacturing Human Resources Purchasing + Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations + Coordination within functional area + In-depth specialization – Poor communication across functional areas – Limited view of organizational goals Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-6 Copyright © 2011 Pearson Canada Inc. 6

Exhibit 5-2b Geographical Departmentalization Vice President for Sales Sales Director, Sales Director, Sales Director, Sales Director, Western Region Prairies Region Central Region Eastern Region + More effective and efficient handling of specific regional issues that arise + Serve needs of unique geographic markets better – Duplication of functions – Can feel isolated from other organizational areas Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-7 Copyright © 2011 Pearson Canada Inc. 7

Exhibit 5-2c Product Departmentalization Bombardier, Ltd. Mass Transit Sector Recreational and Utility Vehicles Sector Rail Products Sector Mass Transit Division Bombardier–Rotax (Vienna) Rail and Diesel Products Division Recreational Products Division Logistic Equipment Division Industrial Equipment Division Bombardier–Rotax (Gunskirchen) + Allows specialization in particular products and services + Managers can become experts in their industry + Closer to customers – Duplication of functions – Limited view of organizational goals Source: Bombardier Annual Report. Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-8 Copyright © 2011 Pearson Canada Inc. 8

Exhibit 5-2d Process Departmentalization Plant Superintendent Sawing Department Manager Planing and Milling Department Manager Assembling Department Manager Lacquering and Sanding Department Manager Finishing Department Manager Inspection and Shipping Department Manager + More efficient flow of work activities – Can only be used with certain types of products Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-9 Copyright © 2011 Pearson Canada Inc. 9

Exhibit 5-2e Customer Departmentalization Director of Sales Manager, Manager, Manager, Retail Accounts Wholesale Accounts Government Accounts + Customers’ needs and problems can be met by specialists – Duplication of functions – Limited view of organizational goals Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition 5-10 Copyright © 2011 Pearson Canada Inc. 10