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Organizational Structure Ch. 8B Management A Practical Introduction

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Presentation on theme: "Organizational Structure Ch. 8B Management A Practical Introduction"— Presentation transcript:

1 Organizational Structure Ch. 8B Management A Practical Introduction
Angelo Kinicki & Brian K. Williams

2 Learning objectives 1 Define organization
Describe the different types of organization and the function of an organization chart Explain the meaning of vertical hierarchy and horizontal specialization Describe the 7 common elements of an organization

3 Learning objectives 2 Describe the 8 types of organizational structures and illustrate these structures with examples. Discuss the advantages and disadvantages of each types. Determine the best structure which should be used under a given situation by applying the contingency design concept.

4 8.3 What Is An Organization?
HOW ARE ORGANIZATIONS STRUCTURED? An organization is a system of consciously coordinated activities or forces of two or more people Organizations are formed for three purposes: for-profit (formed to make money), nonprofit (formed to offer services, but not make a profit), and mutual-benefit (formed to promote members’ interests) Organizations can be represented in an organization chart (a box-and-lines illustration showing the formal lines of authority and the organization’s official positions) Practical Action: When Should You Delegate & When Not? Using Your Authority Wisely This Practical Action explores the situations when delegating responsibilities is appropriate and when it makes more sense to handle things yourself. In particular, delegating makes sense when it involves routine and technical matters the tasks can help subordinates grow Delegating doesn’t make sense when it involves confidential and personnel matters it is an emergency it involves special assignments your boss asked you to handle Always try to match the tasks you delegate to your subordinates’ skills and responsibilities

5 8.3 What Is An Organization?
Figure 8.2: Organization Chart

6 8.3 What Is An Organization?
The vertical hierarchy of an organization shows the chain of command, and the official communication network The horizontal specialization shows the different jobs or work specialization of an organization

7 8.4 The Major Elements Of An Organization
WHAT ARE THE COMMON ELEMENTS OF AN ORGANIZATION? There are seven elements common to all organizations: 1. Common Purpose - a common purpose unifies employees or members and gives everyone an understanding of the firm’s reason for being 2. Coordinated Effort - organizations achieve a common purpose by coordinating individual efforts into a group or organization-wide effort 3. Division Of Labor - the arrangement of having discrete parts of a task done by different people is referred to as work specialization

8 8.4 The Major Elements Of An Organization
4. Hierarchy Of Authority - the control mechanism for making sure the right people do the right things at the right time is called the hierarchy of authority or chain of command 5. Span Of Control - the span of control or span of management refers to the number of people reporting directly to a given manager 6. Authority, Responsibility, & Delegation – authority, accountability, responsibility, and the ability to delegate are all part of an organization’s elements 7. Centralization Versus Decentralization - when important decisions are made by higher-level managers, the organization has centralized authority, when important decisions are made by middle-level and supervisory-level managers, the organization has decentralized authority

9 8.5 Basic Types Of Organizational Structures
WHAT ARE THE BASIC TYPES OF ORGANIZATIONAL STRUCTURES? There are eight types of organizational structures: 1. The simple structure has authority centralized in a single person, a flat hierarchy, few rules, and low work specialization and is often used in the very early stages of a firm 2. In a functional structure, common in both profit and nonprofit organizations, people with similar occupational specialties are put together in formal groups Lecture Note: Ask students to compare the organizational charts of several different types of firms. What do the structures indicate about the organizations? How are decisions likely to made? Why might an organization be structured the way it is?

10 8.5 Basic Types Of Organizational Structures
Figure 8.4: Simple Structure: An Example

11 8.5 Basic Types Of Organizational Structures
Figure 8.5: Functional Structure: Two Examples

12 8.5 Basic Types Of Organizational Structures
3. When people with diverse occupational specialties are put together in formal groups, a divisional structure is in place Product divisions group activities around similar products or services Customer divisions group activities around common customers or clients Geographic divisions group activities around regional locations 4. The conglomerate structure groups divisions or business units around similar businesses or industries

13 Chapter 8: Organizational Culture, Structure, & Design
Figure 8.6: Divisional Structure: Three Examples

14 8.5 Basic Types Of Organizational Structures
Figure 8.7: Conglomerate Structure

15 8.5 Basic Types Of Organizational Structures
5. A hybrid structure uses functional and divisional structures in different parts of the same organization 6. When an organization combines functional and divisional chains of command in a grid so that there a two command structures, vertical and horizontal, a matrix structure is used 7. In a team-based structure, teams, both temporary and permanent, are used to improve horizontal relations and solve problems throughout the organization 8. The network structure or virtual organization has a central core that is linked to outside independent firms by computer connections which are used to operate as if all were a single organization

16 8.5 Basic Types Of Organizational Structures
Figure 8.8: Hybrid Structure

17 8.5 Basic Types Of Organizational Structures
Figure 8.9 Matrix Structure

18 8.5 Basic Types Of Organizational Structures
Figure 8.10: Team-Based Structure

19 8.5 Basic Types Of Organizational Structures
Figure 8.11: Network Structure

20 8.6 Contingency Design: Factors In Creating The Best Structure
WHAT IS THE BEST STRUCTURE? Contingency design is the process of fitting the organization to its environment Firms must consider: 1. The environment (mechanistic versus organic) Mechanistic organizations are characterized by centralized authority, clearly specified tasks and rules, and close supervision of employees When authority is decentralized, there are few rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks, an organic organization exists

21 8.6 Contingency Design: Factors In Creating The Best Structure
2. The environment (differentiation versus integration) Differentiation is the tendency of the parts of an organization to disperse and fragment Integration is the tendency to come together to achieve a common purpose 3. Size Organizational size is usually measured by the number of full-time employees 4. Technology Technology (the tools and ideas for transforming materials, data, or labor into goods and services) influences organizational design 5. Organizational life cycle The organizational life cycle involves birth, youth, midlife, and maturity

22 Key terms 1 Accountability Authority
Birth/ Youth/ Midlife/ Maturity stage Centralized authority Conglomerate structure Contingency design Coordinated effort Customer divisions Decentralized authority Delegation Differentiation Division of labor Divisional structure Functional structure Geographic divisions

23 Key terms 2 Hierarchy of authority Hybrid structure Integration
Matrix structure Mechanistic organization Network structure Organic organization Organizational culture Organizational life cycle Organizational size Product divisions Responsibility Simple structure Span of control (Management) Team-based structure Technology


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