Presentation on theme: "Organization Structure and Design"— Presentation transcript:
1 Organization Structure and Design Exploring ManagementChapter 8Organization Structureand Design
2 Chapter 8 What is organizing as a managerial responsibility? What are the most common types of organization structures?What are the trends in organizational design?
3 Organizing is one of the management functions Organization charts describe the formal structures of organizationsOrganizations also operate with informal structuresInformal structures have good points and bad pointsAs with the other management functions, how you organize depends on what you want to do.
4 ORGANIZING Management Functions Arranges people and resources to work toward a goalOrganizational structures are designed and re-designed to use resources such as money, assets, technology, knowledge and people in the most efficient way to interact with the external environment.
5 ORGANIZING Organizational Charts Structuresystem of tasks, reporting relationships, and communication that links people and positions within an organization.Organization Chartsdescribe the formal structure, how an organization should ideally work.There are many different types of organizations and there is no one best way to organize them.
6 ORGANIZING Organizational Charts What You Can Learn from an Organization ChartDivision of workPositions and titles show work responsibilities.Supervisory relationshipsLines between positions show who reports to whom in the chain of command.Span of controlThe number of persons reporting to a supervisor.Communication channelsLines between positions show routes for formal communication flows.Major subunitsWhich job titles are grouped together in work units, departments, or divisions.Staff positionsStaff specialists that support other positions and parts of the organization.Levels of managementThe number of management layers from top to bottom.Many organizations do not make detailed organizational charts public knowledge. They may be used by competitors, investors or they may not even have complete charts developed. Relationships can change rapidly.
7 ORGANIZING Formal Structure Organizational charts are often depicted as a dichotomy, but in reality, they are a living flow of communication and relationships.
8 ORGANIZING Formal Structure Division of LaborPeople and groups performing different jobs.Formal StructureThe official structure of the organization.Informal StructureThe unofficial relationships that develop among an organization’s members.The unofficial relationships are often stronger than the formal relationships. There are many explanations for this fact. One is that managers often establish informal relationships outside of the formal structure.
9 ORGANIZING Informal Structure Unofficial but important working relationships between members.Shadow organizations can have both a positive and a negative affect on the organization’s performance. In the case of weak management, the shadow organization can be what holds the business together.
10 ORGANIZING Informal Structure Informal Structures have good and bad pointsSocial network analysis identifies communication relationshipsGood points include problem solving, support, friendship and fill gaps in the formal structureBad points include rumors, inaccurate information and resistance to changeGood or bad, they exist in all but the smallest organizations.
11 8.2 Common Types of Structures Functional structures group together people using similar skillsDivisional structures group together people by products, customers or locationsMatrix structures combine the functional and divisional structuresTeam structures use many permanent and temporary teamsNetwork structures extensively use strategic alliances and outsourcing
12 COMMON ORGANIZATIONAL STRUCTURES Functional Structures Functional Structures group people with similar skillsDepartmentalizationGrouping people and jobs into a work unitFunctional StructureWork units have similar skills and tasks such as finance, marketing, production and human resources.Work best in smaller or stable organizationsFunctional structures attempt to group people with similar responsibilities. In many cases, small groups of workers can be stuck in larger departments with which they have little in common. For example, in a large hospital, the helicopter ambulance staff may be in the same department as the maintenance staff.
13 COMMON ORGANIZATIONAL STRUCTURES Functional Structures Potential Advantages of Functional StructuresEconomies of scale make efficient use of human resources.Functional experts are good at solving technical problems.Training within functions promotes skill development.Career paths are available within each function.The potential disadvantage of functional structures is that managers may tend not to communicate with other functional organizations. This can be solved with cross functional teams.
14 COMMON ORGANIZATIONAL STRUCTURES Functional Structures Common functional structureNotice that there is no formal communications across functions. Many departments feel that they work separately from all others. Adversarial relationships can occur.
15 COMMON ORGANIZATIONAL STRUCTURES Functional Structures Functional Chimneys or SilosCommunication and performance decrease across functionsThe lack of communications in functional organizations is often referred to as the Functional Chimneys or Functional Silos problem.
16 COMMON ORGANIZATIONAL STRUCTURES Divisional Structures Divisional structures group together people who work on a similar product, work in the same geographical region, or serve the same customersDivisional structures often result from growth. As organizations grow, it is difficult for one person to manage it all. Thus the company sub divides into smaller profit and loss centers.
17 COMMON ORGANIZATIONAL STRUCTURES Divisional Structures Common divisional structuresDivisional structures have managers who are usually responsible for the operations within the division including profit and loss responsibility.
18 COMMON ORGANIZATIONAL STRUCTURES Divisional Structures Potential Advantages of Divisional StructuresExpertise focused on special products, customers, regionsBetter coordination across functions within divisionsBetter accountability for product or service deliveryEasier to grow or shrink in size as conditions changeDivisions make restructuring easier. Organizations can sell or spin off large divisions, for example GE recently spun off NBC, and Time Warner and AOL recently parted ways.
19 COMMON ORGANIZATIONAL STRUCTURES Matrix Structures Matrix Structures combine functional and divisional structuresuses permanent cross functional teams to try to gain the advantages of both the functional and divisional approachesMatrix structures are complex and need to be closely managed. However, they do have distinct advantages.
20 COMMON ORGANIZATIONAL STRUCTURES Matrix Structures Notice how the matrix structure solves the communication problem of functional structures by creating cross functional teams.
21 COMMON ORGANIZATIONAL STRUCTURES Matrix Structures Potential advantages of Matrix structuresPerformance accountability rests with program, product, or project managers.Better communication exists across functions.Teams solve problems at their levels.Top managers spend more time on strategy.Functional chimneys or silos are prevented with improved communication and cross functional teams.
22 COMMON ORGANIZATIONAL STRUCTURES Team Structures Make use of permanent and temporary cross functional teamsImproved problem solving and project managementTeam structures have a number of advantages but they also have some of the disadvantages of group think.
23 COMMON ORGANIZATIONAL STRUCTURES Team Structures Team structure example
24 COMMON ORGANIZATIONAL STRUCTURES Team Structures Possible advantages of Team structuresTeam assignments improve communication, cooperation, and decision-making.Team members get to know each other as persons, not just job titles.Team memberships boost morale, and increase enthusiasm and task involvement.Team structures may increase commitment and expertise on projects.
25 COMMON ORGANIZATIONAL STRUCTURES Network Structures Consist of a central core with networks of relationships with contractorsContractors and network partners supply essential servicesNetwork structures are increasingly common as information technology and supply chain integration become more sophisticated.
26 COMMON ORGANIZATIONAL STRUCTURES Network Structures Network structure exampleThe network structure requires close relationships with a few trusted sub-contractors.
27 COMMON ORGANIZATIONAL STRUCTURES Network Structures Possible advantages of Network structures • Lower costs due to fewer full-time employees. • Better access to expertise through specialized alliance partners and contractors. • Easy to grow or shrink with market conditions.More and more organizations are using network structures. The Nike case for this chapter seems to make a case that Nike uses a network structure.
28 COMMON ORGANIZATIONAL STRUCTURES Network Structures Virtual OrganizationsNetwork that depends on information technology to link alliances and essential servicesVirtual organizations are a form of network structures. They have become an innovative way to build an organization through outsourcing.
29 8.3 Organizational Design Trends Organizations are becoming flatter, with fewer levels of managementOrganizations are increasing decentralizationOrganizations are increasing delegation and empowermentOrganizations are becoming more horizontal and adaptiveOrganizations are using more alternative work schedules
30 ORGANIZATIONAL DESIGN TRENDS Organizational Design Aligns structure to best accomplish mission and respond to external environmentIf the external environment demands a change in mission, the design may also need to change in response. Difficult economic times such as a recession may require change.
31 ORGANIZATIONAL DESIGN TRENDS Organizational Design Span of controlHow many people report to a managerNarrowmanger supervises few peopleWidemanger supervises larger number of peopleflatter organizations have wide span of controlWide spans of control are usually found where workers are performing similar tasks. The more diverse the functions, the more likely the span of control will be narrow.
33 ORGANIZATIONAL DESIGN TRENDS Decentralized Decision-making CentralizationTop management keeps strong decision-making controlDecentralizationDecision-making is distributed throughout the organizationDecentralization, empowerment and delegation require competent loyal employees, a confident manager and a good feedback and control process.
34 ORGANIZATIONAL DESIGN TRENDS Increased Delegation Giving others the right to make decisions and take actionStepsAssign responsibility—explain task and expectations to others.Grant authority—allow others to act as needed to complete task.Create accountability—require others to report back, complete task.Without accountability, delegation does not require any individual responsibility for results.
35 Empowerment Empowerment Gives people freedom to do their jobs as they think best.When delegation is done well it leads to empowerment.
36 ORGANIZATIONAL DESIGN TRENDS Horizontal and Adaptive Organizations BureaucracyFormal authorityRulesOrderFairnessMechanistic DesignsBureaucraticCentralizedVertical structureMany organizations remain bureaucratic and mechanistic. Government organizations and colleges are often a good examples. Employees do not feel empowered and are reluctant to go outside a narrow definition of their job description.
37 ORGANIZATIONAL DESIGN TRENDS Horizontal and Adaptive Organizations Organic DesignsAdaptableDecentralizedHorizontal StructureOrganic designs are more able to quickly respond do external environmental change and opportunities. Workers feel empowered to solve problems and use necessary resources to accomplish their task.
38 ORGANIZATIONAL DESIGN TRENDS Horizontal and Adaptive Organizations This chart shows the two extremes. There are many organizations that are in between. Students may have suggestions for organizations and how they fit within this continuum.
39 ORGNIZATIONAL DESIGN TRENDS Alternative Work Schedules Alternative schedules increase flexibility and increase satisfaction for employers and employeesCompressed workweekFlextimeJob sharingTelecommutingBest Buy’s “Results Only Work Environment” that allows employees in some departments at their corporate headquarters in Minneapolis to work anywhere, any time as long as they achieve the required results is an extreme example.