1. BA 351 Managing Organizations
Managing the Structure and
Design of Organizations

2. Organization Structure
Formal system of relationships that determine:
Lines of authority – who reports to whom.
Tasks assigned to individuals and units – who does what tasks and with which department.
Dimensions of organization structure:
Vertical dimension
Horizontal dimension

3. The Vertical Dimension of Organization Structure
Unity of Command – a subordinate should have only one direct supervisor.
A decision can be traced back from the subordinates who carry it out to the manager who made it.

4. The Vertical Dimension of Organization Structure (continued)
Authority – The formal right of a manager to make decisions, give orders, and expect the orders to be carried out.
Line Authority
Staff Authority
Responsibility – the manager’s duty to perform an assigned task.
Accountability – the manager (or other employee) with authority and responsibility must be able to justify results to a manager at a higher level in the organizational hierarchy.

5. The Vertical Dimension of Organization Structure (continued)
Line Authority
entitles a manager to directly control the work of subordinates by hiring, discharging, evaluating, and rewarding them
line managers hold positions that contribute directly to the strategic goals of the organization
part of the chain of command
Staff Authority
the right to provide advice, recommend, and counsel line managers and others in the organization
staff managers direct line managers

6. Yes or No
Can a manager hold line authority and staff authority at the same time?

7. The Vertical Dimension of Organization Structure (continued)
Organization Level
Activities
Required Skills
Talk with insiders and outsiders about
Vision
Strategy
Other major issues
Conceptualizing
Communicating
understanding the perspectives of others
Senior Managers
Help middle managers
Define and redefine their roles
Manage conflict
Listening
conflict management
Negotiating
Motivating
Create and maintain the organization’s culture
Interpersonal influence

8. The Vertical Dimension of Organization Structure (continued)
Organization Level
Activities
Required Skills
Champion’ strategic ideas
Help firm to remain adaptive
Networking
Communicating
Influencing
Process data and information for use by other individuals
Analysis
Communication
Middle
Managers
Deliver strategic initiatives to lower-level managers
Communicating
Motivating
Understanding values
Managing stress

9. The Vertical Dimension of Organization Structure (continued)
Organization Level
Activities
Required Skills
Coaching firm’s associates (workers)
Teaching
Listening
Understanding personalities
Managing stress
Removing obstacles for associates
Deal with personal problems of associates
Negotiating
Influencing others
Counseling
Understanding personalities
Lower-level
Managers
Design jobs, teams structures and reward systems
Negotiating
Group dynamics

10. The Vertical Dimension of Organization Structure (continued)
Span of control – the feature of vertical structure that outlines:
The number of subordinates who report to a manager.
The number of managers.
The layers of management within an organization.
Smaller span – fewer employees supervised by a manager – creates a tall vertical organizational structure
Larger span – greater number of employees supervised – creates a flat organizational structure

11. The Vertical Dimension of Organization Structure (continued)
Centralization – the location of decision authority at the top of the organization hierarchy.
Decentralization – the location of decision authority at lower levels in the organization.
Formalization – the degree of written documentation that is used to direct and control employees.

12. The Horizontal Dimension of Organization Structure
The organization structure element that is the basis for:
Dividing work into specific jobs and tasks.
Assigning jobs into units such as departments or teams.
Departmentalization:
Functional
Divisional
Matrix

13. Functional Departmental Structure

14. Advantages and Disadvantages of the Functional Approach
Decision authority is centralized at the top of the organization hierarchy
Career paths foster professional identity with the business function
High degree of efficiency
Economies of scale help develop specialized expertise in employees
Disadvantages
Communication barriers
Conflict between departments
Coordination of products and services is difficult
Diminished responsiveness to customers’ needs
Employees identify with functional department goals and not organization goals or needs of the customer

15. Divisional Organization Structure
President
Computer
Division
Software
Division
Consulting
Source
Division
Production
Production
Production
Marketing
Marketing
Marketing
Finance
Finance
Finance

16. Geographic-Based Organization Structure

17. Advantages and Disadvantages of the Divisional Approach
Coordination among different business functions
Improved and speedier service
Accountability for performance
Development of general manager and executive skills
Disadvantages
Duplication of resources by two or more departments
Reduced specialization in occupational skills
Competition among divisions

18. Coordination Mechanisms
Meetings
Organization-wide Reward Systems
Task Forces and Teams
Liaison Roles
Integrating Managers
Organizational Culture

19. Video – Destination CEO Jim McCann
After Jim McCann started Flora Plenty, what key strategic events triggered a change in the structure and design of the organization?

20. Organization Design
The selection of an organization structure that best fits the strategic goals of the business.
Basic organization designs:
Mechanistic
Organic
Boundaryless
These designs incorporate vertical and horizontal structural elements.

21. Organization Design (continued)
As business strategy changes, so do the structural elements of organization design.
Strategic factors that affect the choices of organization design:
Organization capabilities
Technology
Organization size
Environmental turbulence

22. Mechanistic, Organic, and Boundaryless Designs
Emphasis on teams that also may cross organization boundaries
Emphasis on teams
Emphasis on individuals working independently
Broadly defined flexible jobs
Narrowly defined specialized jobs
Decentralized decision authority
Centralized decision authority
Informal communication
Top-down communication
Low formalization
High formalization
Collaboration (vertical, horizontal, customers, suppliers, competitors)
Collaboration (both vertical and horizontal)
Rigid hierarchical relationships
Boundaryless
Organic
Mechanistic

23. Video – One Smooth Stone
Demonstrates:
Economic importance of innovation.
Why innovation is important for business success
Illustrates choosing an organizational structure and the reasons behind that choice.

24. This demonstrates the that each individual is accountable for
Coordination
Responsibility
Centralization
Formalization
At One Smooth Stone, there are no real business units, only a group of individuals who each have unique talents to offer the company in pursuit of client goals. Still, these individuals are interdependent and are required to meet deadlines and objectives as agreed upon by the group, to contribute to a common goal.

25. Redesigning Organizations
Merger
Acquisition
Divestiture
Downsizing