1. ORGANIZATION STRUCTURE
Chapter 13

2. “Management Talk”
“Our company today is leaner, faster, more flexible and more efficient – in short much more competitive. But our journey is far from finished. Building upon our recent success and momentum, we are determined to drive GM to the next level – to sustained success.”
Rick Wagoner, General Motors, Chairman and CEO

3. Objectives Read an organizational chart
List the four types of organizational structures and explain the advantages and disadvantages of each type
Name the factors that affect the type of structure an organization adopts
Describe the roles of the chief executive officer and the board of directors

4. Understanding Management
General Motors has a long, proud history of being one of the biggest car manufacturers in the world. By the 1980s and 1990s, however, the company was losing profits to newer, more efficient manufacturers. Since then, the company has updated its factories and streamlined its operations in order to reduce costs.

5. Management Skills
How would consolidating six divisions help General Motors improve serviced and cut costs? What are the possible drawbacks of merging the separate divisions?
Have you ever been in a situation at home or work where there were too many people in charge of completing a task? What suggestions would you make to simplify the process?

6. Sec. 13.1: Understanding how organizational structures work
Can you describe a graphic organizer you have used in school or the classroom?
What are the benefits of using them?
Why is it important for businesses to have organization charts?

7. What You’ll Learn How to read an organizational chart
The four main types of organizational structures
The difference between staff and line functions
The benefits of adopting a matrix or team structure

8. Why is this important?
“Without an appropriate organizational structure, a business will not succeed”

9. What is an Organization Structure?
A way to organize employees into some kind of structure to meet goals
Minimizes confusion
Coordinates activities by clearly identifying which individuals are responsible for which tasks

10. Types of Organizational Structures?
Line Structure
Line and Staff Structure
Matrix Structure
Team Structure
Organizational Chart:
A visual representation of a business’s organizational structure

11. Line Structure Authority originates at the top and moves downward
Common among small companies
Line Functions
Functions that contribute directly to company profits
Production managers, sales reps, and marketing managers

12. Line Structure Line Managers Example:
Collect and analyze all information needed to carry out their responsibilities
Example:
Production Managers
Hire and fire all of the assembly-line workers in their departments
Order all supplies for their department

13. Line and Staff Structure
Mid-sized and large companies
Other employees hired to help line managers perform activities they cannot
Staff Functions
Advise and support line functions
Staff departments include: legal, human resources, and public relations
Help line departments do their jobs
Authority is limited to making recommendations to line managers

14. Matrix Structure
Allows employees from different departments to come together temporarily to work on special project teams
Provides flexibility to respond quickly to a customer need by creating a team of people who devote all of their time to a project then return to their departments or join a new project team
I.E. – Boeing – assigns employees to project teams when it creates to design a new aircraft

15. Matrix Structure

16. Team Structure
Brings together people with different skills in order to meet a particular objective
Belief is that the company will meet customer needs more effectively than traditional structures
Senior managers need not approve decisions by lower-level managers
Teams have the authority to make final decisions
Employee preferred due to its focus on completing a project rather than a task

17. Flat vs. Tall Structures
Flat structure: Small number of levels and broad span of management at each level
Manager must be able to delegate well
Advantages:
Great Job Satisfaction
More Delegation
Increased communication between levels of management
Tall Structure: Has many levels with small spans of management
Power is centralized on the top levels and there is more employee control
Greater control
Better Performance

18. FLAT TALL Span of Management 8:1 (Four Levels)
Span of Management 5:1 (Seven Levels)

19. Extension Activity!!!
Design an organizational chart that illustrates the organizational structure of Fremd High School
You can interview school staff for information
You can navigate the Fremd website to understand departmental structures and how to structure your organizational chart (Line, Line and Staff, Matrix, and/or Team)
Use Microsoft Word or Inspiration to build out your organization chart

20. What Makes an Organization Effective?
Knowing Your Customers and Responding to Their Needs
To succeed in the business world, companies must change to keep up with customer needs
What are some ways that Kodak has done this? (established first simple camera in 1888)

21. 13. 1: Chapter Summary
Companies use organizational charts to visually represent their organizational structures
Businesses generally adopt one of the following four organizational structures: line structure, line and staff structure, matrix structure, or team structure

22. Sec. 13.2: Creating an Organizational Chart
List leadership roles or committee appointments that you have had
What were the positive and negative experiences that you had in these roles
How might a small company’s growth into a large corporation might change its management structure?

23. What You’ll Learn Why is this Important?
The different ways in which companies organize their departments
Why a company’s structure needs to change as the company grows
The role of the chief executive officer
The role of the board of directors
Why is this Important?
“Managers both help create and work within organizational structures.”

24. Factors Affecting Organizational Structure
Size of the business and kinds of products or services it produces
Structures will differ between:
High-teach company employing 50,000 in eight countries (Motorola, Inc.)
Small retail business with just a dozen employees (Bob’s Hardware Store)

25. “As a company grows, organizational structure must change with it”
SIZE
“As a company grows, organizational structure must change with it”
Organizational Life Cycle Stages
Stage 1: Growth through creativity
Stage 2: Growth through direction
Stage 3: Growth through delegation, coordination, and collaboration

26. Stage 1: Growth through creativity
Entrepreneurs create products or services for which there is a market
Business is small in structure
Lack formal structures, policies, and objectives
Founder is involved in every aspect of the business and makes all the decisions
Current Importance
An idea that appeals to consumers

27. Stage 2: Growth through direction
Company grows in size
Company founder is no longer solely responsible for all decision making
Professional managers hired to plan, organize, and staff
Managers create written policies, procedures, and plans
Rules and systems for hiring, firing, and rewarding employees are implemented
Set up:
Systems for employees to communicate
Financial controls/Budget constraints for departments
Formal Rules are on decision-making are formulated

28. Stage 3: Growth through delegation, coordination, and collaboration
Problems occur which include:
Company’s structure can become too rigid and decision making becomes too centralized
Lower-level employees feel left out of the decision-making process
Top executives find themselves too far removed from the customer to make good decisions
To combat these problems, stage 3 is implemented which includes:
Delegation of duties to lower-level employees in attempt to decentralize
Focuses on:
Motivating people at lower levels
Allows senior executives to devote more of their time to long-term management issues
Set up:
Systems for employees to communicate
Financial controls/Budget constraints for departments
Formal Rules are on decision-making are formulated

29. The Changing Nature of a Company’s Organizational Structure
How have the needs of Apple Computer changed over time?
Stage 1:
When a company is young, it depends heavily on technical geniuses who had a brilliant idea for a user-friendly desktop computer.
They turned this idea into a multimillion dollar company by introducing the Apple II computer in the 1970s
1976

30. The Changing Nature of a Company’s Organizational Structure
Stage 2:
As a company grows, it needs managers with excellent managerial skills. To continue to grow, in the 1980s Apple Computer replaced its co-founder, Steven Jobs, with a professional manager. The new CEO, John Sculley, helped introduce the company’s Macintosh Computer
1984

31. The Changing Nature of a Company’s Organizational Structure
Stage 3:
Managers learn to delegate authority. In 1996 company founder Steven Jobs returned to Apple as interim CEO in an effort to breathe new life into a company that had fallen on hard times. Apple’s organizational structure allowed it to introduce several important products in the 1990s, including the iMac and now in the 21st Century, the iPod and iPhone.

32. Type of Product or Service
“The number of levels within an organization increases as the level of technical complexity increases with producing a product or service”

33. Organizing a Company into Departments
Organizing Departments by Work Functions
Production
Actual creation of company’s goods or services
Marketing
Product development, pricing, distribution, sales, and advertising
Finance
Maintaining a company’s financial statements and obtaining credit so a company can grow
Human Resources
Hiring employees and placing them in appropriate jobs

34. Organizing a Company into Departments
Each function includes various positions
Production
Engineering, Manufacturing, Quality Control
Marketing
Advertising, Sales, Market Research
Finance
Accounting and Credit
Advantages:
Allows for functional specialization
Negative Effects:
Conflicts may develop between departments with different goals
Production department not concerned about advertising
Create managers whose scope is relatively narrow
Marketing manager may know a great deal about marketing, but lack skills in other aspects of the business

35. Organizing a Company into Departments
Organizing Departments by Product
Single manager oversees all activities needed to produce and market a product
Advantages:
Allows employees to identify with the product rather than with their particular job function
Develops a sense of common purpose
Helps identify which products are profitable
Allows for training executive personnel by letting them experience a broad range of functional activities
Negative Effects:
Departments could become overly competitive, to the detriment of the company as a whole
Activities are duplicated for each division [multiple marketing departments for each different product]

36. Organizing a Company into Departments
Organizing Departments in Other Ways
Geographical region
North America v Asia
Type of Customer
Sales to:
Governments
For-profit businesses
Nonprofit organizations

37. Understanding the Role of Company Leadership
Committees
An organized group of people appointed to consider or decide upon certain matters
I.E. – homecoming dance, food drive, blood drive, Grant-A-Wish, etc.
Guidelines that managers must set:
Clearly define the committee’s function
Establish authority figures within a committee
Set Clear Goals for members to attain

38. Understanding the Role of Company Leadership
Chief Executive Officer (CEO)
The most important executive in a company (Top Executive)
Together with other senior managers, the CEO:
Makes decisions about meeting the company’s objectives
Sets the company’s objectives
Determines who fills senior management positions
Develops the company’s long-term strategies
Attends the company’s annual stockholders’ meeting and answers questions about the company’s activities
Takes charge of the company in a crisis
Works with the board of directors

39. Understanding the Role of Company Leadership
Board of Directors
In companies owned by stockholders, approves all major management decisions
Meet four to six times a year
The legal representative of a company’s stockholders
Inside Board Members = Work for the company
Outside Board Members = Do not work for the company
Examines all major decisions to ensure it is in best interest of company’s stockholders
Makes it more difficult for corporate managers to act in ways that benefit them personally at the expense of the company’s owners

40. 13. 2: Chapter Summary
The type of structure a company adopts depends on many factors including the company’s size and its products or services
Many companies are organized by work functions. Others are organized by product, region, or customer
An organization may form a committee to decide upon certain matters
Senior management, led by the company’s chief executive officer, initiates or approves all of a company’s major decisions
A board of directors approves all major decisions made by corporate management

41. Math Skills
Lindholm Technologies, a high-tech company that specializes in computer graphics, has decided to reorganize its corporate structure into a team structure. By organizing into teams, Lindholm expects to be able to eliminate three mid-level managers, each earning $82,000 a year. It also expects to hire two additional entry-level employees, to be paid about $25,000 a year each. If the cost of the reorganization itself is $75,000, how much can the company expect to save after two years?

42. Assessing Computer Skills
Choose a major U.S. company, such as IBM, Apple, Home Depot, Coca-Cola, General Mills, McDonald’s. Using the Internet, find out how the company you selected is organized and identify the top six managers. Also, if you can, obtain a copy of the company’s organizational chart.