Organizational

1
Organizational Structure
2
What is organizing?

• The process of creating an organizations
  structure

3
Organization Structure
Organization Design
The framework for dividing, assigning, and
coordinating work
Developments in or changes to the structure of an
organization
4
What is Your Task?

• Your task as a manager is to create an
  organizational structure that
• 1. Supports your strategic plan
• 2. Encourages the knowledge, skills and attitudes
  required to support the strategic plan
• 3. Encourages people and groups to cooperate and
  work together effectively.

5
Structure and Culture Affect

• Behavior
• Motivation
• Performance
• Teamwork and cooperation
• Intergroup and Interdepartmental relationships
• Why is this true?

6
What bearing does organizational design have on
organizational behavior?

• As a manager, you (or your team) must decide
• How you want your people to behave
• What attitudes you want to encourage
• What you want your people to accomplish
• Then you can design the organizations structure
  to encourage the development of
• Cultural values and norms
• Desired attitudes, behaviors, and goals.

7
How does an organization determine which
attitudes and behaviors to encourage?

• An organization bases design decisions on the
  contingencies it faces (a contingency is any
  event that might possibly occur and thus must be
  taken into account in planning).

8
Factors Affecting Organizational Design
Environment
Determine design or organizational structure
Strategic Plan
Technology
Culture
9
Determinants of Structure

• The environment The quicker the environment
  changes, the more problems face managers.
• Structure must be more flexible when
  environmental change is rapid.
• Usually need to decentralize authority.

10
Determinants of Structure

• Strategy Different strategies require the use of
  different structures.
• A differentiation strategy needs a flexible
  structure, low cost may need a more formal
  structure.

11
Determinants of Structure

• Technology The combination of skills, knowledge,
  tools, equipment, computers and machines used in
  the organization.
• More complex technology makes it harder for
  managers to regulate the organization. Technology
  can be measured by
• Task Variety new problems a manager encounters.
• Task Analyzability programmed solutions
  available to a manager to solve problems.
• High task variety and low analyzability present
  many unique problems to managers.
• Flexible structure works best in these
  conditions.
• Low task variety and high analyzability allow
  managers to rely on established procedures.

12
Technology People

• Small Batch Technology produces small quantities
  of one-of-a-kind products.
• Based on the skills of the workers who need a
  flexible structure.
• Mass Production Technology automated machines
  make high volumes of standard products.
• Workers perform repetitive tasks so a formal
  structure works well.
• Continuous Process Technology totally mechanized
  systems of automatic machines.
• Workers must watch for unexpected problems and
  react quickly. A flexible structure is needed
  here.

13
Determinants of Structure

• Human Resources the final factor affecting
  organizational structure.
• Higher skilled workers who need to work in teams
  usually need a more flexible structure.
• Higher skilled workers often have professional
  norms (CPAs, physicians).
• Managers must take into account all four
  factors (environment, strategic plan, technology
  and culture) when designing the structure of the
  organization.

14
Types of Departmentalization

• Functional
• Product
• Geographical
• Process
• Customer

15
Departmentalization

• Traditional view
• Jobs have to be grouped back together
• Most organizations will use a combination of types

• Contemporary view
• Customer departmentalization is highly popular
• Cross-functional teams are being used in addition
  to rigid functional departmentalization

16
A Sample of Pier 1s Functional Structure
17
Divisional Structures

• A division is a collection of functions working
  together to produce a product.
• Divisions create smaller, manageable parts of a
  firm.
• Divisions develop a business-level strategy to
  compete.
• A division has marketing, finance, and other
  functions.
• Functional managers report to divisional managers
  who then report to corporate management.
• Product structure divisions created according to
  the type of product or service.
• Geographic structure divisions based on the area
  of a country or world served.
• Market structure divisions based on the types of
  customers served.

18
Product Structure
19
Geographic Structure
20
Market Structure
21
Global Structures

• When managers find different problems or demands
  across the globe, global solutions are needed.
• Global geographic structure different divisions
  serve each world region.
• For customer needs that vary between regions.
• Global product structure Customers in different
  regions buy similar products so firms keep most
  functional work at home and set up a division to
  market product abroad.

22
Matrix Product Teams

• Matrix structure managers group people by
  function and product teams simultaneously.
• Results in a complex network of reporting
  relationships.
• Very flexible and can respond rapidly to change.
• Each employee has two bosses which can cause
  problems.
• Functional manager gives different directions
  than product manager and employee cannot satisfy
  both.
• Product Team Structure no 2-way reporting and
  the members are permanently assigned to the team
  and empowered to bring a product to market.

23
Matrix Structure
CEO
Func. Managers
Sales
Design
Production
Product team A
Team Managers
Product team B
Product Team
Product team C
two boss employee
24
Product Team Structure
25
Hybrid Structures

• Many large organizations have divisional
  structures where each manager can select the best
  structure for that particular division.
• One division may use a functional structure, one
  geographic, and so on.
• This ability to break a large organization into
  many smaller ones makes it much easier to manage.

26
Team Structure
27
Team Structure
28
21st Century Organizational Trends

• Globalization
• Increasingly globalized sales, manufacturing,
  research, management
• Movement from direct exports to having sales
  offices in different countries to having
  manufacturing to all functions spread across the
  globe
• Increasingly globalized labor market
• Due to
• reduced cost and improved quality of
  international transportation and communication
• search for unsaturated markets
• exploit regional cost and expertise differences

29
21st Century Organizational Trends

• Diversity
• Workforce getting more heterogeneous sexually,
  racially, culturally, individually, etc.
• Source of both innovation and conflict/communicati
  on problems
• Need to cope with different styles of
  interaction, dress, presentation, physical
  appearance
• Due to
• changing demographics
• globalization of the labor market

30
21st Century Organizational Trends

• Flexible
• Organizational systems and processes and people
  that can respond differently to different
  situations
• Fewer detailed rules and procedures
• Greater autonomy, encouragement for initiative
• Customizable employment relationships
  telecommuting, job sharing, mommy tracks, pay for
  skills
• Lifetime employability, not lifetime employment
• Due to
• differentiated customer needs -- filling them
  exactly is source of competitive advantage
• increasing diversity in workplace
• increased pace of change in technology and
  markets

31
21st Century Organizational Trends

• Flat
• Fewer levels of management,
• Workers empowered to make decisions
• Fewer differences in responsibility (not in pay)
  across levels
• Due to
• need for speed, which makes it helpful to empower
  employees to make decisions, which means fewer
  managers are needed
• changes in information technology mean less need
  for the communication and control functions of
  middle managers
• globalization means intensified competition,
  which increases the need to cut costs

32
21st Century Organizational Trends

• Networked
• Direct communication across unit firm
  boundaries, ignoring chain of command
• Cross-unit team structures
• Outsourcing downsizing
• Strategic alliances with competitors and others
• Now have firms that are your competitors,
  customers and collaborators all at the same time

33
21st Century Organizational Trends

• Networked
• Close coordination among firms (e.g., JIT
  systems) and information sharing (open computer
  systems)
• Across the board contact with customers, not just
  official boundary spanners
• Customization
• Decentralization
• Due to
• new information technologies, especially
  groupware, client-server, distributed computing
• fast changing customer needs and competitor
  offerings
• more complicated products require better
  integration of manufacturing, design, and
  marketing functions

34
Coordinating Functions

• To ensure sufficient coordination between
  functions, managers delegate authority.
• Authority the power vested in the manager to
  make decisions and use resources.
• Hierarchy of authority describes the relative
  authority each manager has from top to bottom.
• Span of Control refers to the number of
  workers a manager manages.
• Line authority managers in the direct chain of
  command for production of goods or services.
  Example Sales
• Staff authority managers in positions that
  give advice to line managers. Example Legal

35
Tall Flat Organizations

• Tall structures have many levels of authority
  relative to the organizations size.
• As levels in the hierarchy increase,
  communication gets difficult.
• The extra levels result in more time being taken
  to implement decisions.
• Communications can also become garbled as it is
  repeated through the firm.
• Flat structures have few levels but wide spans of
  control.
• Results in quick communications but can lead to
  overworked managers.

36
Minimum Chain of Command

• Managers should carefully evaluate
• Do they have the right number of middle managers?
• Can the structure be altered to reduce levels?
• Centralized v. Decentralized
• Decentralized operations puts more authority at
  lower levels and leads to flat organizations.
• Workers must be able to reach decisions.
• Divisions and functions can begin to lose sight
  of organizational goals and focus only on their
  small area.

37
Integrating Mechanisms

• Direct contact get managers from different
  divisions or functions together to solve mutual
  problems.
• Liaison Roles one manager in each area is
  responsible for communication with other areas.
• Task Forces temporary committees formed across
  divisions to solve a specific problem.
• Cross-functional teams works much like a
  permanent task force that deals with recurring
  problems.
• Matrix structure already contains many
  integrating mechanisms.

38
Strategic Alliances

• Strategic alliance a formal agreement committing
  two or more firms to exchange resources to
  produce a good.
• Network Structure a whole series of strategic
  alliances.
• Created between suppliers, manufacturers, and
  distributors.
• Toyota and Honda use many such alliances.
• Network structures allow firms to bring resources
  together in a boundary-less organization.