managing the structure and design of organizations 1
TRANSCRIPT
Organization StructureOrganization StructureFormal 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 dimensionHorizontal dimension
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The Vertical Dimension of The Vertical Dimension of Organization StructureOrganization 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.
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The Vertical Dimension of The Vertical Dimension of Organization StructureOrganization Structure (continued)(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.
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The Vertical Dimension of The Vertical Dimension of Organization Structure Organization Structure (continued)(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
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The Vertical Dimension ofThe Vertical Dimension ofOrganization StructureOrganization Structure (continued) (continued)
Organization Level
Activities Required Skills
• Talk with insiders and outsiders about• Vision• Strategy• Other major issues
• Conceptualizing• Communicating• understanding the
perspectives of others
• Help middle managers• Define and redefine
their roles• Manage conflict
• Listening• conflict management• Negotiating• Motivating
• Create and maintain the organization’s culture
• Interpersonal influence
Senior Managers
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The Vertical Dimension ofThe Vertical Dimension ofOrganization StructureOrganization Structure (continued) (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
• Deliver strategic initiatives to lower-level managers
• Communicating• Motivating• Understanding values• Managing stress
Middle Managers
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The Vertical Dimension ofThe Vertical Dimension ofOrganization StructureOrganization Structure (continued) (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
• Design jobs, teams structures and reward systems
• Negotiating• Group dynamics
Lower-level Managers
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The Vertical Dimension ofThe Vertical Dimension ofOrganization StructureOrganization Structure (continued)(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
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The Vertical Dimension ofThe Vertical Dimension ofOrganization StructureOrganization Structure (continued)(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.
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The The Horizontal DimensionHorizontal Dimension of of Organization StructureOrganization 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:FunctionalDivisionalMatrix
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Functional Departmental StructureFunctional Departmental Structure
E n g in e ering P ro du c tion M a rke ting F in an ce
P re sid e n t
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Advantages and Disadvantages of the Advantages and Disadvantages of the Functional ApproachFunctional Approach
AdvantagesDecision authority is
centralized at the top of the organization hierarchy
Career paths foster professional identity with the business function
High degree of efficiencyEconomies of scale help
develop specialized expertise in employees
DisadvantagesCommunication barriersConflict between
departmentsCoordination of products
and services is difficultDiminished responsiveness
to customers’ needsEmployees identify with
functional department goals and not organization goals or needs of the customer
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PresidentPresident
SoftwareDivisionSoftwareDivision
ConsultingSourceDivision
ConsultingSourceDivision
ComputerDivision
ComputerDivision
ProductionProduction
MarketingMarketing
FinanceFinance
ProductionProduction ProductionProduction
MarketingMarketing MarketingMarketing
FinanceFinance FinanceFinance
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Geographic-Based Geographic-Based Organization StructureOrganization Structure
U .S . a ndC a na daD iv is io n
L a tinA m e ricaD iv is io n
E u ro pe anD iv is io n
A s ianD iv is io n
P re sid e n t
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Advantages and Disadvantages of the Advantages and Disadvantages of the Divisional ApproachDivisional Approach
AdvantagesCoordination among
different business functions
Improved and speedier service
Accountability for performance
Development of general manager and executive skills
DisadvantagesDuplication of
resources by two or more departments
Reduced specialization in occupational skills
Competition among divisions
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Meetings Organization-wide Reward Systems
Task Forces and Teams
Liaison Roles
Integrating Managers
Organizational Culture
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After Jim McCann started Flora Plenty, what key strategic events triggered a change in the structure and design of the organization?
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Organization DesignOrganization DesignThe selection of an organization structure that best fits the strategic goals of the business.
Basic organization designs:
MechanisticOrganicBoundaryless
These designs incorporate vertical and horizontal structural elements.
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Organization DesignOrganization Design (continued)(continued)
As business strategy changes, so do the structural elements of organization design.
Strategic factors that affect the choices of organization design:
Organization capabilitiesTechnologyOrganization sizeEnvironmental turbulence 21
Mechanistic, Organic, and Boundaryless Mechanistic, Organic, and Boundaryless DesignsDesigns
Emphasis on teams that also may cross organization boundaries
Emphasis on teamsEmphasis on individuals working independently
Broadly defined flexible jobsBroadly defined flexible jobsNarrowly defined specialized jobs
Decentralized decision authority
Decentralized decision authority
Centralized decision authority
Informal communicationInformal communicationTop-down communication
Low formalizationLow formalizationHigh formalization
Collaboration (vertical, horizontal, customers, suppliers, competitors)
Collaboration (both vertical and horizontal)
Rigid hierarchical relationships
BoundarylessOrganicMechanistic
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Video – One Smooth StoneVideo – One Smooth Stone
Demonstrates:Economic importance of innovation.Why innovation is important for
business successIllustrates choosing an organizational
structure and the reasons behind that choice.
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This demonstrates the that each individual is accountable for
A) CoordinationB) ResponsibilityC) CentralizationD) Formalization
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