Chapter 5: Managing Organizational Structure

Cross-functional team

A group of individuals from different departments brought together to perform organizational tasks

Divisional Structure

An organizational structure composed of separate business units which produce a specific kinds of products for a specific kind of customer. 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 teams

An organizational structure in which employees are permanently assigned to a cross-functional team and report only to the project team manager or to one of this or her direct subordinates.

Departmentalization: Simple Structure

Departmentalization - how to group jobs together into units to best match the needs of the organization's environment,strategy, technology, and human resources • Small businesses and entrepreneurial start-ups often adopt a very simple structure • The owner is the general manager responsible for the activities in all the functions

Geographic division

Divisions are based on the area of a country or world served.

Product division

Divisions are created according to the type of product or service.

Market segmented

Divisions based on the types of customers served.

Flat structures

Few levels but wide spans of control. Results in quick communications but can lead to overworked managers.

managers design organizational structures with four important elements in mind

How to group tasks into individual jobs that are interesting and motivating for employees. How to group jobs into departments and divisions as organizations grow. How to allocate authority among functional areas and divisions to ensure coordination and integration. Whether to pursue a more formal or flexible structure.

Functional Structure

It consists of all departments, such as marketing, production, and finance, that an organization uses to produce its good or service. Pros:- Workers can learn from others doing similar tasks. - Easy for managers to monitor and evaluate workers. Cons: - Hard for one department to communicate with others. - Managers can become preoccupied with their department and forget the firm.

Tall structures

Many levels of authority. As levels in the hierarchy increase, communication gets difficult. The extra levels result in more time being taken to implement decisions.

Job Characteristics Model

Model of job design that explains how managers can make jobs more interesting and motivating. Five characteristics: • Skill Variety • Task Identity • Task Significance • Autonomy • Feedback

Outsourcing

Offers opportunities to reduce costs and increase organizational flexibility. • Choosing the wrong activities to outsource• Choosing the wrong vendor • Writing a poor contract • Failing to consider personnel issues • Losing control over the activity • Ignoring the hidden costs • Failing to develop an exit strategy

Job Simplification

Reduction of the number of tasks each worker performs. Intended to increase employee productivity and efficiency. Too much simplification and boredom results.

Organizational Structure

The formal system of task and reporting relationships showing how workers use resources to reach organizational goals.

Job Design

The process by which managers decide how to divide tasks into specific jobs. This results in a division of labour between workers that is effective and efficient. Work specialization

Organizing

The process by which managers establish working relationships among employees to achieve goals.

Organizational Design

The process by which managers make specific choices result in a given organizational structure.

Network Structure

a series of global strategic alliances that organizations create with suppliers, manufacturers, and distributors to to produce and market a product. Created between suppliers, manufacturers, and distributors. Example: Toyota and Honda • Network structures allow firms to bring resources together in a boundaryless organization. • Example: Nike

Job Enlargement

increase tasks for a given job by changing the division of labour. Increasing the range of tasks performed by an employee will reduces boredom and fatigue and may increase motivation to perform at a high level—increasing both the quantity and the quality of goods and services provided.

Job Enrichment

increases the degree of responsibility a worker has over a job. Empowering employees Encouraging employees to develop new skills Allowing employees to decide how to do the work Allowing employees to monitor and measure their own performance

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

Minimum Chain of Command

• Managers should consider: Do they have the right number of middle managers? Can the structure be altered to reduce levels? • Centralized vs. Decentralized • Decentralized operations puts more authority at lower levels and leads to flat organizations.

Allocating Authority

• To ensure sufficient coordination between functions, managers delegate authority. Authority is the power vested in the manager to make decisions and use resources. Hierarchy of Authority describes each manager's relative authority from top to bottom. Span of Control: refers to the number of workers a manager manages.

Choosing a Formalor Flexible Structure Overall

• Two basic ways in which managers can organize and control an organization's activities to respond to characteristics of its external environment: Mechanistic Structure Organic Structure