Organizational Structure (Final)

Functional Structure

(PG 3)

Divisional Product Structure

(PG 4)

Six questions for Designing the Proper organizational structure

(pg 1)

Strengths of a Functional Structure

-Functional interests within departments are maximized -It makes easier to organize re-training program. -Effective using of human resources without overlapping. -Effective communication system within departments -Effective control system from top management

Disadvantages of Specialization

-Job Satisfaction might be decreasing -Reduction of employee's responsibility for final products -Difficulties to find new job because particular (narrow) specialization -Fatigue, stress, boredom, low quality products, absenteeism and high turnover

Advantages of Specialization

-Makes efficient use of employee skills -Increases employee skills through repetition -Less downtime, increases productivity - Specialized training is more efficient - Allows use of specialized equipment

Weaknesses of a Divisional Organizational Structure

-Overlapping functions within each division, increasing costs -Difficulties with coordination and communication among specialties from different product divisions -Sometimes lack of competence & specialization takes place

Divisional Departmentalization

-Product Departmentalization jobs are grouped by product line in which each major product area is placed under the authority of a manager whom is responsible for all aspects of the product line. -Geographical Departmentalization groups jobs on the basis of territory or geography. , -Customer Departmentalization groups jobs on the basis of a common set of needs or problems of specific customers. For instance, a plumbing firm may group its work according to whether it is serving private sector, public sector, government, or not-for-profit organizations.

Weaknesses of a Functional Structure

-The positioning of employees to focus only on a department's interests -Difficulties with preparing "generalist" specialities of a broad area -Difficulties with coordination tasks among different departments -Difficulties to find a new job because particular (narrow) specialization

Strengths of a Divisional Organizational Structure

-The possibility to estimate the results of a department's activity as a profit center -Easer adaptation to any changes in production, region, or clients demands -Effective coordination among functional department within a division for quickly reply -Focus on clients needs and demands -Decentralization of authority which needs creativity from managers

Matrix Structure weaknesses Need to finish

-employees should be able to work in a team because they need com. skills

The advantages of wide span of control are:

1) There are less layers of management to pass a message through, so the message reaches more employees faster 2) It costs less money to run a wider span of control because a business does not need to employ as many managers

Matrix Structure strengths

1. Fast adaptation to any changes in projects, high speed of innovations 2. The possibility to produce adequate and simultaneously responds on the several market segments 3. The possibility to maximize using human and other recourses. 4. Good functional specialists might take part in all company's projects. 5. Stimulate developing functional and project skills. 6. Give the possibility for creative self organization. 7. Flexibility

Main types of departmentalization

1. Functional Departmentalization 2. Divisional Departmentalization 3. Matrix Structure 4. Virtual Structure

Chain of command presupposes two principles

Authority and Unity-of-command

The advantages of a narrow span of control are:

By keeping the span of control to five or six employees, a manager can maintain close control. -A narrow span of control allows a manager to communicate quickly with the employees under them and control them more easily -Feedback of ideas from the workers will be more effective -It requires a higher level of management skill to control a greater number of employees, so there is less management skill required

Factors That May Influence on Span of Control

Job complexity Similarity of subordinate jobs Physical proximity of subordinates Abilities of employees Abilities of the manager Technology PG 7

Matrix Structure

PG 5

Span of control

Span of control is the number of subordinates a manager can efficiently and effectively direct. The more people under the control of one manager - the wider the span of control. Less means a narrower span of control. On the first glance, the wider or larger the span, the more efficient the organization.

work specialization

To what degree are activities subdivided into separate jobs?

chain of command

Who reports to who?

Departmentalization

Work specialization leads to departmentalization. Departmentalization is the basis on which work or individuals are grouped into manageable units.

Mechanistic Structure

an organizational design that emphasizes structured activities, specialized tasks, and centralized decision making

Organic Structure

an organizational design that emphasizes teamwork, open communication, and decentralized decision making

Virtual Structure

consists on a small numbers of executives and outside contractors

Functional Departmentalization

groups jobs by the functions that they perform. All types of organizations can use this approach although functions may change to reflect the organization's objectives. The advantage of this type of grouping is obtaining efficiencies from consolidating similar specialties and people with common skills, knowledge and orientations together in common units.

Unity-of-command principle

helps preserve the concept of an unbroken line of authority. It states that a person should have one and only one superior to whom that person is directly responsible.

span of control

how many employees a manager is responsible for

Level of Centralization/decentralization is measured

in term of amount of authority in making decision and responsibility each level of executive have.

Matrix structure

is an attempt to combine the advantages of the pure functional structure and the product organizational structure. (Project structure).

Decentralization:

management shares decision-making authority with lower-level employees.

Formalization

refers to the degree to which jobs within the organization are standardized A company with a high degree of formalization is characterized by detailed job descriptions and clearly defined policies and procedures covering a wide variety of employee behaviors. Conversely, a company with a low level of formalization is characterized by non-structured jobs and fewer explicit policies and procedures.

Authority

refers to the rights inherent in a managerial position to give orders and expect the order to be obeyed

Standardization

solving problems by applying rules, procedures, and processes

Chain of Command

the line on which orders and decisions are passed down from top to bottom of the hierarchy. In a hierarchy the chain of command means that a production manager may be higher up the hierarchy, but will not be able to tell a marketing person what to do.

Centralization:

the retention of decision-making authority by top management. -Centralization of decision making determines the level at which significant organizational decisions are made

centralization

where decisions are formally made in an org.