Chapter 10 Managing Organizational Structure

Leanne Powers MHR301

From McGraw-Hill Irwin Contemporary Management

Designing Organizational Structure

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

Organizational Structure
Formal system of task and reporting relationships showing how workers use resources.

Organizational design
The process by which managers make specific choices that result in a particular kind of organizational structure.

The Organizational Environment

The Organizational Environment
The quicker the environment changes, the more problems face managers. Structure must be more flexible (i.e., decentralized authority) when environmental change is rapid.

Formal or Flexible?
More flexible structure Rapidly-changing environment More complex (or nonroutine) technology Higher task variety More formal structure Stable environment Less-complex technology used in task environment Higher task analyzability

Small batch or continuous- Mass-production process production More highly-skilled workforce Strategic necessity (differentiation strategy) More vertical integration or global expansion More entry-level or semiskilled workforce Strategic necessity (lowcost strategy) Less vertical integration; fewer global operations

Job Design
Job Design
The process by which managers decide how to divide tasks into specific jobs. The appropriate division of labor results in an effective and efficient workforce.

Job Simplification
The process of reducing the tasks each worker performs.
Too much simplification and boredom results.

Job Design
Job Enlargement
Increasing the number of tasks for a given job to reduce boredom.

Job Enrichment
Increasing the degree of responsibility a worker has over a job can lead to increased worker involvement.

Job Characteristics Model

Job characteristics Skill variety Task identity Employee uses a wide range of skills Worker is involved in all tasks of the job from beginning to end of the production process Worker feels the task is meaningful to organization. Employee has freedom to schedule tasks and carry them out. Worker gets direct information about how well the job is done.

Task significance Autonomy

Feedback

Functional Structure
An organizational structure composed of all the departments that an organization requires to produce its goods or services.
Advantages
Encourages learning from others doing similar jobs. Easy for managers to monitor and evaluate workers.

Possible Disadvantages
Difficult for departments to communicate with others. Preoccupation with own department and losing sight of organizational goals.

Divisional Structures
An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer
Divisions create smaller, manageable parts of a firm. Divisions develop a business-level strategy to compete. Divisions have marketing, finance, and other functions. Functional managers report to divisional managers who then report to corporate management.

Types of Divisional Structures

Product structure
Divisions by the product group or category

Market structure
Divisions by type of customer

Geographic structure
Global or regional divisions

Divisional Structures

Divisional Structures

Divisional Structures

Matrix Design Structure

An organizational structure that simultaneously groups people and resources by function and product.
Results in a complex network of superior-subordinate reporting relationships. The structure is very flexible and can respond rapidly to the need for change. Each employee has two bosses (functional manager and product manager) and may not be able to satisfy both.

Product Team Design Structure

The members are permanently assigned to the team and empowered to bring a product to market. Avoids problems of two-way communication and the conflicting demands of functional and product team bosses. Cross-functional team is composed of a group of managers from different departments working together to perform organizational tasks.

Product Team Design Structure

Hybrid Structures
The structure of a large organization that has many divisions an simultaneously uses many different organizational structures
Managers can select the best structure for a particular divisionone division may use a functional structure, another division may have a geographic structure. The ability to break a large organization into smaller units makes it easier to manage.

Strategic Alliances
Strategic Alliance
An agreement in which managers pool or share firms resources and know-how with a foreign company and the two firms share in the rewards and risks of starting a new venture.

Network Structure:
A series of strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product. Network structures allow firms to bring resources together in a boundary-less organization.

B2B Network Structures and IT

Boundaryless Organization
An organization whose members are linked by computers, faxes, computeraided design systems, and videoconferencing and who, rarely, if ever, see one another face-to-face.

Knowledge Management System

A company-specific virtual information system that allows workers to share their knowledge and expertise and find others to help solve problems.