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Organizing

Organizing key concepts and purpose


Determinants of structure
Steps in designing the organizational structure
Grouping tasks into jobs: job design and job description
Grouping jobs into functions and divisions and allocating
authority
Integrating mechanisms
How to organize for performance

Organizing Key Concepts

Organizing
The process by which managers establish tasks and 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.

Organizing Key Concepts

Work specialization - the degree to which organizational


tasks are subdivided into individual jobs; also called division
of labor.
Organization chart - the visual representation of an
organizations structure.
Job analysis - an assessment that defines jobs and the
behaviors necessary to perform them
Job description - a written statement that describes a job
Job specification - a written statement of the minimum
qualifications that a person must possess to perform a given
job successfully

Purposes of Organizing

Divides work to be done into specific jobs and departments.


Assigns tasks and responsibilities associated with individual
jobs.
Coordinates diverse organizational tasks.
Clusters jobs into units.
Establishes relationships among individuals, groups, and
departments.
Establishes formal lines of authority.
Allocates and deploys organizational resources.

Factors affecting organizational


structure

Determinants of Structure
1.

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.

2.

Strategy
Different strategies require the use of different structures.
A differentiation strategy needs a flexible structure, low cost
may need a more formal structure.
Increased vertical integration or diversification also requires a
more flexible structure.

Determinants of Structure
3.

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.
Organizations utilizing complex technology require a flexible
structure to be managed efficiently.

Organizations utilizing routine technology can be more readily


managed using a formal structure.
Organizations with high employee interaction requirements
need a flexible structure.

Types of Technology

Small Batch Technology


Small quantities of one-of-a-kind products are produced by the
skills of the workers who work together in small groups.
Appropriate structure is decentralized and flexible.

Mass Production Technology


Automated machines that are programmed to make high
volumes of standard products.
Formal structure is the best choice for workers who must
perform repetitive tasks.

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Determinants of Structure
4.

Human Resources
Highly skilled workers whose jobs
require working in teams usually
need a more flexible structure.
Higher skilled workers (such as
researchers and doctors) often have
internalized professional norms.

Managers must take into account all four factors


(environment, strategy, technology and human resources)
when designing the structure of the organization.

Formal and informal structures


Formal structures
Based on rules, procedures
and standards
Documented in job
descriptions and
organizational charts
Key words: authority,
hierarchy, span of control,
chain of command

Informal structures/groups
Groups that perform any
type of activity, without an
explicit common goal
Networks of people and
relationships, based on
spontaneous individual
affiliations in the work
environment
May include both managers
and ICs

Steps in Designing Organizational Structure


1.
2.
3.
4.
5.

Documenting organizational goals and objectives


Acknowledging the amount of work needed for achieving
the goals and objectives and turning it into tasks
Grouping tasks into jobs and jobs into functions and
divisions
Allocating authority and evaluating chains of command
Reviewing and updating organizational charts and job
descriptions as often as necessary

Grouping Tasks Into Jobs: Job Design

Job Design
The process by which managers decide how to divide tasks into
specific jobs.

Division of Labor
Splitting the work to be performed into particularly impersonal
tasks and assigning tasks to individual workers.
The appropriate division of labor results in an effective and
efficient workforce.

Job Simplification
Reducing the tasks each worker performs: too much
simplification results in boredom.

Job Design

Job Enlargement increase the width of task


Increasing the number of tasks for a given job by changing the
division of labor.
The intention is to reduce boredom and fatigue by increasing
variety of tasks performed.

Job Enrichment - increase the depth of task


Increasing the degree of responsibility a worker has over a job.
Intended to increase worker involvement and self-discretion.
Requires a flexible organizational structure to allow employees
to act flexibly and creatively.

Copyright 2004 McGraw-Hill. All


rights reserved.

Job Description

Job descriptions are written statements that describe the:


Duties,
Responsibilities,
Most important contributions and outcomes needed from a
position,
Required qualifications of candidates,
Reporting relationship and coworkers of a particular job.

are based on objective information obtained through job


analysis
Job analysis - an understanding of the competencies and
skills required to accomplish needed tasks, and the needs of
the organization to produce work

Job Description Template

Title of Job
Position Description
Reports to: and Direct Reports (Span of Authority)
Job Purpose
Primary Objectives
Specific Duties and Responsibilities of the Job
Qualifications
Job Requirements (Specialized Knowledge, Skills, Abilities, Personal
Characteristics)
Education, Professional Certification, Experience
Physical Demands

Work Environment
Approval (Approved by, Date of approval, Reviewed by)
Employee Acknowledgement (employees and supervisors
signature)

Listing Duties and Responsibilities

Identify between three and eight primary duties and


responsibilities for the position
List the primary duties and responsibilities in order of
importance
Begin each statement with an action verb
Use the present tense of verbs
Use gender neutral language such as s/he
Use generic language such a photocopy instead of Xerox
Where appropriate use qualifiers to clarify the task where,
when, why or how often
Avoid words that are open to interpretation

Job Characteristics Model


Job Characteristic
Skill variety

Employee uses a wide range of skills

Task identity

Worker is involved in all tasks of the job from


beginning to end of production process

Task significance

Worker feels the task is meaningful to organization

Autonomy

Employee has freedom to schedule tasks and carry


them out
Worker gets direct information about how well the
job is done

Feedback

The Job Characteristics Model

Figure 7.2

Grouping jobs into functions and divisions


Functional
Structure

Divisional
Structure

Matrix
Structure

Product
Team
Structure

Product

Groups people
and resources by
Product

Permanently
assigned team
members

Groups people
and resources by
Function

Cross-functional
teams

Functions:
Finance/
Accounting
Manufacturing/
Operations/
Services Delivery
Sales/ Marketing
R&D
HR
Infrastructure
(Legal, IT)

Geographic

Market/Customer

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

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

The Functional
Structure of
Pier 1 Imports

Figure 7.3

Types of Structures
Divisional Structure
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 upper management.

Divisional
Structures

Figure 7.4

Types of Divisional Structures

Product Structure
Customers are served by self-contained divisions that handle a
specific type of product or service.
Allows functional managers to specialize in one product area.
Division managers become experts in their area.
Removes need for direct supervision of division by corporate
managers.
Divisional management improves the use of resources.

Viacoms 2001
Product
Structure

725

Types of Divisional Structures

Geographic Structure
Each regional or a country or area with customers with differing
needs is served by a local self-contained division producing
products that best meet those needs.
Global geographic structure
Different divisions serve each world region when managers find
different problems or demands across the globe.
Generally, this structure is adopted when managers are pursuing a
multidomestic strategy.

726

Types of Divisional Structures

Market (Customer) Structure


Each kind of customer is served by a self-contained division
Global market (customer) structure
Customers in different regions buy similar products so firms can
locate manufacturing facilities and product distribution networks
where they decide is best.
Firms pursuing a global strategy will use this type of structure.

Copyright 2004 McGraw-Hill. All


rights reserved.

Global Geographic and Global Product Structures

Types of Structures
Matrix 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 possibly cannot satisfy both.

Matrix Structure

730

Types of Structures
Product Team 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 Structure

732

Allocating Authority

Authority - The power to hold people accountable for their actions


and to make decisions concerning the use of organizational resources.
Hierarchy of Authority - An organizations chain of command,
specifying the relative authority of each manager.
Span of Control - The number of subordinates who report directly to
a manager.
Line Manager
Managers in the direct chain of command who have authority over people
and resources lower down.
Primarily responsible for the production of goods or services.

Staff Manager
Managers who are functional-area specialists that give advice to line
managers.

The Hierarchy of
Authority and Span
of Control at
McDonalds
Corporation

Tall and Flat Organizations

Tall structures have of many levels authority and narrow


spans of control.
As hierarchy levels increase, communication gets difficult,
creating delays in the time being taken to implement decisions.
Communications can also become garbled as it is repeated
through the firm.

Flat structures have fewer levels and wide spans of control.


Structure results in quick communications but can lead to
overworked managers.

Flat Organizations

Tall Organizations

The Minimum Chain of Command

Managers should carefully evaluate:


Do the organization have the right number of middle managers?
Can the structure be altered to reduce levels?

Centralized and Decentralized of Authority


Decentralization puts more authority at lower levels and leads
to flatter organizations.
Decentralization works best in dynamic, highly competitive
environments.
Stable environments favor centralization of authority.

Integrating Mechanisms

Strategic Alliances and Network Structures

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.

Copyright 2004 McGraw-Hill. All


rights reserved.

740

How to Organize for Performance


Do

Always start with the


objectives
Keep the chain of command
to its minimum
Have potential replacements
for all managerial positions
Keep structures simple for a
faster information flow
The more dynamic the
environment, the more
flexible the structure

Dont

Positions reporting to more


than one manager
High dependency between a
jobs duties and anothers
outcome (replace with
collaboration)
Burdening some of the jobs
with too many responsibilities,
or duties unrelated to the job
purpose
Organizational charts or jobs
descriptions kept unchanged
for years