ORGANIZATION STRUCTURES
“It’s all about working
together”
ORGANIZATION STRUCTURES
Organizing As A Management Responsibility
● Organizing is one of the management
functions.
● Organization charts describe the formal
structures of organizations.
● Organizations also operate with
important informal structures.
● Informal structures have good points
and bad points.
ORGANIZATION STRUCTURES
Organizing As A Management Responsibility
● Organizing
● process of arranging people and resources to work
toward a common goal.
ORGANIZATION STRUCTURES
Organizing As A Management Responsibility
● Structure
● system of tasks, reporting relationships, and communication that links
people and positions within an organization.
● Organization Charts
● describe the formal structure, how an organization should ideally work.
ORGANIZATION STRUCTURES
Organizing As A Management Responsibility
● What You Can Learn from an Organization Chart
● Division of work - Positions and titles show work responsibilities.
● Supervisory relationships - Lines between positions show who reports to
whom in the chain of command.
● Span of control - The number of persons reporting to a supervisor.
● Communication channels - Lines between positions show routes for formal
communication flows.
● Major subunits - Which job titles are grouped together in work units,
departments, or divisions.
● Staff positions - Staff specialists that support other positions and parts of the
organization.
● Levels of management - The number of management layers from top to
bottom.
ORGANIZATION STRUCTURES
Organizing As A Management Responsibility
● Division of Labor
● People and groups performing different jobs
● Formal Structure
● The official structure of the organization
● Informal Structure
● the unofficial relationships that develop among
an organization’s members.
ORGANIZATION STRUCTURES
Organizing As A Management Responsibility
Span of Management/
Span of Control
● Number of employees who report to a
supervisor
● Traditional view = seven subordinates per
manager
● Lean organizations today = 30+
subordinates
● Supervisor Involvement
● must be closely involved with subordinates,
the span should be small
● need little involvement with subordinates, it
can be large
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Factors Associated With Less Supervisor
Involvement
● Work is stable and routine
● Subordinates perform similar work tasks
● Subordinates are concentrated in a single
location
● Subordinates are highly trained
● Rules and procedure defining task activities are
available
● Little time is required in nonsupervisory activities
● Managers’ preferences and styles favor a large
span
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Tall versus Flat Structure
● Span of Control used in an organization
determines whether the structure is tall or
flat
● Tall structure has a narrow span and more
hierarchical levels
● Flat structure has a wide span, is
horizontally dispersed and fewer
hierarchical levels
● The trend has been toward wider spans of
control
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Centralization versus
Decentralization
● Centralization means that
decision authority is located
near the top of the
organization.
● Decentralization means
decision authority is pushed
downward to lower
organizational levels.
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Organization Structures
departmentalization
Grouping together people and jobs into one unit
● Functional structures group together people using
similar skills.
● Divisional structures group together people by
products, customers, or locations.
● Matrix structures combine the functional and
divisional structures.
● Team structures use many permanent and
temporary teams.
● Network structures extensively use strategic
alliances
ORGANIZATION STRUCTURES
Functional Structures
● Functional Structures
● group together people using similar skills to perform
similar activities.
Potential Advantages of Functional Structures
● Economies of scale make efficient use of human resources.
● Functional experts are good at solving technical problems.
● Training within functions promotes skill development.
● Career paths are available within each function.
ORGANIZATION STRUCTURES
Functional Structures
ORGANIZATION STRUCTURES
Functional Structures
● Functional Chimneys Problem
● A lack of communication and coordination
across functional organizations
ORGANIZATION STRUCTURES
Divisional Structures
● Divisional structures group together
people who work on a similar product,
work in the same geographical region,
or serve the same customers.
ORGANIZATION STRUCTURES
Divisional Structures
● Advantages ( Geographic)
● Places responsibility at lower levels
● Improves coordination in region
● Takes advantages of economies of local
operations
● Better face to face communication with
local interests
● Furnishes training ground for general
managers
● Disadvantages (geographic)
● Requires more persons with general
manager abilities.
● Tends to make maintenance of
economical central services difficult
and may require services such as
personnel or purchasing at the
regional level.
● Increases problem of top management
control.
● Advantages (customer group)
● Encourages concentration on customer
needs
● Develops expertise in customer area
● Disadvantages
● Difficult to coordinate operations between
competing customer demands
● Requires expert staff
● Customer groups not clearly defined.
● Advantages ( product)
● Places attention on product line
● Facilitates use of specialized
knowledge
● Permits growth and diversity of
products
● Places responsibility of profits at
division level
● Training ground for general managers
● disadvantages ( product)
● More people with general skills req
● Tends to make maintainence of
economical central services difficult
● Lack of top management control
ORGANIZATION STRUCTURES
Matrix Structures
● Matrix Structure
● uses permanent cross functional teams to try
to gain the advantages of both the functional
and divisional approaches.
ORGANIZATION STRUCTURES
Matrix Structures
Potential Advantages of Matrix Structures
● Performance accountability rests with program, product, or project managers.
● Teams enable better communication and cooperation across functions.
● Teams make more decisions and solve more problems at their levels.
● Top managers spend more time on strategic issues.
● A cross-functional team brings together members from different functional
departments.
● Disadvantages (matrix)
● Conflict in organization authority
● Disunity of command
● Good interpersonal skills required
ORGANIZATION STRUCTURES
Team Structures
● Team Structures
● make extensive use of permanent and temporary
teams, often cross functional, to improve
communication, cooperation, and problem solving.
Potential Advantages of Team Structures
●Team assignments improve communication, cooperation, and
decision-making.
●Team members get to know each other as persons, not just job
titles.
●Team memberships boost morale, and increase enthusiasm and
task involvement.
ORGANIZATION STRUCTURES
Team Structures
ORGANIZATION STRUCTURES
Network Structures
● Network structures maintain a staff of core fulltime
employees and use contracted services and
strategic alliances to accomplish many business
needs.
ORGANIZATION STRUCTURES
Virtual Structures
● Virtual Structure
● Uses information technologies to
operate as a shifting network of
alliances. It’s a loose concept of a
group of independent firms
connected usually through IT.
● E.gEbay,library, university. Which
may have no org chart or
centralised building.
● Also called a boundaryless
organisation
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