Chapter 9: Organization

The organization

Chapter 9: Structures
organizational

PLAN

Introduction .....................................................................................................106
I. ORGANIZATIONAL STRUCTURES....................................108
1) Hierarchical structure:............................................................................108
2) Functional structure:...........................................................................109
3) Staff and line structure (hierarchical-functional)................................110
4) Divisional structure..............................................................................111
5) Structure "Strategic Business Unit" .........................................................114
6) Matrix structure:...............................................................................115
7) Structure - Network....................................................................................117
II. EVALUATION OF AN ORGANIZATIONAL STRUCTURE......118
1) The size and stage of growth.............................................................119
2) Organizational environment: .............................................................120
3) Technology and structure :.........................................................................120
Conclusion........................................................................................................120

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Introduction

By organization, one can understand:

* The activity of organizing which notably involves developing a structure, procedures

and an order specific to the system;

* The framework that the state of a system represents for its members after the act of organizing,
notably in terms of structure and culture;

* A social institution as an organized system.

The purpose of organizing a function is to achieve coordinated effort through design.

the structure of the task and relational authority.

Individual works can be defined in terms of required movement. But there

other ways to describe the work such as depth and extent.

The depth of a job refers to the relative freedom the worker has.
to accomplish the tasks that have been assigned to him. The scope of the work, for its part, refers to
the length of the work cycle time; the more a job is repeated in a period of time
the more the extent is limited. Similarly, the more a job is specialized, the more the extent will be
narrow. Highly specialized work has relatively little depth and scope.

The primary reason for establishing an organizational structure is to have lines

of authority that will facilitate management and will exercise the necessary degree of control over
the company. Authority is the right to allocate resources, establish lines of authority and
create order within a company. The absence of authority leads to a situation where everything
the world tells everyone what to do.

First, once the authority has been delegated, it creates an obligation to fulfill it.
assigned work, this obligation is called responsibility.

Then, the organizational structure helps to achieve organizational objectives.

due to synergy. Synergy is established when organizational work units
collaborate to produce a whole greater than the sum of the productions of the individual units
separately.

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The division of labor and coordination are the culmination of a structure

effective organizational structure that leads to synergy.

Finally, the organizational structure facilitates communication between the different

organizational units. In other words, it clearly defines the communication chains.
between the different members and units within an organization.

LINE AND STAFF :

Two concepts must be defined before examining the different structures.

organizational. Most of today's companies have line and staff functions
line, and line staff and personnel functions. Line personnel are directly involved in the
production and marketing of the company's products.

Line functions are generally linked to the major objectives of the company.
On the other hand, the functions and staff facilitate the achievement of the objectives of a
indirect way.
The staff personnel is generally a specialist in a particular field and their
authority is normally limited to making recommendations to line personnel: resources
human resources, research and development, quality control and
supply.
In every company, a potential conflict always exists. The staff can be
resistant since he only serves as an advisor to the line staff. At the same time, the
the personnel line, knowing that he has the ultimate responsibility for achieving the company’s objectives,
is reluctant, in turn, to listen to the staff's advice. This situation can make the staff
demotivated staff if their advice is not taken into consideration.

An approach that is frequently used to resolve the conflict between line and staff,
consists of giving the line experience to the staff. This can be achieved either through
a collaboration on projects or joint committees either through the requirement of a
line experience for staff to better understand the problems they face
face the staff line.

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I. ORGANIZATIONAL STRUCTURES
Structures define the overall mission of the organization, distributing functions.
and the responsibilities, allow for coordination mechanisms and describe the activities
individual and collective. Furthermore, they influence individuals and communication,
the technologies, the powers, the strategies, and the corporate culture. There are different
organizational structures:
* 1
Hierarchical structure:

General Management

Finance Marketing Production

General accounting Cost accounting

Box Billing

Fig 9-1 hierarchical structure

It is a structure suitable for small and medium-sized enterprises operating in a

stable environment, to administrations; to new organizations; to the needs of
reductions of complexity. It is based on the principle of unity of command and connection
of subordination; that is to say, that each employee has only one and unique boss from whom he receives the
instructions. The tasks are clearly defined and delineated, relatively stable and
repetitive, little interactive. It will also suit companies with instructions
of well-defined behaviors, based on the association of authority and formal power and
on the vertical hierarchy. This structure has advantages and disadvantages:

Advantages:
Clarity and simplicity of the distribution of tasks, skills, and authority
decisional and responsibilities;
Coherence of the decisions from the summit;
Feeling of security;

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Potential speed of decision-making and order transition;

Easy control.

Disadvantages:
Overloaded direction;
Long communication channels: slowness and filtering of communications;
Difficult collaboration and coordination, tendency towards the fragmentation of activities;
Too centralized decision-making power: demotivation of employees;
Rigidity in the face of changes;
Danger of the emergence of bureaucracy.

* 2
Functional structure:

fig 9-2 functional structure

The functional structure is an approach based on grouping people according to

their ability and their expertise. Authority and competence are linked and the subordinate
depends on one or more hierarchical managers. Each supervisor gives instructions
to its subordinates within the limits of its competence. This structure is valid for any
size of a company that has one or more product lines.
In general, small and medium-sized enterprises often have a few departments
functional.

Advantages:
Efficiency due to technical expertise;
Interaction of specialists in achieving a more efficient and effective synergy;
Interaction therefore leads to more innovation and improvement;

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On a psychological level, this interaction contributes to improving satisfaction.

in work and helps reduce turnover;
This structure facilitates the process of planning, organizing, directing and
control of staff groups. This helps to achieve the company's goals;
Training and staff development are often more effective than
other structures because training centers are standard for tasks
functional.

Disadvantages:

The fact that everything is organized around functions rather than products or
the geographical regions, it is difficult to detect the responsibility for profits and
losses.

* 3

General Direction

General Staff
Strategic consulting
Marketing consulting
Production consulting

Production Personnel Commercial

Staff and line structure (hierarchical-functional)

fig 9-3 Structure staff and line

Also called a mixed structure, the staff and line structure is a compromise between the
two previous structures. It is composed of:
A functional body (headquarters or staff) that is responsible for strengthening management.
general and advising other operational services.

A hierarchical body (line) whose mission consists of manufacturing, selling

product or any other task directly related to the operation of the business.

A distinction must be made between advisory units (staff) without responsibility.

directly on other services and the operational units directly associated with the activities
company currents.

Advantages:

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The bodies of the line are relieved from preparation to decisions;

Enriching exchange between the line and specialists in specific fields;

Training facilities for staff at the headquarters;

Resolution of the competence problem.

Disadvantages:

Risk of conflicts between the staff and the line;

Demotivation of the staff when their advice is not taken into account;

Creation of two classes: technocrats and operational;

Emergence of an informal authority of the staff.

* 4
Divisional structure
It involves creating divisions within the organization that have autonomy.
decision-making and sometimes financial. There are different types of structures
divisional:

4.1. Divisional structure by product:

This structure is better suited for companies with multiple lines of

products. Instead of organizing the company around functions, the divisional structure by
the product focuses on the company's product categories

President

Vice President A Vice President B Vice President C

Marketing Finance Production

Fig 9-4 Divisional structure by product

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Advantages:
Improves decision-making;
Ensures better coordination;
Share responsibility in independent profit centers;
Reduces the communication channel vertically;
Offers itself as a training ground for management staff.

Disadvantages:
Leads to losses of economies of scale;
Generates little cooperation between the divisions;
Makes the distribution of services difficult, from advisory staff to the different
divisions ;
Provokes the doubling of efforts, several units could be assigned to
the resolution of the same problem;
Requires more general training for managers;
Increase the difficulty of control by top management.

4.2. Geographic divisional structure:

When a company has operations in multiple geographic regions, a structure

appropriate could be the geographic divisional structure where activities and personnel
are grouped by specific geographical region.

Figure 9-5 Geographical divisional structure

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Advantages:

Products and services can be designed to meet the needs of

specific regions;

The company addresses the technical needs of the different regions.

international

Production or distribution of products in a regional or global manner

can give a competitive advantage to the company (example: the cost of the
labor, proximity to raw materials, clients, and technology

Having a geographical structure that meets the needs of

clients from different countries;

This structure allows the company to easily adapt to different systems.

legal.

Disadvantages:

The disadvantages are similar to those of the product structure.

4.3. Multidivisional structure

fig 9-6 Multidivisional structure

When the company continues to expand its product lines, the previous structure can
become ineffective.
Companies with multiple product lines can adopt a structure
multidivisional where the company will be partitioned into several divisions, each of which
a manager for one or more product lines.

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Advantages:

Continuous growth becomes easy. The new product lines are

created or acquired. These lines can be integrated into an existing division or
can serve as the basis for a new developed division;

Each division has a manager who will be able to analyze the operations of each.
product ;

Authority is delegated to each division and to each line manager

products;

Performance is easily assessed at the product level.

Disadvantages:

The distribution of the company's charges carried out at the division level can be
difficult or relatively difficult;

Rivalry between divisions for more resources; leads to

malfunctions;

Transfer pricing; when one division manufactures a part for another division
Conflicts can arise over the setting of transfer prices.

* 5
Strategic Business Unit

fig 9-7 Structure strategic business unit

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Growth can push a company to consolidate its product lines (which are in
relation) into divisions. These divisions can also, in turn, be grouped into Strategic
Business Unit (SBU) or what is called the activity sectors.

The SBU structure is particularly suitable for a large and diversified company.

Advantages:

Reduces the scope of control of the parent company. Instead of controlling several
divisions, it will control some SBUs;

Reduce the surplus of information;

Better coordination between divisions that have products, markets, or

similar technologies.

Disadvantages:
The parent company becomes distant from a division or a product through a new
vertical line of management;
Rivalry between the SBU;
* This structure involves the analysis of the product portfolio.

* 6
Matrix structure:

The evolution of organizational structures has given rise to a hybrid structure.

called matrix structure.

The matrix structure assigns tasks to specialists in the departments.

functional operations executed in the form of one or more projects led by a
project manager appointed.

Project managers can either be recruited from outside or chosen from within.
the inside of the organization.

Advantages:

By associating the functional structure with the project-based structure (or by

product), the company can benefit from the advantages of both forms;

This matrix offers a cost advantage as project managers

pay the services of the functional staff when they need them. The time
those who remain, these functional employees work in their departments;

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The matrix structure offers considerable flexibility. Employees

can be easily transferred to other projects;

Great motivation of functional employees because they are involved in

the projects;

The matrix structure is an excellent means for training and

general development of managers;

The top management of a matrix is free to get involved on a daily basis in

the company's operations as it can focus only on the
strategic problems and opportunities.

Disadvantages:

Huge administrative cost incurred by this structure because of coordination

between functions and different projects is important, the matrix staff
spends a considerable amount of time in meetings for information exchange.
This communication is essential but it consumes valuable time that
may be used in the establishment of current projects;

Conflicts: A conflict may arise between project managers and the

functional managers regarding the allocation of budgets and the assignment of
staff as well as between project managers regarding the issues of
the allocation of resources to be shared;

Source of considerable stress: a significant ambiguity can arise in

functional employees reporting to two project managers.

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Figure 9-8 Matrix structure

* 7
Structure - Network

The network structure is suitable for centralized small businesses that depend on
other companies to carry out basic functions in a contractual manner. In
In this network structure, most functions are entrusted to specialized companies.
This gives management a great degree of flexibility and allows the company to
focus on its strategic directions

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fig 9-9 Network structure

Advantages:

Very high degree of flexibility to respond to a change in the market;

Search for very low costs.

Disadvantages:

Lack of control over outsourced operations;

Supplies are not guaranteed since the companies we have

subcontracting operations may risk not meeting their commitments
delivery_time

An innovation in design can be imitated by other companies.

II. EVALUATION OF AN ORGANIZATIONAL STRUCTURE

In the early studies of management, classical theorists tried to
develop an ideal organizational structure.

For example, Henri FAYOL put forward the idea of unity of command, Max
Weber speaks of the ideal bureaucracy...
Gradually, contingency theory begins to emerge by putting forward the idea that
the appropriate managerial action depends on the particular parameters of the situation.
Research has recognized that the best structure of a given company depends on
major contingency factors such as technology, size, and environment.

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* 1
The size and the stage of growth

The size and growth stage of a company are key variables for
determine the organizational structure.

Chandler is the first to develop the relationship between structure and growth or the
size of a company.

After J. THOMAS CANNON proposed five stages of growth

organizational.

1.1 Entrepreneurial stage:

Decisions are mainly made by a person from top management and the structure.
organizational is rather informal with a minimum of coordination required. The
communication is also designed on an informal basis.
1.2. Stage of functional development:
Decisions are increasingly being made by other managers and less and less by
top management. The organizational structure is based on functional specialization
and coordination problems of functions begin to appear.

1.3. Decentralization step:

At this stage, management is trying to address the issues related to growth.
activities within the company by managing them under the conditions set in the step
entrepreneurial. The flexibility to move resources from one function to another in order to
exploitation of new opportunities becomes limited. Expenses are increasing by the
multiplication of efforts and top management loses control of micro activities in
delegating certain tasks.

1.4. Staff proliferation stage:

This step involves the creation of an organ, the headquarters, to assist the top.
management. The major problem that generally marks this stage is the conflict that arises
between the staff and the line.

1.5. Step of recentralization:

Sometimes companies address the issue of decentralization and the steps of

proliferation of staff through recentralization. Computerized systems and controls
sophisticated allow the management of several companies to move to this stage.

Obviously, not all companies must necessarily go through all

these steps since it is done in a different and often unpredictable way.

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* 2
Organizational environment:

The business environment influences the choice of the appropriate structure. Indeed,
in a dynamic and volatile environment, the organic structure proves to be the most suitable
since it assumes less formal tasks and more inclined towards adaptation in addition to a
participative management style. On the other hand, in a stable environment, the structure
Appropriate will be the mechanical structure where tasks and responsibilities are well defined.
with a centralization of authority

* 3
Technology and structure:
In order to survive in a constantly changing environment, the organization is
brought to adopt the structure capable of easily adapting to external technology or
created within the company through a research and development department.

Conclusion
In conclusion, we can say that the evaluation of a company is done through
to the answers to the following questions:

* Is the structure compatible with the staff profile and the state strategy?
major?

* At the staff level, is the structure compatible with the outputs of it?
business unit of the company.

* Are there few or multiple hierarchical levels of analysis at the staff level?
or business unit?

* Will the structure promote coordination among its elements?

* Does the structure allow for centralization or decentralization of authority?

* Does the structure allow for the appropriate grouping of activities?

A good organizational structure does not necessarily produce results.

positive while a poor or inappropriate structure can make these positive results more
difficult or even impossible.

An effective structure allows a company and its managers to achieve their

better performance. In fact, an ideal organizational structure does not go against
managers to do their job.

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