Organizational Structure and Communication Chapter 5 Organizational Structure and Communication

Introduction Organization structure determines who works together It is the way managers design their firms to achieve their organization’s mission and goals Organizational communication flows through its structure, which affects: behavior human relations performance

The transition from an economy based on materials to an economy based on flows of information has created considerable challenges for organizational structure, and communication.

Principles of Organization Span of Management Coordination Centralized and Decentralized Authority Division of Labor and Departmentalization Chain of Command The following suggestions specify the types of changes in jobs that are most likely to lead to improvements in each of the five core dimensions. (1) Combine tasks - managers should put existing fractionalized tasks back together to form a new, larger module of work. This increases skill variety and task identify. (2) Create natural work units - managers should design tasks that form an identifiable and meaningful whole. This increases employee “ownership” of the work and encourages employees to view their work as meaningful and important rather than as irrelevant and boring. (3) Establish client relationships - the client is the user of the product or service that the employee works on. Whenever possible, managers should establish direct relationships between workers and their clients. This increases skill variety, autonomy, and feedback for the employee. (4) Expand jobs vertically - vertical expansion means giving employees responsibilities and controls that were formerly reserved for management. It partially closes the gap between the “doing” and “controlling” aspects of the job, and it increases employee autonomy. (5) Open feedback channels - by increasing feedback, employees not only learn how well they are performing their jobs but also whether their performances are improving, deteriorating, or remaining at a constant level. Ideally, employees should receive performance feedback directly as they do their jobs rather than from management on an occasional basis. 9

Questions and Answers for Designing Organizational Structure: How should we subdivide work? Division of Labor and Departmentalization Who should departments and individuals report to? Chain of Command How many individuals should report to each manager? Span of Management At what level should decisions be made? Centralization vs. Decentralization How do we get everyone to work together as a team? Coordination

Formal Organization Structure Vertical downward communication Vertical upward communication

Informal Organization Structure President Horizontal communication networks Vice President Production Vice President Finance Vice President Marketing Manager A Manager B Manager C Manager D Manager E Manager F Manager G Manager H

Example of Wide Span of Management President Supervisor Supervisor 11

Example of Narrow Span of Management President Department Head Department Head Supervisor Supervisor Supervisor Supervisor 12

Common Types of Departmentalization Divisional Territory Matrix Product Customer Functional Break-even Analysis identifies profit or loss at various sales volumes Return on Investment measures productivity of assets Marginal Analysis compares the additional cost in a particular decision rather than average cost Game Theory mathematical models that analyze multi-party decision contexts Linear Programming for optimally solving resource allocation problems Queuing Theory for calculating waiting lines 5

Functional Departmentalization Chief Executive Officer Engineering Reliability Finance Public Relations Manufacturing Distribution Human Resources Purchasing 4

Product (Service) Departmentalization Vice President & General Manager Consumer Products Division Director of Human Resources Director of Marketing Staff Services Director of Marketing Research Director of Distribution & Planning Director of Quality Assurance Comptroller Division Vice President & General Sales Manager Division Vice President & General Manager Infant & Baby Products Division Vice President & General Manager Household Products Division Vice President & General Manager Commercial Products Vice President Manufacturing 7

Customer Departmentalization President Retail Division Business Division Government Division Production Production Production Marketing Marketing Marketing Finance Finance Finance

Divisional Departmentalization President Computer Division Software Division Consulting Source Division Production Production Production Marketing Marketing Marketing Finance Finance Finance

Territory (Geographic) Departmentalization Northeast regional manager Midwest Southeast Pacific Chairman CEO Southwest General managers for: New York Philadelphia Boston Cleveland Chicago St. Louis Raleigh Atlanta Orlando Seattle San Francisco Los Angeles Dallas Houston Albuquerque

Example of the Matrix Departmentalization Functions Project or product A Project or product B Project or product C Project or product D Project or product E Projects, products Manufacturing Marketing Engineering Finance 8

Example of the Matrix Departmentalization President Vice President Finance Vice President Operations Vice President Manufacturing Vice President Sales and Marketing Region A Manager Region B Manager Region C Manager

Contemporary Organization Design Virtual Organizations Boundaryless E-Organizations Learning Team Organizations and Reengineering The following suggestions specify the types of changes in jobs that are most likely to lead to improvements in each of the five core dimensions. (1) Combine tasks - managers should put existing fractionalized tasks back together to form a new, larger module of work. This increases skill variety and task identify. (2) Create natural work units - managers should design tasks that form an identifiable and meaningful whole. This increases employee “ownership” of the work and encourages employees to view their work as meaningful and important rather than as irrelevant and boring. (3) Establish client relationships - the client is the user of the product or service that the employee works on. Whenever possible, managers should establish direct relationships between workers and their clients. This increases skill variety, autonomy, and feedback for the employee. (4) Expand jobs vertically - vertical expansion means giving employees responsibilities and controls that were formerly reserved for management. It partially closes the gap between the “doing” and “controlling” aspects of the job, and it increases employee autonomy. (5) Open feedback channels - by increasing feedback, employees not only learn how well they are performing their jobs but also whether their performances are improving, deteriorating, or remaining at a constant level. Ideally, employees should receive performance feedback directly as they do their jobs rather than from management on an occasional basis. 9

Organizational Communication Organizational communication – the compounded interpersonal communication process across an organization Communication flows in an organization are: Vertical Horizontal Grapevine (multidirectional)

Vertical and Horizontal Communication Vertical Communication The flow of information both up and down the chain of command Formal communication Recognized as official Status and power are not equal among participants in vertical communication Horizontal Communication The flow of information between colleagues and peers Informal communication Does not follow the chain of command Not recognized as official

Grapevine Communication Grapevine – the informal vehicle through which messages flow throughout the organization “When the grapevine allows employees to know about a management decision almost before it is made, management must be doing something right.”

Communication Networks Communication networks – sets of employees who have stable contact through which information is generated and transmitted Two major types of communication networks: 1. within organizations 2. within departments and small groups

Message Transmission Channels Oral Communication Written Communication Nonverbal Communication

Oral Communication Media Face-to-Face Telephone Meetings Presentations 4

Nonverbal Communication Facial Expressions Vocal Qualities Gestures Posture 4

Communicating with Emotional Employees: Emotional labor – requires the expression of desired emotions during interpersonal relations Universal emotions: happiness surprise fear sadness anger disgust

Understanding Feelings Feelings are subjective – they tell you people’s attitudes and needs Feelings are usually disguised as factual statements Feelings are neither right nor wrong but behavior is

Criticism Getting Criticism Giving Criticism

Guidelines for Giving Effective Criticism Give more praise than criticism Criticize immediately Criticism should be performance oriented Give specific and accurate criticism Open on a positive note and close by repeating what action is needed

Situational Communication Styles Autocratic Communication Style Consultative Participative Laissez-Faire 4

Situational Variables (1 of 2) Time – Do I have enough time to use two-way communication? Information – Do I have the necessary information to communicate my message, make a decision, or take action? Acceptance – Will the other party accept my message without any input?

Situational Variables (2 of 2) Capability – Ability: Does the other party have the experience or knowledge to participate in two-way communication? Motivation: Does the other party want to participate?