Organizational Structure and Design 15 . C H A P T E R F I F T E E N Organizational Structure and Design

Flight Centre’s Organizational Structure Flight Centre has a “tribal” structure that organizes people around families, villages and tribes. This tribal structure seems to work well in an industry that has to pay attention to local markets and change quickly in a dynamic industry AAP Image/Dave Hunt

Division of Labour Subdivision of work into separate jobs assigned to different people Potentially increases work efficiency Necessary as company grows and work becomes more complex AAP Image/Dave Hunt

Forms of Work Coordination Informal communication Sharing information High media-richness Important in teams Formal hierarchy Direct supervision Common in larger firms Problems -- costly, slow, less popular with young staff Standardization Formal instructions Clear goals/outputs Training/skills AAP Image/Dave Hunt

Elements of Organizational Structure Department- alization Span of Control Organizational Structure Elements Formalization Centralization

Span of Control Number of people directly reporting to the next level Assumes coordination through direct supervision Wider span of control possible: with other coordinating methods employees perform similar tasks employee skills are standardized tasks are routine Moving to flatter structures

Span of Control at Ducks Unlimited Ducks Unlimited Canada recently flattened its organizational structure by removing layers of management. The Winnipeg- based environmental conservation group wanted the flatter structure to empower employees, and let them make decisions quickly without having to go up the hierarchy. Ducks Unlimited/Darin Langhorst

Centralization and Decentralization Formal decision making authority is held by a small group of people Centralization Decision making authority is dispersed throughout the organization Decentralization

Formalization Causes Problems As firms get older, larger, and more regulated Problems Reduces organizational flexibility Work rules can undermine productivity Employee alienation, powerlessness Rules become focus of attention

Mechanistic vs. Organic Structures Narrow span of control High formalization High centralization Organic Wide span of control Little formalization Decentralized decisions

Effect of Departmentalization Establishes work teams and supervision structure Creates common resources, measures of performance, etc Coordination through informal communication

Functional Organizational Structure Organizes employees around specific knowledge or other resources (marketing, production) CEO Finance Production Marketing

Divisional Structure Organizes employees around outputs, clients, or geographic areas CEO Transportation Recreational Capital

Matrix Structure (Project-based) Employees ( )are temporarily assigned to a specific project team and have a permanent functional unit CEO Engineering Marketing Design Project A Manager Project B Manager Project C Manager

Features of Team-Based Structures Self-directed work teams Teams organized around work processes Very flat span of control Very little formalization Usually found within divisionalized structure

Network Organizational Structure Product Development Firm (France) Call Centre Firm (India) Core Firm (Canada) Public Relations Firm (U.S.A.) Manufacturing (Malaysia) Accounting Firm (Canada)

Types of Organizational Technology Assembly Line Engineering Projects High Analyzability Skilled Trades Scientific Research Low Analyzability Low Variety High Variety

External Environment & Structure Dynamic • High rate of change • Use team-based, network, or other organic structure Stable • Steady conditions, predictable change • Use mechanistic structure Complex • Many elements (such as stakeholders) • Decentralize Simple • Few environmental elements • Less need to decentralize

External Environment & Structure (con’t) Diverse • Variety of products, clients, regions • Divisional form aligned with the diversity Integrated • Single product, client, location • Use geographic divisionalized structure Hostile • Competition and resource scarcity • Use organic structure for responsiveness Munificant • Plenty of resources and product demand • Less need for organic structure

Organizational Strategy Structure follows strategy Differentiation strategy Providing unique products or attracting clients who want customization Cost leadership strategy Maximize productivity in order to offer competitive pricing

Organizational Structure and Design 15 . C H A P T E R F I F T E E N Organizational Structure and Design