Organizational Structure Unit 2.2 Organizational Structure

By the end of the chapter You should be able to… Define the following terminology- Delegation; span of Control; Levels of Hierarchy; Chain of Command; Bureaucracy; Centralization; Decentralization; De-layering Describe the following types of organization charts: Flat/horizontal; Tall/vertical; Hierarchical; By Product; By Function; by Region Explain changes in organizational structures Describe how cultural differences and technologies impact communication in an organization

Structure within an organization All organizations, whether large or small need to have a sense of organization A structure in an organization sets out roles and responsibilities Also sets out who employees are supervised by or report to

Administrative Executive CEO Production Executive Assistant Marketing Executive Finance Executive HR Executive Administrative Executive Assistant 1

Organizational Charts Outlines formal roles, responsibilities and reporting lines – sets out the chain of command – Terminology Levels of Hierarchy How many levels of responsibility Chain of Command Formal route by which a decision travels Span of Control How many workers are directly under the authority of a manager Delegation Possibility that the product might fail due to lack of knowledge of client

Terms Relevant to Organizational Structure Delegation When a manager gives authority for someone to accomplish a task; manager still responsible Centralization Decisions are made by upper management Decentralization Opposite of centralization – Decision-making delegated to middle managers; likely to be more democratic Bureaucracy Rules and procedures. An organization that is “bureaucratic” has many rules and procedures. Delegation usually doesn’t happen. De-layering Occurs when a business reduces the levels of hierarchy; removing layers of management – typically reduces costs

Types of organizational Chart Tall Structure – traditional organizational form Many levels; narrow spans of control; centralized decision-making; long chains of command autocratic leadership; limited delegation

Types of organizational Charts – cont’d Flat - Modification of traditional structure Few levels of hierarchy Wider span of control Decentralized decision-making Shorter chains of command Democratic leadership Increased delegation

Types of Organizational Structure Line Oldest and simplest form; Quicker decisions, lack of specialization Line and Staff More complex; allows for experts at different levels; Matrix – Project teams; no consistent structure; match skills with projects Team Permanent work teams; self-directed; leader facilitates

What is an Adaptive Organization An organizations that adjusts to change Decision-making is centralized Team-oriented Focuses on customer needs

When is changed needed? A merger is anticipated New competitors New technology Rapid growth or decline in business Change in legal issues New product or service pending Customer dissatisfaction Costs are increasing Morale is decreasing

Types of organizational Charts – cont’d Organizational structure by hierarchy Figure 2.2.2 Organizational Structure by Function Figure 2.2.3 Organizational Structure by Product Figure 2.2.4 Organizational Structure by Region Figure 2.2.5

Changes in Organizational Structure Project-based organization Allows a business to be more flexible & responsive to market demands Project managers run teams of employees Very common in construction or IT – Shamrock Organizations - by Charles Handy Allows flexibility & to be responsive in workforce planning Businesses trim workforces to retain a multi-skilled core Core Managers Contractual fringe Flexible workforce – part-time, temporary, seasonal

Communication Can be formal or informal Forms of communication Verbal – Interviews; meetings; presentations Visual Presentations; video; signs & symbols Written Reports; letters; press releases;