16-1©2005 Prentice Hall 13 Organizational Design and Structure Chapter 13 Organizational Design and Structure

16-2 ©2005 Prentice Hall Chapter Objectives  Understand the relationship between organizational design and an organization’s structure  Explain the main contingencies affecting the process of organizational design and differentiate between a mechanistic and an organic structure

16-3 ©2005 Prentice Hall Chapter Objectives  Cite the advantages of grouping people into functions and divisions and distinguish between the main forms of organizational structure from which an organization can choose  Explain why coordination becomes a problem with the growth of an organization and differentiate between the three main methods it can use to overcome this problem and link its functions and divisions

16-4 ©2005 Prentice Hall Chapter Objectives  Gain an understanding of the enormous impact modern information technology has had on the process of organizational design and structure both inside organizations and between them

16-5 ©2005 Prentice Hall Opening Case: A New Approach to Organizing at Sun Life  Why did Sun Life Change Its Structure?  Rigid and bureaucratic structure  Customer response too slow  Reorganization into series of cross- functional product teams

16-6 ©2005 Prentice Hall Designing Organizational Structure  Organizational Structure: Formal system of task and job reporting relationships  Organizational Design: Arrangement of tasks and job relationships that comprise the organizational structure

16-7 ©2005 Prentice Hall Figure 16.1 Contingencies Affecting Organizational Design Organizational Design Organization’s Environment HR and Employment Relationships Organization’s Technology

16-8 ©2005 Prentice Hall Routine vs Complicated Technology Task Variety Task Analyzability

16-9 ©2005 Prentice Hall Kinds of Technology Small- Batch Continuous- Process Mass- Production

16-10 ©2005 Prentice Hall Small Batch Production

16-11 ©2005 Prentice Hall Organic and Mechanistic Structures Organic  Dynamic, flexible  Empowered teams  Continuous improvement  Norms and values Mechanistic  Formal, controlling  Centralized decision- making  Clearly defined tasks  Rules and regulations

16-12 ©2005 Prentice Hall The Functional Structure Advantages  Coordination  Communication  Skill Improvement  Motivation  Controlling Disadvantages  Limited growth under existing structure  Limits to number of products and services  Coordination difficulties at larger size

16-13 ©2005 Prentice Hall Figure 16.2 Dell’s Functional Structure CEO Michael Dell ManufacturingSales Product Development Customer Service

16-14 ©2005 Prentice Hall Divisional Structures  Product  Market  Geographic

16-15 ©2005 Prentice Hall Figure 16.3 Product Structure

16-16 ©2005 Prentice Hall Figure 16.3 Market Structure

16-17 ©2005 Prentice Hall Figure 16.3 Geographic Structure

16-18 ©2005 Prentice Hall The Divisional Structure Advantages  As size and complexity of organization increases, –Coordination –Communication –Motivation –Autonomy Disadvantages  Increased costs  Duplication of functions  Miscommunication across divisions  Competition for resources  Conflict

16-19 ©2005 Prentice Hall The Matrix Structure  Complex network of reporting relationships among product teams and functions  People and resources grouped by –Function –Product

16-20 ©2005 Prentice Hall Figure 16.4 A Matrix Structure

16-21 ©2005 Prentice Hall The Matrix Structure Advantages  Coordination  Fast new product development  Communication  Cooperation  Innovation  Creativity  Autonomy Disadvantages  Role conflict  Role ambiguity  Stress  Unclear individual contributions to team performance

16-22 ©2005 Prentice Hall Techniques for Enhancing Coordination  Allocation of Authority  Mutual Adjustment and Integrating Mechanisms  Standardization

16-23 ©2005 Prentice Hall Allocation of Authority  Span of control  Tall and Flat Hierarchies  Chain of Command  Centralization versus Decentralization

16-24 ©2005 Prentice Hall Figure 16.5 A Wide Span of Control

16-25 ©2005 Prentice Hall Figure 16.5 A Narrow Span of Control

16-26 ©2005 Prentice Hall Figure 16.6 Flat Organizational Structure

16-27 ©2005 Prentice Hall Figure 16.6 Tall Organizational Structure

16-28 ©2005 Prentice Hall Mutual Adjustment and Integrating Mechanisms  Direct contact  Liaison roles  Teams and task forces  Cross-functional teams

16-29 ©2005 Prentice Hall Figure 16.7 Using a Team to Increase Coordination

16-30 ©2005 Prentice Hall Figure 16.8 A Cross-Functional Team Structure

16-31 ©2005 Prentice Hall Cross-functional Team Structure at Chrysler

16-32 ©2005 Prentice Hall Standardization  Standardizing inputs  Standardizing conversion processes –Formalization  Standardizing outputs

16-33 ©2005 Prentice Hall The Effects of IT Virtual Organizations Network Structure