Spring 2007Organization Structure1

Spring 2007Organization Structure2 Why Organizations Are Structured Organizing: The deployment and structuring of organizational resources to achieve organizational goals Dimensions Specialization / division of labor Formal lines of authority Mechanisms for coordination Organization or structure is designed to: Facilitate accomplishment of organizational goals Fit with technology and environment

Spring 2007Organization Structure3 Dimensions of Organization Structure Hierarchical Vertical dimension “...relative ranks in a manner similar to the organization chart” Functional Horizontal dimension “...different types of work to be done” Inclusion or centrality “...the degree to which any given person is nearer to or farther from the central core of the organization”

Spring 2007Organization Structure4 Specialization / Division of Labor Adam Smith and the pins Efficiency vs. effectiveness Individuals perform well-defined tasks Short training time Individuals become expert Individuals can perform tasks for which they are best suited Problems Lose sight of overall goal Boredom, fatigue, stress Lack of flexibility

Spring 2007Organization Structure5 Issues in Determining Division of Labor Nature of the work Complexity of work Task interdependency Organization Goals (re-engineering) Resources Employees Abilities Expectations

Spring 2007Organization Structure6 Authority and Responsibility Look back at Fayol, Weber Chain of command Unity of command Scalar principle Authority The right to make decisions, issue orders and allocate resources Does it exist if not accepted? Responsibility Accountability Unity of authority and responsibility Delegation Line and staff

Spring 2007Organization Structure7 Span of Control Tall vs. flat organizations Nature of work Stability Task similarity Location Employees Preferences Skills Organization Policies and procedures Support for managers

Spring 2007Organization Structure8 Centralization vs. Decentralization Where are decisions made? Need for pooled resources Speed and flexibility (environmental uncertainty) Consistency Where is the knowledge? Who must implement decisions

Spring 2007Organization Structure9 Formalization Policies and procedures Bureaucracy Max Weber again Pro Uniformity Less uncertainty Con Less flexibility Deciding Nature of the work Nature of the employees

Spring 2007Organization Structure10 Teams Free flow of information Wide spans of control Decentralization Low formalization Organic Mechanistic vs. Organic Structures High specialization Rigid departmentalization Clear chain of command Narrow span of control Centralization High formalization Mechanistic

Spring 2007Organization Structure11 Departmentalization Functional Divisional Product Customer Geographical Matrix Project teams

Spring 2007Organization Structure12 Functional Structures Pro: Specialization Efficiency Career progress for employees High-quality problem solving Con: Poor communication between functions May be too centralized Employees have limited perspective on total organization Where best used Stable environment Single product

Spring 2007Organization Structure13 Functional Structure VP Sales VP Sales VP Manufacturing VP Manufacturing VP Finance VP Finance CEO G/ L Tax Budget

Spring 2007Organization Structure14 Divisional Types Product Geographical Customer Pro: Speed and flexibility of response Cross-fertilization of ideas Focus on product / customer / area Emphasis on organizational goals Where best used Uncertain environment Diversified organization Con: Resources duplicated (inefficient) Less coordination between divisions Competition for resources

Spring 2007Organization Structure15 Sample Divisional Structure VP Cereal VP Cereal VP Detergent VP Detergent VP Paper VP Paper CEO Tissue Diapers Towels

Spring 2007Organization Structure16 ThyssenKrupp

Spring 2007Organization Structure17 Sara Lee Structure Household Products Headquarters Food and Beverage Intimates and Underwear

Spring 2007Organization Structure18 University of Tennessee System Board of Trustees UT- MartinUT - Knoxville UT - Chattanooga Health Science Center at Memphis Space Institute at Tullahoma Institute of Agriculture Institute for Public Service

Spring 2007Organization Structure19 Mixed Structure VP Admin VP Admin VP Manufacturing VP Manufacturing VP Sales VP Sales CEO Retail Wholesale International

Spring 2007Organization Structure20 Unilever Structure Home & Personal Care Africa, Middle East & Turkey Bestfoods Ice Cream and Frozen Foods Latin America & Slim.fast worldwide Unilever Bestfoods Asia Unilever Bestfoods, Europe Unilever Bestfoods, North America Unilever Bestfoods Africa, Middle East & Turkey Home Diverseyever Home and Personal Care, Asia Home & Personal Care, Europe Home & Personal Care, North America Latin America

Spring 2007Organization Structure21 Matrix Dual lines of authority Examples Pro: Combines advantages of functional and divisional structures Con: Conflict may arise Cost associated with grater need for coordination Where best used: Extreme environmental pressure Very large or geographically dispersed organizations

Spring 2007Organization Structure22 Organizing Work Processes Unit production Mass production Process production

Spring 2007Organization Structure23 Technology, Structure and Effectiveness