Organizational Structure Human Relations Organizational Structure

Why be concerned with organizational structure? Human Relations Why be concerned with organizational structure? Organizing follows strategy. Strategy defines what to do; organizing defines how to do it.

Human Relations Organizing Tasks are subdivided into individual jobs. Division of labor concept. Employees perform only the tasks relevant to their specialized function. Jobs tend to be small, but they can be performed efficiently.

Organization Structure Human Relations Organization Structure Defines: how tasks are divided, resources are deployed, and departments are coordinated. the set of formal tasks. the formal reporting relationships. the design of systems to ensure effective coordination of employees across departments.

Four Points About the Organization Chart Human Relations Four Points About the Organization Chart Visual representation Set of formal tasks Formal reporting relationships Framework for vertical control

Human Relations Chain of Command Unbroken line of authority that links all persons in an organization. Shows who reports to whom. Associated with two underlying principles. - Unity of Command – everyone reports to just one person. - Line of Authority is clearly defined.

Human Relations Authority Formal and legitimate right of a manager to make decisions, issue orders, and to allocate resources to achieve organizationally desired outcomes. Authority is distinguished by three characteristics: Authority is vested in organizational positions, not people. Authority is accepted by subordinates. Authority flows down the vertical hierarchy.

Human Relations Responsibility The duty to perform the task or activity an employee has been assigned. Managers need authority commensurate with responsibility.

Human Relations Accountability Mechanism through which authority and responsibility are brought into alignment. People are subject to reporting and justifying task outcomes to those above them in the chain of command. Can be built into the organization structure.

Human Relations Delegation The process managers use to transfer authority and responsibility. 1 The organization encourages managers to delegate authority to the lowest possible level. 2

Human Relations Span of Management The number of employees reporting to a supervisor. Traditional view, seven or so per manager. Many organizations today, 30 or more per manager. Generally if supervisors must be closely involved with employees, span should be small.

Factors Associated with Large Spans of Control Human Relations Factors Associated with Large Spans of Control Work is stable or routine. Similar task is performed by everyone. A single location. Employees are highly trained. Rules and procedures are available. Support systems and personnel are available for supervisor. Little time is required in nonsupervisory activities. Personal preferences and styles of management favor a large span.

Tall versus Flat Structure Human Relations Tall versus Flat Structure Span of control used in an organization determines whether the structure is tall or flat. Tall structure has a narrow span and more hierarchical levels. Flat structure has a wide span, is horizontally dispersed and fewer hierarchical levels. The trend has been toward wider spans of control.

Human Relations Tall vs. Flat Structure

Centralization and Decentralization Human Relations Centralization and Decentralization The hierarchical level at which decisions are made.

Human Relations Decentralization Facilities at different locations. Decision authority is pushed down the chain of command to lower levels. 18

Decentralization Tends to--- Human Relations Decentralization Tends to--- Make greater use of human resources. Reduce burdens of top managers. Cause decisions to be made close to the action. Permit rapid response to changes. 19

Centralization versus Decentralization Human Relations Centralization versus Decentralization Greater change and uncertainty in the environment are usually associated with decentralization. The amount of centralization or decentralization should fit the firm’s strategy. In times of crisis or risk of company failure, authority may be centralized at the top.

Factors that Influence Centralization/Decentralization Human Relations Factors that Influence Centralization/Decentralization Amount of change and uncertainty. Corporate culture. Size of organization. Cost and risk of failure. Efficiency of communication and control systems. 20

Downward Communication Messages sent from top management down to subordinates. Most familiar and obvious flow of formal communication. Encompasses the following: 1. Implementation of goals and strategies. 2. Job instructions and rationale. 3. Procedures and practices. 4. Performance feedback. 5. Indoctrination.

Human Relations Upward Communication Messages that flow from the lower to the higher levels in the organizations. Five types of information communicated upward: 1. Problems and exceptions. 2. Suggestions for improvement. 3. Performance reports. 4. Grievances and disputes. 5. Financial and accounting information.

Horizontal Communication Human Relations Horizontal Communication Lateral or diagonal exchange of messages among peers or coworkers. Horizontal communications three categories: 1. Intradepartmental problem solving. 2. Interdepartmental coordination. 3. Change initiatives and improvements.

Human Relations The Grapevine Will always exists in organizations. Used to fill in information gaps. Tends to be more active during periods of change. About 80% of topics are business related. About 70-90% of details of grapevine are accurate.

Approaches To Structural Design Slide 1 of 2

Approaches To Structural Design Slide 2 of 2

Human Relations Matrix Approach Functional and divisional chains of command simultaneously. Dual lines of authority. Functional hierarchy of authority runs vertically. Divisional hierarchy runs laterally. Violates the unity of command concept. 31

Human Relations Network Approach Organization divides major functions into separate companies brokered by a small headquarters organization. "Where is the organization?" Especially appropriate for international operations. Held together with phones, faxes, and other electronic technology. 37

Human Relations Organization Growth As organizations grow and evolve two things happen: New positions and departments are added. Senior managers have to find a way to tie all departments together.

Evolution of Organization Structures Human Relations Evolution of Organization Structures