Copyright by Paradigm Publishing, Inc. INTRODUCTION TO BUSINESS CHAPTER 8 Organizational Structure

Copyright by Paradigm Publishing, Inc. Purpose and Types of Organizational Structure Organizational Structure: identifies responsibilities for each job position and the relationships among those positions. Chain of command: identifies the job position to which each type of employee must report. How Organizational Structure Varies Among Firms Span of control: the number of employees managed by each manager.

Line Organization Versus Line-and-Staff Organization Copyright by Paradigm Publishing, Inc.

Draw your Org. Chart Consultants will be on a “staff” line (dotted) Consultants will be an expense Try to incorporate your “duties/interests” on the chart (i.e. person coordinating financial section would be your CFO, acct., or bookkeeper) Keep it simple (template on PPT and word)

Departmentalizing by Function Copyright by Paradigm Publishing, Inc.

Accountability in an Organizational Structure Role of the Board of Directors Board of directors: a set of executives who are responsible for monitoring the activities of the firm’s president and other high-level managers. Inside board members: board members who are also managers of the same firm. Outside board members: board members who are not managers of the firm.

Copyright by Paradigm Publishing, Inc. Accountability in an Organizational Structure Conflicts of Interest within the Board Resolving Conflicts of Interest Board Committees Compensation Committee Nominating Committee Audit Committee

Copyright by Paradigm Publishing, Inc. Distributing Authority Among the Job Positions Centralization Centralized: most authority is held by the high-level managers. Decentralization Decentralized: authority is spread among several divisions or managers. Autonomy: divisions can make their own decisions and act independently.

Copyright by Paradigm Publishing, Inc. Distributing Authority among the Job Positions Advantages Reduces operating expenses Shortens the decision-making process Improves the morale of employees Disadvantages Forces some managers to make major decisions An excessive amount of responsibility assigned to middle and supervisory managers

Copyright by Paradigm Publishing, Inc. Structures That Allow More Employee Input Matrix Organization: an organizational structure that enables various parts of the firm to interact to focus on specific projects. Intrapreneurship: the assignment of particular employees of a firm to generate ideas, as if they were entrepreneurs running their own firms.

Structures That Allow More Employee Input A Matrix Organization for a Special Project to Design a New Computer System Copyright by Paradigm Publishing, Inc.

Structures That Allow More Employee Input A firm’s informal organizational structure allows employees to exchange information about the firm on an informal basis. Copyright by Paradigm Publishing, Inc.

Methods of Departmentalizing Tasks Departmentalize: assign tasks and responsibilities to different departments Departmentalize by Function Departmentalize by Product Departmentalize by Location Departmentalize by Customer