Managing Organizational Structure 9 Chapter Managing Organizational Structure

Chapter #9 Learning Objectives By the conclusion of this discussion you will understand: How jobs are designed and grouped together to achieve optimal organizational performance. The various job grouping options and the advantages and disadvantages of each. The way authority is allocated between and within functions. © Copyright McGraw-Hill. All rights reserved.

Designing Organizational Structure Organizing: the process of establishing working relationships among employees to achieve goals. Organizational Structure Organizational Design Successful organizational design depends on the organization’s unique situation. Organizational Structure: formal system of task & reporting relationships showing how workers use resources. Organizational design: the process of making specific organizational choices resulting in a given organizational structure. © Copyright McGraw-Hill. All rights reserved.

Factors Affecting Organizational Structure © Copyright McGraw-Hill. All rights reserved. Figure 9.1

Job Design Job Design: group tasks into specific jobs. Job simplification Job enlargement Job enrichment Results in a division of labor between workers that is effective and efficient. Job simplification: reduction of the tasks each worker performs. Job enlargement: increase tasks for a given job to reduce boredom. Job enrichment: increases the degree of responsibility a worker has over a job. Job Simplification: Too much and boredom results. Job Enrichment can lead to increased worker involvement © Copyright McGraw-Hill. All rights reserved.

The Job Characteristics Model Source: Adapted from J. R. Hackman and G. R. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980). © Copyright McGraw-Hill. All rights reserved. Figure 9.2

Grouping Jobs into Functions Functional Structure - people working together with similar skills, tools or techniques to perform their jobs. Advantages Encourages learning from others doing similar jobs. Easy for managers to monitor and evaluate workers. Disadvantages Difficult for departments to communicate with others. Preoccupation with own department and losing sight of organizational goals. © Copyright McGraw-Hill. All rights reserved.

The Functional Structure of Pier 1 Imports Figure 9.3 © Copyright McGraw-Hill. All rights reserved.

Grouping Jobs Divisional: A division is a collection of functions working together to produce a product. Divisions create smaller, manageable parts of a firm. Divisions develop a business-level strategy to compete. A division has marketing, finance, and other functions. Functional managers report to divisional managers who then report to corporate management. © Copyright McGraw-Hill. All rights reserved.

Product, Market, and Geographic Structures Figure 9.4 © Copyright McGraw-Hill. All rights reserved.

Viacom’s 2001 Product Structure © Copyright McGraw-Hill. All rights reserved. Figure 9.5

Global Geographic and Global Product Structures © Copyright McGraw-Hill. All rights reserved. Figure 9.6

Matrix Structure Figure 9.7 © Copyright McGraw-Hill. All rights reserved. Figure 9.7

Product Team Structure © Copyright McGraw-Hill. All rights reserved. Figure 9.7

Hybrid Structures Hybrid Structure The structure of a large organization that has many divisions an simultaneously uses many different organizational structures Managers can select the best structure for a particular division—one division may use a functional structure, another division may have a geographic structure. The ability to break a large organization into smaller units makes it easier to manage. © Copyright McGraw-Hill. All rights reserved.

Target’s Hybrid Structure © Copyright McGraw-Hill. All rights reserved. Figure 9.8

Coordinating Functions Hierarchy of authority: describes the relative authority each manager has from top to bottom. Span of Control Line authority Staff authority Authority: the power vested in the manager to make decisions and use resources. To ensure sufficient coordination between functions, managers delegate authority. Span of Control: refers to the number of workers a manager manages. Line authority: managers in the direct chain of command for production of goods or services. Example: Sales, Operations Staff authority: managers in positions that give advice to line managers. Example: Human Resources, Accounting © Copyright McGraw-Hill. All rights reserved.

Tall and Flat Organizations Tall structures have many levels of authority and narrow spans of control. As hierarchy levels increase, communication gets difficult creating delays in the time being taken to implement decisions. Communications can also become garbled as it is repeated through the firm. Flat structures have fewer levels and wide spans of control. Structure results in quick communications but can lead to overworked managers. © Copyright McGraw-Hill. All rights reserved.

Flat Organizations Figure 9.10a © Copyright McGraw-Hill. All rights reserved. Figure 9.10a

Tall Organizations Figure 9.10b © Copyright McGraw-Hill. All rights reserved. Figure 9.10b

Centralized vs. Decentralized Centralized operations allocates authority at the top. Decentralized operations puts more authority at lower levels and leads to flat organizations. Workers must be able to reach decisions. Divisions and functions can begin to lose sight of organizational goals and focus only on their small area. Managers should carefully evaluate: Do they have the right number of middle managers? Can the structure be altered to reduce levels? © Copyright McGraw-Hill. All rights reserved.

There is no one best structure/design. Conclusion Jobs should be designed and organizations should be structured through careful planning. There is no one best structure/design. Design and structure is based on organizational goals and culture. © Copyright McGraw-Hill. All rights reserved.