Organizational Structure Business Management Copyright © Texas Education Agency, 2012. All rights reserved.

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What is Organizational Structure? The hierarchy within an organization that sets forth the chain of command in addition to the delegation of responsibilities Depends upon the goals of the organization Illustrated by an organizational chart Centralized – decision-making rests with upper management Decentralized – decision-making is the responsibility of departments or divisions Every company has some form of organizational structure that basically sets forth who does what in that organization. This depends on the particular goals of the company. Businesses also must determine if decisions will be made by centralized upper management or decentralized by departments or divisions. Copyright © Texas Education Agency, 2012. All rights reserved.

What is an Adaptive Organization? An organization that adjusts well to changes More decision-making is with the employees (decentralized) Team-oriented Focus on anticipation of customer needs to more easily adjust to unpredictability Because situations in business can change much more rapidly today, businesses need to adapt to change. This is more easily accomplished through decentralized management such as through teams. In this way the focus can be more on the needs of customers and, in turn, increasing revenue for the business. Copyright © Texas Education Agency, 2012. All rights reserved.

When is Change Needed? New competitors New technology New product or service Change in laws Rapid growth or decline Customer dissatisfac-tion Increasing costs Decreasing employee morale Merger Companies must be able to recognize when change is needed or they will be left behind. Many situations that require an adjustment by a company are as follows: new competitors in the market, new technology, a potential merger or acquisition, increasing costs, or decreasing employee morale. Copyright © Texas Education Agency, 2012. All rights reserved.

What is Human Resource Management? All of the activities associated with the personnel of an organization: Hiring Compensation Performance evaluation Employee relations Health and safety Human resources are the most important resources of any business. Because of this, many activities are related to human resources. Personnel must be hired and compensated accordingly. Their performance on the job should be reviewed periodically as well. Employee relations refers to the working relationship between employees and management and includes issues regarding decision-making and ensuring non-discrimination. Human resources also provides for health and safety concerns for all employees. Copyright © Texas Education Agency, 2012. All rights reserved.

Copyright © Texas Education Agency, 2012. All rights reserved. What is Span of Control? Span of control refers to the number of subordinates a member of management has direct authority over Easily displayed through an organizational chart President V.P. Sales V.P. Finance V.P. Human Resources Span of Control = 3 Span of control or span of management, refers to the range or number of employees over which management has direct authority. This is usually evidenced by an organizational chart which depends on the type of organizational structure a business has. Copyright © Texas Education Agency, 2012. All rights reserved.

Copyright © Texas Education Agency, 2012. All rights reserved. Types of Structure Line Direct line of authority from top executives downward Line and Staff Staff specialists assist the lines of authority Matrix Temporary work teams Team Permanent work teams Businesses can be structured in different ways, depending upon the goals of the business. The line organization refers to the top-to-bottom chain of command structure which was more common in the past, as opposed to the line and staff structure that is more common today and utilizes specialists to assist at different levels. The matrix structure provides for temporary work teams whereas the team organization divides employees into permanent work teams. Copyright © Texas Education Agency, 2012. All rights reserved.

Copyright © Texas Education Agency, 2012. All rights reserved. President Production Manager Sales Assistant Controller Branch A Branch B Line Organization Oldest form of organization Simplest form of organization Due to top-to-bottom chain of command, decisions can be made quicker Lack of specialization The line organization is the oldest and simplex form of organization. While decisions can possibly be made quicker due to less people making the decisions, a lack of specialization may be a negative factor in this form of organization. Copyright © Texas Education Agency, 2012. All rights reserved.

Line-and-Staff Organization President Production Manager Production Supervisor Sales Manager Marketing Assistant Finance Manager Finance Supervisor More complex than line organization Allows for experts at different levels in the organization Specialization More costly than line organization The line-and-staff organizational structure is more complex than the line organization. It may be more costly but it provides for more specialization at different levels. Copyright © Texas Education Agency, 2012. All rights reserved.

Copyright © Texas Education Agency, 2012. All rights reserved. Matrix Organization Teams designed for specific projects No consistent organization structure because of the changing nature of projects Matches skills with projects In a matrix organization temporary work teams are formed. As projects are created, personnel with skills and abilities that match the requirements of the project are assigned as necessary. Copyright © Texas Education Agency, 2012. All rights reserved.

Copyright © Texas Education Agency, 2012. All rights reserved. Team Organization Team leader acts as manager for the team In self-directed teams, team members have autonomy over planning, conducting, and reviewing their work with team leader acting as facilitator Feedback can come from customers The team handles HR functions such as hiring, firing, and evaluating performance Teams are generally formed as permanent work teams, as opposed to the matrix structure which has temporary work teams. Self-directed teams are popular as they can make their own decisions regarding planning, conducting, and reviewing their work while their team leader acts as facilitator. Customer feedback is an important evaluation tool. Many HR functions are handled through the team structure instead of upper management. Copyright © Texas Education Agency, 2012. All rights reserved.

Independent Practice Assignments Corporate Organizational Chart Assignment #1 - Students are use the Internet to do research needed to create organizational charts for 2 different corporations in different industries, or students can use a local community business. You may create these charts in a word processing program using online graphics. Identify each as to the type of organizational structure it is and comment on whether or not the structure varied for different industries. Students must include a bibliography. Org Structure Rap Assignment #2 – In pairs students will create a rap outlining the four types of organization structure of a business. They should include enough detail in the rap to demonstrate their knowledge of the topic. They should also include reference to at least one major corporation or local business that the other students can recognize as well as its organizational structure. Students will then perform their rap to the class. Copyright © Texas Education Agency, 2012. All rights reserved.

Independent Practice Assignments (Cont.) Case Study Report Assignment #3 – You are the owner of a business that sells uniforms and provides embroidery services for high school, college, and recreational sports teams in your area. You have managers in the following departments: High School Sales, Collegiate Sales, Recreational Sales, and Accounting. The High School and Collegiate Sales have one full-time sales associate and two part-time associates as well as a delivery person. The Recreational Sales department has one full-time and one part-time associate. The Accounting department has two full-time employees that report to the manager. Students will prepare a 2-page report that answer the following questions: 1) What does the organizational chart look like for your business? (Hint: create an organizational chart), 2) What organizational structure is your business?, 3) Assuming sales are declining in one of the sales departments, what would your recommendation be to possibly restructure to improve sales?, 4) If sales are increasing, make a recommendation on how to restructure to handle the increased business, 5) Is the current structure considered ‘tall’ (more centralized) or ‘flat’ (more decentralized)? Copyright © Texas Education Agency, 2012. All rights reserved.

Independent Practice Assignments (Cont.) Teamwork Project Assignment #4 - Divide the class into teams of 5 if possible. They are to think of a team name and logo. They are to provide objects they can use to create a product. Bring either fruit or other food items you can arrange or put together in any way possible. Or bring wooden or plastic blocks or logs with which to create a toy. They must create an organization chart of all of their team members, identifying the type of structure, as well as job titles. They are to create a Marketing Plan for their finished food dish or toy including the four P’s for their product (product, price, place, promotion). All items can be affixed to a poster or flip chart. Finally, they will each prepare an ‘exit ticket’ that will include their own critique of their team’s organizational structure, team member duties, teamwork, their success (or lack of) with their product, and their overall assessment of their marketing plan. (An example of a marketing plan will be given.) Copyright © Texas Education Agency, 2012. All rights reserved.