Chapter 7 and 8 Organizational Structure and Managing Change

Designing Organizational Structure Organizing The process by which managers establish the structure of working relationships among employees to achieve goals Organizational Structure Formal system of task and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals

Factors Affecting Organizational Structure Figure 7.1 The Organizational Environment The quicker the environment changes, the more problems face managers. Structure must be more flexible (i.e., decentralized authority) when environmental change is rapid. Strategy Different strategies require the use of different structures A differentiation strategy needs a flexible structure, low cost may need a more formal structure Increased vertical integration or diversification also requires a more flexible structure Technology The combination of skills, knowledge, tools, equipment, computers and machines used in the organization More complex technology makes it harder for managers to regulate the organization Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization

Job Design Job Design Job Enlargement Job Enrichment The process by which managers decide how to divide tasks into specific jobs Job Enlargement Increasing the number of different tasks in a given job by changing the division of labor Job Enrichment Increasing the degree of responsibility a worker has over a job

Departmentalization- by Function Functional Structure An organizational structure composed of all the departments that an organization requires to produce its goods or services 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

Departmentalization: by Divisions Divisional Structure An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer Divisions create smaller, manageable parts of a firm Divisions develop a business-level strategy to compete Divisions have marketing, finance, and other functions Functional managers report to divisional managers who then report to corporate management

Departmentalization: by Product Structure Each product line or business is handled by a self-contained division Advantages Allows functional managers to specialize in one product area Division managers become experts in their area Removes need for direct supervision of division by corporate managers Divisional management improves the use of resources

Product, Market, and Geographic Structures Figure 7.4 Product, Market, and Geographic Structures

Departmentalization: by Geographic Geographic Structure Each region of a country or area of the world is served by a self-contained division Global geographic structure Managers locate different divisions in each of the world regions where the organization operates Generally, occurs when managers are pursuing a multi-domestic strategy

Departmentalization Global Product Structure Each product division, not the country or regional managers, takes responsibility for deciding where to manufacture its products and how to market them in foreign countries

Global Geographic and Global Product Structures Figure 7.5

Departmentalization: By market Market Structure Each kind of customer is served by a self-contained division Also called customer structure Matrix Structure An organizational structure that simultaneously groups people and resources by function and product

Matrix Structure Figure 7.6 The matrix structure is very flexible and can respond rapidly to the need for change Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy both

Product Team Structure Employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his direct subordinates Cross-functional team group of managers brought together from different departments to perform organizational tasks

Coordinating Functions and Divisions Authority The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources Hierarchy of Authority An organization’s chain of command, specifying the relative authority of each manager

Allocating Authority Span of Control Line Manager Staff Manager The number of subordinates that report directly to a manager Line Manager someone in the direct line or chain of command who has formal authority over people and resources Staff Manager Someone responsible for managing a specialist function, such as finance or marketing.

Tall & Flat Organizations Figure 7.9 Tall structures have many levels of authority and narrow spans of control Flat structures have fewer levels and wide spans of control

Tall & Flat Organizations Figure 7.9

Tall and Flat Organizations Decentralizing authority giving lower-level managers and nonmanagerial employees the right to make important decisions about how to use organizational resources.

Organization Change Organization Change Top-down change Movement of an organization away from its present state and toward some desired future state to increase its efficiency and effectiveness Top-down change A fast, revolutionary approach to change in which top managers identify what needs to be changed, decide what to do, and then move quickly to implement changes throughout the organization Bottom-up change A gradual approach to change in which managers at all levels work together to develop a plan for change

Four Steps in the Organizational Change Process

Description on Organizational Change Process 1.Recognize the need for change: The change agent can use a variety of techniques to diagnose problems in need of changes to solve them. 2.Identify possible resistance to the change and plan how to overcome it: Follow the guidelines in step 1. 3.Plan the change interventions: Based on the diagnosis of the problem, the appropriate intervention must be selected. 4.Implement the change interventions: The change agent, or someone selected, conducts the intervention to bring about the desired change. 5.Control the change: Follow up to ensure that the change is implemented and maintained. Make sure the objective is met. If not, take corrective action.

Resistance to Change and Ways to Overcome Resistance Why employees resist change? Uncertainty--- Fear of the unknown outcome of change Learning anxiety--- Nervousness or fear of change that requires learning new ways of working Self-interest--- People resist change that threatens their own self interest Loss --- Lost job or change in salary/benefits Control --- Change can also result in an actual or perceived loss of power, status, security and control, feeling that someone else is controlling their destiny

Overcome Resistance to Change Ways to overcome resistance to change: Develop a positive trust climate for change --- Develop and maintain good human relations Plan --- Take good planning. Identify the possible resistance to change and plan how to overcome it. Communication ---Clearly state why the change is needed and how it will affect company or employees Create a win-win situation --- Company should guarantee that employees will not lose jobs, pay or other loses, at least within a short period of time Involve employees --- Employees who have participated in developing changes are more committed to them than those who have not Provide support --- Give advance notice and providing training before the change take place.