MODULE 13 ORGANIZATION STRUCTURES “It’s all about working together” What is organizing as a managerial responsibility? What are the most common types of organization structures? Organizing is sometimes seen as a solution to a problem when, in fact, the organizational structure had nothing to do with the problem.

Organizing is one of the management functions. ORGANIZATION STRUCTURES Organizing As A Management Responsibility MODULE GUIDE 13.1 Organizing is one of the management functions. Organization charts describe the formal structures of organizations. Organizations also operate with important informal structures. Informal structures have good points and bad points. As with the other management functions, how you organize depends on what you want to do.

ORGANIZATION STRUCTURES Organizing As A Management Responsibility process of arranging people and resources to work toward a common goal. What people do should be dependent on their abilities and desires, not on personal relationships.

ORGANIZATION STRUCTURES Organizing As A Management Responsibility There are many different types of organizations. Some of them are so complex that even the employees do not understand them. Structure system of tasks, reporting relationships, and communication that links people and positions within an organization. Organization Charts describe the formal structure, how an organization should ideally work.

ORGANIZATION STRUCTURES Organizing As A Management Responsibility What You Can Learn from an Organization Chart Division of work - Positions and titles show work responsibilities. Supervisory relationships - Lines between positions show who reports to whom in the chain of command. Span of control - The number of persons reporting to a supervisor. Communication channels - Lines between positions show routes for formal communication flows. Major subunits - Which job titles are grouped together in work units, departments, or divisions. Staff positions - Staff specialists that support other positions and parts of the organization. Levels of management - The number of management layers from top to bottom. When you think of it, there is a lot you can learn about a company from its organization chart. That could be why, many companies to not publish one.

ORGANIZATION STRUCTURES Organizing As A Management Responsibility Division of Labor People and groups performing different jobs Formal Structure The official structure of the organization Informal Structure the unofficial relationships that develop among an organization’s members. The unofficial relationships are often stronger than the formal relationships. There are many explanations for this fact. One is that managers often establish informal relationships outside of the formal structure.

ORGANIZATION STRUCTURES Organizing As A Management Responsibility Shadow organizations can have both a positive and a negative affect on the organization’s performance. In the case of weak management, the shadow organization can be what holds the business together.

ORGANIZATION STRUCTURES Organization Structures MODULE GUIDE 13.2 Functional structures group together people using similar skills. Divisional structures group together people by products, customers, or locations. Matrix structures combine the functional and divisional structures. Team structures use many permanent and temporary teams. Network structures extensively use strategic alliances Recent trends are toward team structures, and with the internet, virtual structures.

ORGANIZATION STRUCTURES Functional Structures Departmentalization Grouping together people and jobs into one unit Functional Structures group together people using similar skills to perform similar activities. Potential Advantages of Functional Structures Economies of scale make efficient use of human resources. Functional experts are good at solving technical problems. Training within functions promotes skill development. Career paths are available within each function. The potential disadvantage of functional structures is that managers may tend not to communicate with other functional organizations. This can be solved with cross functional teams.

ORGANIZATION STRUCTURES Functional Structures Notice that there is no formal communications across functions.

ORGANIZATION STRUCTURES Functional Structures Functional Chimneys Problem A lack of communication and coordination across functional organizations The lack of communications in functional organizations is often referred to as the Functional Chimneys or Functional Silos problem.

ORGANIZATION STRUCTURES Divisional Structures Divisional structures group together people who work on a similar product, work in the same geographical region, or serve the same customers. Potential Advantages of Divisional Structures Expertise focused on special products, customers, regions Better coordination across functions within divisions Better accountability for product or service delivery Easier to grow or shrink in size as conditions change Divisional structures often result from growth. As organizations grow, it is difficult for one person to manage it all. Thus the company sub divides into smaller profit and loss centers.

ORGANIZATION STRUCTURES Divisional Structures Divisional structures have managers usually are responsible for the operations within the division including profit and loss responsibility.

ORGANIZATION STRUCTURES Customer & Matrix Structures Customer Structure Groups together people and jobs that serve the same customers or clients Matrix Structure uses permanent cross functional teams to try to gain the advantages of both the functional and divisional approaches. Matrix structures are complex and need to be closely managed. However, they do have distinct advantages.

ORGANIZATION STRUCTURES Matrix Structures Notice how the matrix structure solves the communication problem of functional structures by creating cross functional teams. Potential Advantages of Matrix Structures Performance accountability rests with program, product, or project managers. Teams enable better communication and cooperation across functions. Teams make more decisions and solve more problems at their levels. Top managers spend more time on strategic issues. A cross-functional team brings together members from different functional departments.

ORGANIZATION STRUCTURES Team Structures make extensive use of permanent and temporary teams, often cross functional, to improve communication, cooperation, and problem solving. Potential Advantages of Team Structures Team assignments improve communication, cooperation, and decision-making. Team members get to know each other as persons, not just job titles. Team memberships boost morale, and increase enthusiasm and task involvement. Team structures have a number of advantages but they also have some of the disadvantages of group think.

ORGANIZATION STRUCTURES Team Structures This team structure does not indicate a team leader. However, even if there is not a formal team leader position, more often than not, a leader will emerge in the informal structure.

ORGANIZATION STRUCTURES Network Structures Network structures maintain a staff of core fulltime employees and use contracted services and strategic alliances to accomplish many business needs. The network structure requires close relationships with a few trusted sub-contractors.

ORGANIZATION STRUCTURES Virtual Structures Uses information technologies to operate as a shifting network of alliances. MANAGEMENT TIPS Seven deadly sins of outsourcing: Outsourcing activities that are part of the core competency 2. Outsourcing to untrustworthy vendors 3. Agreeing to unfavorable contracts with the vendor 4. Overlooking impact on existing employees 5. Not maintaining oversight; losing control to vendors 6. Overlooking hidden costs of managing contracts 7. Failing to anticipate need to change vendors or cease outsourcing Virtual structures are a form of network structures. These management tips are worth remembering.