NETA PowerPoint Presentations to accompany The Future of Business Fourth Edition Adapted by Norm Althouse, University of Calgary Copyright © 2014 by Nelson Education Ltd.

Designing Organizational Structures Chapter 10 Copyright © 2014 by Nelson Education Ltd.Chapter 10

Copyright © 2014 by Nelson Education Ltd. Making the Connection

Learning Outcomes 1. Identify the five structural building blocks that managers use to design organizations. 2. Examine the tools companies use to establish relationships within their organizations. 3. Show how the degree of centralization/decentralization can be altered to make an organization more successful. 4. Describe the differences between a mechanistic and organic organization. 5. Discuss the traditional and contemporary organizational structures companies are using. Copyright © 2014 by Nelson Education Ltd.4

Learning Outcomes (cont’d) 6. Summarize why companies are using team-based organizational structures. 7. Explain how the informal organization affects the performance of the company. 8. List some of the trends that are influencing the way businesses organize Copyright © 2014 by Nelson Education Ltd.5

Organizational Structures Copyright © 2014 by Nelson Education Ltd.6 Organizational Structures In today’s dynamic business environment, organizational structures need to be designed so that the organization can respond quickly to new competitive threats and changing customer needs.

Identify the five structural building blocks that managers use to design organizations. Copyright © 2014 by Nelson Education Ltd.7

Building Organizational Structures Copyright © 2014 by Nelson Education Ltd.8 Division of Labour DepartmentalizationDelegation

Specialization Copyright © 2014 by Nelson Education Ltd.9 Specialization results in: – Greater efficiency. – Consistency in production. – Lack of variety/challenges. The degree to which tasks are established into smaller jobs.

Departmentalization Copyright © 2014 by Nelson Education Ltd.10 Functional Based on the primary functions performed Product Based on the goods/services produced or sold Process Based on the production process used Customer Based on the primary type of customer Geographic Based on location

Exhibit 10.2: Organizational Chart for a Typical Retailer Copyright © 2014 by Nelson Education Ltd.11

Examine the tools companies use to establish relationships within their organizations. Copyright © 2014 by Nelson Education Ltd.12

Managerial Hierarchy Copyright © 2014 by Nelson Education Ltd.13 Top Management Middle Management Supervisory Management Power

Chain of Command Copyright © 2014 by Nelson Education Ltd.14 The line of authority that extends from one level of an organization’s hierarchy to the next, from the bottom, and makes clear who reports to whom. Authority – Legitimate power, prescribed by the organization. Delegation of Authority – Assignment of some degree of authority to persons lower in the chain of command.

Span of Control Copyright © 2014 by Nelson Education Ltd.15 The number of employees a manager directly supervises. Optimal span of control is determined by: Nature of task. Location of workers. Amount of interaction and feedback required. Level of skill and motivation of workers.

Exhibit 10.3: Narrow and Wide Spans of Control Copyright © 2014 by Nelson Education Ltd.16

Show how the degree of centralization/ decentralization can be altered to make an organization more successful. Copyright © 2014 by Nelson Education Ltd.17

Degree of Centralization Copyright © 2014 by Nelson Education Ltd.18 Centralization Decentralization Formal authority is concentrated in one area or level. Process of pushing decision-making authority down the hierarchy.

Describe the differences between a mechanistic and organic organization. Copyright © 2014 by Nelson Education Ltd.19

Exhibit 10.4: Mechanistic versus Organic Copyright © 2014 by Nelson Education Ltd.20

Exhibit 10.5: Flat versus Tall Organizational Structure Copyright © 2014 by Nelson Education Ltd.21

Discuss the traditional and contemporary organizational structures companies are using. Copyright © 2014 by Nelson Education Ltd.22

Common Organizational Structures Copyright © 2014 by Nelson Education Ltd.23 Line Line-and- Staff Direct, clear lines of authority and communication flowing from the top managers downward. Includes both line and staff positions.

Line and Staff Positions Copyright © 2014 by Nelson Education Ltd.24 Line Positions Staff Positions Positions directly concerned with producing products and directly connected from top to bottom. Positions that provide administrative and support services to the line positions.

Exhibit 10.6: Line-and-Staff Organization Copyright © 2014 by Nelson Education Ltd.25

Common Organizational Structures Copyright © 2014 by Nelson Education Ltd.26 Matrix Committee Combines functional and product departmentalization by bringing together people from different functional areas of the organization to work on a special project. Authority and responsibility are held by a group rather than an individual.

Summarize why companies are using team-based organizational structures. Copyright © 2014 by Nelson Education Ltd.27

Teams Copyright © 2014 by Nelson Education Ltd.28 Work Groups: Share resources and coordinate efforts to help members better perform their individual jobs. Work Teams: Similar to work groups but also requires the pooling of knowledge, skills, abilities, and resources to achieve a common goal.

Exhibit 10.8: Group Decision Making Copyright © 2014 by Nelson Education Ltd.29

Types of Teams Copyright © 2014 by Nelson Education Ltd.30 Self-Managed Cross-Functional Problem-Solving Generate ideas and alternatives and recommends a course of action. Members take responsibility for goal setting and planning work activities. Employees are from same hierarchical level but different functional areas.

Building High-Performance Teams Copyright © 2014 by Nelson Education Ltd.31  Select appropriate employees for the team.  Team members should have a variety of complementary skills.  Team must have clearly defined goals.  Need to practise good communication.  Need for a great leader.

Explain how the informal organization affects the performance of a company. Copyright © 2014 by Nelson Education Ltd.32

Functions of the Informal Organization Copyright © 2014 by Nelson Education Ltd.33  Source of friendships and social contact.  Helps employees feel better informed and connected with what is going on.  Provides informal status and recognition.  Aids the socialization of new employees.

List some of the trends that are influencing the way businesses organize. Copyright © 2014 by Nelson Education Ltd.34

The Future of Management and Leadership Copyright © 2014 by Nelson Education Ltd.35  Re-engineering organizational structure.  The virtual corporation.  Virtual teams.  Outsourcing.  Structuring for global mergers.  Managing in diverse cultural environments.