1. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Organizational Structure and Design C H A P T E R 17

2. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e The Decentralization of Coca-Cola Coca-Cola decentralized its organizational structure by cutting half of the staff at its Atlanta headquarters and moving the regional chieftains closer to their local markets. In India, decision making has been moved further down to different areas of that diverse country. © AFP/CORBIS

3. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Division of Labor Subdivision of work into separate jobs assigned to different people Potentially increases work efficiency Necessary as company grows and work becomes more complex © AFP/CORBIS

4. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Forms of Work Coordination Informal communication  Sharing information  High media-richness  Important in teams Formal hierarchy  Direct supervision  Common in larger firms  Problems -- costly, slow, less popular with young staff Standardization  Formal instructions  Clear goals/outputs  Training/skills © AFP/CORBIS

5. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e OrganizationalStructureElements Span of Control Centralization Department-alization Formalization Elements of Organizational Structure

6. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Span of Control Number of people directly reporting to the next level Assumes coordination through direct supervision Wider span of control possible when:  with other coordinating methods  subordinates’ tasks are similar  tasks are routine Flatter structures require wider span (if same # of people in the firm)

7. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Span of Control at Ducks Unlimited Ducks Unlimited Canada recently flattened its organizational structure by removing layers of management. The environmental conservation group wanted the flatter structure to empower employees, and let them make decisions quickly without having to go up the hierarchy. Ducks Unlimited/Darin Langhorst

8. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Organizational crises Organizational crises Management desire for control Management desire for control Increase consistency, reduce costs Increase consistency, reduce costs Centralization Complexity -- size, diversity Complexity -- size, diversity Desire for empowerment Desire for empowerment Decentralization Forces for (De)centralization

9. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Mechanistic vs. Organic Structures Mechanistic High formalizationHigh formalization Narrow span of controlNarrow span of control High centralizationHigh centralization Organic Low formalizationLow formalization Wide span of controlWide span of control Low centralizationLow centralization

10. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Effects of Departmentalization Establishes work teams and supervision structure Creates common resources, measures of performance, etc Encourages informal communication among people and subunits

11. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Organizes employees around skills or other resources (marketing, production) President FinanceProduction Marketing Functional Organizational Structure

12. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Organizes employees around geographic areas, products, or clients Divisionalized Structure President EnterpriseSystemsLaserjetSolutions ConsumerProducts

13. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Project C Manager Project B Manager Project A Manager EngineeringManagerMarketingManagerSoftwareManager Employees are temporarily assigned to a specific project team and have a permanent functional unit Project-Based Matrix Structure President

14. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Team Structure at Jabil Circuits Jabil Circuits relies on a team- based organizational structure at its manufacturing operations. Each production team is responsible for a specific customer group. Team members have a high degree of autonomy and are cross-trained. Courtesy of Jabil Circuits

15. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Features of Team-Based Structures Self-directed work teams Teams organized around work processes Very flat span of control Very little formalization Usually found within divisionalized structure Courtesy of Jabil Circuits

16. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Core Firm (U.S.A.) Product Development Firm (France) Marketing Firm (U.K.) Customer Service Firm (Canada) Production Firm (China) Accounting Firm (U.S.A.) Network Organizational Structure

17. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e HighAnalyzability LowAnalyzability HighVarietyLowVariety Scientific Research Assembly Line Skilled Trades Engineering Projects Types of Organizational Technology

18. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Org. Environment & Structure Dynamic High rate of change Use organic structure Stable Steady conditions, predictable change Use mechanistic structure Complex Many elements (such as stakeholders) Decentralize Simple Few environmental elements Less need to decentralize

19. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Org. Environment & Structure (con’t) Diverse Variety of products, clients, locations Divisional form aligned with the diversity Hostile Competition and resource scarcity Use organic structure for responsiveness Integrated Single product, client, location Don’t need divisional form Munificent Plenty of resources and product demand Less need for organic structure

20. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e Organizational Structure and Design C H A P T E R 17