1. Managing Organizational Structure and Design
Managing Organizational Structure and Design

2. Learning Outcomes
Discuss the fundamental characteristics of organizing, including such concepts as work specialization, chain of command, span of management, and centralization versus decentralization.
Describe functional and divisional approaches to structure.
Explain the matrix approach to structure and its application to both domestic and international organizations.
Describe the contemporary team and virtual network structures and why they are being adopted by organizations.
Explain why organizations need coordination across departments and hierarchical levels, and describe mechanisms for achieving coordination.
Identify how structure can be used to achieve an organization’s strategic goals.

3. Organizing Organizing follows from strategy
Organizing follows from strategy
Strategy dictates what you do
Organization dictates how you do it
Organizing is the deployment of organizational resources to achieve strategic goals

4. Organizing Chart for a Water Bottling Plant

6. Organizing The Vertical Structure
The set of formal tasks assigned to individuals and departments
Formal reporting relationships, including lines of authority, decision responsibility, number of levels and span of control
The design of systems to ensure effective coordination of employees across departments

8. Organizing Concepts
Work Specialization – the division tasks into individual jobs called division of labor
Chain of Command – a line of authority that links individuals and direct reports

9. Authority, Responsibility, and Delegation
The chain of command illustrates authority
Authority: Formal and legitimate right to make decisions and issue orders.
Responsibility: Duty to perform the task or activity assigned.
Accountability: Duty to report and justify outcomes for tasks which you have authority and responsibility.
Delegation: transferring authority and responsibility to others.

10. True or False? I tend to be a perfectionist.
My boss expects me to know all the details of my job.
I don’t have time to explain to others clearly and concisely how a task should be accomplished.
I often end up doing all tasks myself.
My peers and/or subordinates typically are not as committed as I am.
I get upset when other people don’t do the task right.
I enjoy doing the details of my job to the best of my ability.
I like to be in control of task outcomes.

11. Case for Discussion:
Sandra Keller, manager of the South East Sales Division, asked Hector Cruz, a senior sales associate to handle things in the sales department while Sandra worked on the annual budget. She needed peace and quiet for at least a week to complete her figures. After 10 days, Sandra discovered that Hector hired a junior sales associate, not realizing that Sandra had promised interviews to two other people.
First, answer these questions alone and write down your answers.
Second, compare and discuss your answers with a partner. 
Who is at fault in this scenario, Sandra or Hector – why?  
Which aspects of vertical design are illustrated in this scenario?
What could Sandra or Hector could have done to improve this situation?

12. Overcoming Barriers to Delegation:
Delegate the whole task rather than dividing it among multiple people.
Pick the right person to delegate different kinds of responsibilities.
Ensure you delegate not only responsibility but also authority.
Give detailed instructions and performance expectations.
Keep the lines of communication open.

13. Analyze this office incident by using the key concepts of vertical structure discussed in class.

14. This case illustrates DELEGATION
This case illustrates DELEGATION. This is a poor case of delegation because while the manager gives the employee the RESPONSIBILITY for the project, he hands down no AUTHORITY to make the decisions for the employee to successfully accomplish the task.
Yet, he will hold the employee ACCOUNTABLE for the project outcome. Accountability principle states that you should only be held accountable for tasks in which you have BOTH authority and responsibility!

15. Span of Management
The number of employees reporting to a supervisor is span of management.
Factors associated with less supervisor involvement and larger span of control.
Work is stable and routine
Subordinates perform similar work
Subordinates in single location
Highly trained and need little direction
Rules and procedures are defined
Support systems and personnel are available to manager
Little supervision is required
Managers’ personal preference favor a large span

16. Reorganization to Increase Span of Management

17. Centralization and Decentralization
Centralization means that
decision authority
is located near the
top of the organization
Decentralization means
decision authority is
pushed downward to lower
organizational levels
Change and uncertainty are usually associated with decentralization
The amount of centralization or decentralization should fit the firm’s strategy
During crisis or risk of company failure, authority may be centralized

18. Departmentalization Basis for grouping positions into departments
Basis for grouping positions into departments
Choices regarding chain of command
Five traditional approaches:
Functional
Divisional
Matrix
Innovative approaches:
Teams
Virtual Networks

19. Vertical Functional Approach
Grouping into departments based on skills, expertise, work activities and resource use
Departmentalized by organizational resources
Accounting
Human resources
Engineering
Manufacturing

20. Divisional Approach Departments are grouped based on outputs
Departments are grouped based on outputs
Product structure, program structure, self-contained unit structure
Many large corporations have multiple divisions for different business lines
Organizations may assign division responsibility by geographic region or customer group

21. Functional Versus Divisional Approach

22. Geographic-Based Global Organization Structure

23. Matrix Approach
Combines aspects of both functional and divisional structures simultaneously
Improves coordination and information sharing
A key challenge is the dual lines of authority
Employees report to two supervisors

24. Dual-Authority Structure in a Matrix Organization

25. Global Matrix Structure

26. The Virtual Network Approach
Extending the boundaries of collaboration beyond the organization
Subcontracting functions to other companies
Coordinate activities
Interconnected groups of companies
partnerships and collaborations

27. Network Approach to Departmentalization

28. Structural Advantages and Disadvantages

29. The Need for Coordination
Organizations grow and evolve
Organizations need systems to process information and enable communication
Coordination is the quality of collaboration across departments
Coordination is required, regardless of the structure

30. Task Forces, Teams, and Project Management
Project Managers are
responsible for
coordinating
the activities of
several departments on
a full-time basis for
the completion
of a specific project
Task Force
A temporary team or
committee formed to
solve a specific
short-term
problem

31. Structure Follows Strategy
The right structure is designed to fit the organization’s strategy