1. Organizational Structure and Communication
Chapter 5
Organizational Structure and Communication

2. Introduction Organization structure determines who works together
It is the way managers design their firms to achieve their organization’s mission and goals
Organizational communication flows through its structure, which affects:
behavior
human relations
performance

3. The transition from an economy based on materials to an economy based on flows of information has created considerable challenges for organizational structure, and communication.

4. Principles of Organization
Span of
Management
Coordination
Centralized and
Decentralized
Authority
Division of Labor
and
Departmentalization
Chain of Command
The following suggestions specify the types of changes in jobs that are most likely to lead to improvements in each of the five core dimensions.
(1) Combine tasks - managers should put existing fractionalized tasks back together to form a new, larger module of work. This increases skill variety and task identify.
(2) Create natural work units - managers should design tasks that form an identifiable and meaningful whole. This increases employee “ownership” of the work and encourages employees to view their work as meaningful and important rather than as irrelevant and boring.
(3) Establish client relationships - the client is the user of the product or service that the employee works on. Whenever possible, managers should establish direct relationships between workers and their clients. This increases skill variety, autonomy, and feedback for the employee.
(4) Expand jobs vertically - vertical expansion means giving employees responsibilities and controls that were formerly reserved for management. It partially closes the gap between the “doing” and “controlling” aspects of the job, and it increases employee autonomy.
(5) Open feedback channels - by increasing feedback, employees not only learn how well they are performing their jobs but also whether their performances are improving, deteriorating, or remaining at a constant level. Ideally, employees should receive performance feedback directly as they do their jobs rather than from management on an occasional basis. 9

5. Questions and Answers for Designing Organizational Structure:
How should we subdivide work?
Division of Labor and Departmentalization
Who should departments and individuals report to?
Chain of Command
How many individuals should report to each manager?
Span of Management
At what level should decisions be made?
Centralization vs. Decentralization
How do we get everyone to work together as a team?
Coordination

6. Formal Organization Structure
Vertical downward communication
Vertical upward communication

7. Informal Organization Structure
President
Horizontal communication networks
Vice President
Production
Vice President
Finance
Vice President
Marketing
Manager A
Manager B
Manager C
Manager D
Manager E
Manager F
Manager G
Manager H

8. Example of Wide Span of Management
President
Supervisor
Supervisor 11

9. Example of Narrow Span of Management
President
Department Head
Department Head
Supervisor
Supervisor
Supervisor
Supervisor 12

10. Common Types of Departmentalization
Divisional
Territory
Matrix
Product
Customer
Functional
Break-even Analysis
identifies profit or loss at various sales volumes
Return on Investment
measures productivity of assets
Marginal Analysis
compares the additional cost in a particular decision rather than average cost
Game Theory
mathematical models that analyze multi-party decision contexts
Linear Programming
for optimally solving resource allocation problems
Queuing Theory
for calculating waiting lines 5

11. Functional Departmentalization
Chief Executive Officer
Engineering
Reliability
Finance
Public
Relations
Manufacturing
Distribution
Human
Resources
Purchasing 4

12. Product (Service) Departmentalization
Vice President
& General Manager
Consumer Products Division
Director of
Human
Resources
Director of
Marketing
Staff
Services
Director of
Marketing
Research
Director of
Distribution
&
Planning
Director of
Quality
Assurance
Comptroller
Division Vice
President
& General
Sales Manager
Division Vice
President &
General Manager
Infant & Baby
Products
Division Vice
President &
General Manager
Household
Products
Division Vice
President &
General Manager
Commercial
Products
Vice President
Manufacturing 7

13. Customer Departmentalization
President
Retail
Division
Business
Division
Government
Division
Production
Production
Production
Marketing
Marketing
Marketing
Finance
Finance
Finance

14. Divisional Departmentalization
President
Computer
Division
Software
Division
Consulting
Source
Division
Production
Production
Production
Marketing
Marketing
Marketing
Finance
Finance
Finance

15. Territory (Geographic) Departmentalization
Northeast
regional
manager
Midwest
Southeast
Pacific
Chairman
CEO
Southwest
General
managers for:
New York
Philadelphia
Boston
Cleveland
Chicago
St. Louis
Raleigh
Atlanta
Orlando
Seattle
San Francisco
Los Angeles
Dallas
Houston
Albuquerque

16. Example of the Matrix Departmentalization
Functions
Project or product A
Project or product B
Project or product C
Project or product D
Project or product E
Projects, products
Manufacturing Marketing Engineering Finance 8

17. Example of the Matrix Departmentalization
President
Vice President
Finance
Vice President
Operations
Vice President
Manufacturing
Vice President
Sales and
Marketing
Region A
Manager
Region B
Manager
Region C
Manager

18. Contemporary Organization Design
Virtual
Organizations
Boundaryless
E-Organizations
Learning
Team Organizations
and
Reengineering
The following suggestions specify the types of changes in jobs that are most likely to lead to improvements in each of the five core dimensions.
(1) Combine tasks - managers should put existing fractionalized tasks back together to form a new, larger module of work. This increases skill variety and task identify.
(2) Create natural work units - managers should design tasks that form an identifiable and meaningful whole. This increases employee “ownership” of the work and encourages employees to view their work as meaningful and important rather than as irrelevant and boring.
(3) Establish client relationships - the client is the user of the product or service that the employee works on. Whenever possible, managers should establish direct relationships between workers and their clients. This increases skill variety, autonomy, and feedback for the employee.
(4) Expand jobs vertically - vertical expansion means giving employees responsibilities and controls that were formerly reserved for management. It partially closes the gap between the “doing” and “controlling” aspects of the job, and it increases employee autonomy.
(5) Open feedback channels - by increasing feedback, employees not only learn how well they are performing their jobs but also whether their performances are improving, deteriorating, or remaining at a constant level. Ideally, employees should receive performance feedback directly as they do their jobs rather than from management on an occasional basis. 9

19. Organizational Communication
Organizational communication – the compounded interpersonal communication process across an organization
Communication flows in an organization are:
Vertical
Horizontal
Grapevine (multidirectional)

20. Vertical and Horizontal Communication
Vertical Communication
The flow of information both up and down the chain of command
Formal communication
Recognized as official
Status and power are not equal among participants in vertical communication
Horizontal Communication
The flow of information between colleagues and peers
Informal communication
Does not follow the chain of command
Not recognized as official

21. Grapevine Communication
Grapevine – the informal vehicle through which messages flow throughout the organization
“When the grapevine allows employees to know about a management decision almost before it is made, management must be doing something right.”

22. Communication Networks
Communication networks – sets of employees who have stable contact through which information is generated and transmitted
Two major types of communication networks:
1. within organizations
2. within departments and small groups

23. Message Transmission Channels
Oral Communication
Written Communication
Nonverbal Communication

24. Oral Communication Media
Face-to-Face
Telephone
Meetings
Presentations 4

25. Nonverbal Communication
Facial
Expressions
Vocal
Qualities
Gestures
Posture 4

26. Communicating with Emotional Employees:
Emotional labor – requires the expression of desired emotions during interpersonal relations
Universal emotions:
happiness
surprise
fear
sadness
anger
disgust

27. Understanding Feelings
Feelings are subjective – they tell you people’s attitudes and needs
Feelings are usually disguised as factual statements
Feelings are neither right nor wrong but behavior is

28. Criticism
Getting Criticism
Giving Criticism

29. Guidelines for Giving Effective Criticism
Give more praise than criticism
Criticize immediately
Criticism should be performance oriented
Give specific and accurate criticism
Open on a positive note and close by repeating what action is needed

30. Situational Communication Styles
Autocratic
Communication
Style
Consultative
Participative
Laissez-Faire 4

31. Situational Variables (1 of 2)
Time – Do I have enough time to use two-way communication?
Information – Do I have the necessary information to communicate my message, make a decision, or take action?
Acceptance – Will the other party accept my message without any input?

32. Situational Variables (2 of 2)
Capability –
Ability: Does the other party have the experience or knowledge to participate in two-way communication?
Motivation: Does the other party want to participate?