1. Organizational Structure and Design15 .
C H A P T E R
F I F T E E N
Organizational Structure and Design

2. Flight Centre’s Organizational Structure
Flight Centre has a “tribal” structure that organizes people around families, villages and tribes. This tribal structure seems to work well in an industry that has to pay attention to local markets and change quickly in a dynamic industry
AAP Image/Dave Hunt

3. Division of Labour
Subdivision of work into separate jobs assigned to different people
Potentially increases work efficiency
Necessary as company grows and work becomes more complex
AAP Image/Dave Hunt

4. 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
AAP Image/Dave Hunt

5. Elements of Organizational Structure
Department-
alization
Span of
Control
Organizational
Structure
Elements
Formalization
Centralization

6. Span of Control Number of people directly reporting to the next level
Assumes coordination through direct supervision
Wider span of control possible:
with other coordinating methods
employees perform similar tasks
employee skills are standardized
tasks are routine
Moving to flatter structures

7. Span of Control at Ducks Unlimited
Ducks Unlimited Canada recently flattened its organizational structure by removing layers of management. The Winnipeg- based 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. Centralization and Decentralization
Formal decision making authority is held by a small group of people
Centralization
Decision making authority is dispersed throughout the organization
Decentralization

9. Formalization Causes Problems
As firms get older, larger, and more regulated
Problems
Reduces organizational flexibility
Work rules can undermine productivity
Employee alienation, powerlessness
Rules become focus of attention

10. Mechanistic vs. Organic Structures
Narrow span of control
High formalization
High centralization
Organic
Wide span of control
Little formalization
Decentralized decisions

11. Effect of Departmentalization
Establishes work teams and supervision structure
Creates common resources, measures of performance, etc
Coordination through informal communication

12. Functional Organizational Structure
Organizes employees around specific
knowledge or other resources
(marketing, production)
CEO
Finance
Production
Marketing

13. Divisional Structure
Organizes employees around outputs, clients, or geographic areas
CEO
Transportation
Recreational
Capital

14. Matrix Structure (Project-based)
Employees ( )are temporarily assigned to a specific project team and have a permanent functional unit
CEO
Engineering
Marketing
Design
Project A
Manager
Project B
Manager
Project C
Manager

15. 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

16. Network Organizational Structure
Product Development Firm (France)
Call Centre Firm (India)
Core Firm (Canada)
Public
Relations
Firm (U.S.A.)
Manufacturing (Malaysia)
Accounting Firm (Canada)

17. Types of Organizational Technology
Assembly
Line
Engineering
Projects
High
Analyzability
Skilled
Trades
Scientific
Research
Low
Analyzability
Low
Variety
High
Variety

18. External Environment & Structure
Dynamic
• High rate of change
• Use team-based, network, or other 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. External Environment & Structure (con’t)
Diverse
• Variety of products, clients, regions
• Divisional form aligned with the diversity
Integrated
• Single product, client, location
• Use geographic divisionalized structure
Hostile
• Competition and resource scarcity
• Use organic structure for responsiveness
Munificant
• Plenty of resources and product demand
• Less need for organic structure

20. Organizational Strategy
Structure follows strategy
Differentiation strategy
Providing unique products or attracting clients who want customization
Cost leadership strategy
Maximize productivity in order to offer competitive pricing

21. Organizational Structure and Design15 .
C H A P T E R
F I F T E E N
Organizational Structure and Design