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MANAGEMENT

ORGANIZING
ORGANIZING
Human Relations

Why be concerned with


organizational structure?
Organizing
 Organizing follows
follows strategy.
strategy. Strategy
Strategy
defines what
defines what toto do;
do; organizing
organizing defines
defines
how to
how to do
do it.
it.
ORGANIZING

•• Tasksare
Tasks aresubdivided
subdividedinto
intoindividual
individualjobs.
jobs.
•• Divisionof
Division oflabor
laborconcept.
concept.
•• Employeesperform
Employees performonly
onlythe
thetasks
tasksrelevant
relevantto
totheir
their
specializedfunction.
specialized function.
•• Jobstend
Jobs tendtotobe
besmall,
small,but
butthey
theycan
canbe
beperformed
performed
efficiently.
efficiently.
•• thedevelopment
the developmentof oforganizational
organizationalresources
resourcestotoachieve
achieve
strategicgoals.
strategic goals.
•• Arranginginto
Arranging intocoherent
coherentunity
unityor
orfunctional
functionalwhole.
whole.
•• AlfredDDChandler:
Alfred Chandler:“structure
“structureisisthe
thedesign
designof
of
organizationsthrough
organizations throughwhich
whichthetheenterprise
enterpriseisis
administered.”
administered.”
Organization Structure

•• Organizing:
Organizing: thethe development
development of of organizational
organizational
resources to
resources to achieve
achieve strategic
strategic goals.
goals.
••   
•• Organizational
Organizational Structure:
Structure: the
the framework
framework in in which
which
the organization
the organization defines
defines how
how tasks
tasks are
are divided,
divided,
resources are
resources are deployed,
deployed, and
and departments
departments
coordinated.
coordinated.
•• Organization
Organization Chart:
Chart: The
The visual
visual representation
representation of
of
an organizations
an organizations structure.
structure.
Formal and Informal Organization

FORMAL ORGANIZATION:
the intentional structure of roles
in a formally organized
enterprise.
INFORMAL ORGANIZATION:
a network of interpersonal
relationship that arise when
people associated with each other.
Relation don't appear in
organizational chart
• Work Specialization
• Work can be performed more efficiently if employees are allowed
to specialize.
• the degree to which organizational tasks are subdivided into
individual jobs (division of labor)
• Some organizations are moving away from this principal going
towards a team approach or allowing workers to develop skills
outside of their specialization.
• Chain of Command: an unbroken line of authority that links all
individuals in the organization and specifies who reports to
whom.
• Each employee is responsible to report to only one supervisor.
• Q: Can one person work for multiple employees and have just one
supervisor?
• A: Yes.
Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
• Line Authority: a form of authority in which individuals in
management positions have the formal power to direct and
control immediate subordinates.
• Staff Authority: a from of authority granted to staff specialists in
their area of expertise.
• Span of Management
• The number of employees who report to a supervisor; also called
span of control.
• How many employees should report to each manager?
• Close supervision requires a small span of control
• Less supervision is associated with a larger span of control
• In general, the trend toward downsizing has increased the span
of control
• Work performed by subordinates is stable and routine
• Subordinates perform similar work tasks
• Subordinates are concentrated inHarcourt,
Developed by Stephen M.Peters
a single location
Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Tall vs. Flat

•• ..
•• Tall: narrow
Tall: narrow span
span ofof management;
management; manymany levels
levels
hierarchy.
hierarchy.
•• Flat:
Flat: broad
broad span
span of
of control
control and
and few
few levels
levels of
of hierarchy
hierarchy
Narrow Organizational Structures

Tall Organizational Structure

Levels = 4
Span of Control = 3
Total Employees = 40

Adapted from Exhibit 7.4: Tall and Flat Organization Structures


Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Exhibit Tall and Flat Organizational
Structures
Flat
Tall Organizational Structure

Levels = 3
Span of Control = 7
Total Employees = 57

Adapted from Exhibit 7.4: Tall and Flat Organization Structures


Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Centralization and Decentralization
Centralization: the location of decision
authority near top of the organizational
levels.
Keeps control at a higher level.
 
Decentralization: the location of decision
authority near lower organizational levels.
Keeps decisions close to the action; rapid
response.
Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Classical Organizing Theory

Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Departmentalization

•• The
The basis
basis on
on which
which individuals
individuals are
are grouped
grouped into
into
departments and
departments and departments
departments into
into the
the total
total
organization
organization
Functional Structure

•• Anorganizational
An organizationalstructure
structurethatthatgroups
groupstogether
togetherpeople
peoplewho
whohold
hold
similarpositions,
similar positions,perform
performaasimilar
similarset
setof
oftasks,
tasks,or
oruse
usethe
thesame
samekinds
kindsof
of
skills,expertise,
skills, expertise,and
andresources
resourcesuse.
use.
•• Advantagesof
Advantages ofaaFunctional
FunctionalStructure
Structure
•• Specializationof
Specialization offunctional
functionalknowledge
knowledge
•• Lessduplication
Less duplicationof offunctional
functionalresources
resources
•• Facilitatescoordination
Facilitates coordinationwithin
withinfunctional
functionalareas
areas
•• Topmanager
Top managerdirect
directand
andcontrol
control
•• Easierfor
Easier forworkers
workersto tocommunication
communicationand andshare
shareinformation
information
•• Providesfor
Provides forcareer
careerladders
ladderstotoreward
rewardsuperior
superiorperformance
performancethrough
through
promotionopportunities
promotion opportunities
•• Disadvantagesof
Disadvantages ofaaFunctional
FunctionalStructure
Structure
•• Weakcoordination
Weak coordinationacross
acrossfunctional
functionalgroups
groups
•• Restrictedview
Restricted viewofofoverall
overallorganizational
organizationalgoals
goals
•• Limitedgeneral
Limited generalmanagement
managementtraining.
training.
Functional Structure

CEO

Vice President Vice President Vice President Vice President


Marketing Sales Manufacturing Human Resources

Market research East region Purchasing Recruiting

Advertising South region Operations Training

Promotion West region Logistics Compensation

Adapted from Exhibit 7.6: Functional Structure


Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Geographical/Regional Structure

Chief Executive
Officer

Vice President Vice President Vice President Vice President Vice President
North America Europe Southeast Asia Latin America Africa

Adapted from Exhibit 7.10: Geographical/Regional Structure


Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Territory or geography

•• Grouping
Groupingof ofactivities
activitiesby
byarea
areaororterritory
territoryisiscommon
commonin in
enterprisesoperating
enterprises operatingover
overwide
widegeographic
geographicarea.
area.
•• Strengths:
Strengths:
•• Facilitates
Facilitateslocal
localresponsiveness
responsiveness
•• Develops
Developsin indepth
depthknowledge
knowledgeof ofspecific
specificregions/countries
regions/countries
•• Creates
Createsaccountability
accountabilityby byregion
region
•• Facilitates
Facilitatescross-functional
cross-functionalcoordination
coordinationwithin
withinregions
regions
•• Weaknesses:
Weaknesses:
•• Often
Oftencreates
createscross-regional
cross-regionalcoordination
coordinationdifficulties
difficulties
•• Can
Caninhibit
inhibitability
abilityto
tocapture
captureglobal
globalscale
scaleeconomies
economies
•• Duplicates
Duplicatesresources
resourcesandandfunctions
functionsacross
acrossregions
regions
CUSTOMER GROUP
•• grouping
groupingofofactivities
activitiesthat
thatreflect
reflectaaprimary
primaryinterest
interestin
in
customers
customers
Strengths
Strengths
•• In-depth
In-depthunderstanding
understandingof ofspecific
specificcustomers
customers
•• Responsiveness
Responsivenessto tochanges
changesinincustomer
customerpreferences
preferencesand andneeds
needs
•• Responsiveness
Responsivenessto tomoves
movesbybycompetitors
competitorsto tobetter
betterserve
serve
customers
customers
Weaknesses
Weaknesses
•• Duplication
Duplicationofoffunctional
functionalresources
resourcesin ineach
eachcustomer
customerunit
unit
•• Coordination
Coordinationbetween
betweencustomer
customerunits
unitsand
andcorporate
corporateobjectives
objectives
•• Failure
Failureto
toleverage
leveragetechnology
technologyor orother
otherstrengths
strengthsininone
oneunit
unit
acrossother
across otherunits
units
Customer Structure

CEO

Vice President Vice President Vice President


Retail Industrial Military

Small Domestic Army

Mid-size International Navy

Adapted from Exhibit 7.9: Customer Structure


Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
PRODUCT
Groupingof
Grouping ofactivities
activitiesaccording
accordingtotoproduct
productlines.
lines.
Strengths
Strengths
•• More
Morefocus
focuson onproducts
productsandandcustomers
customers
•• Easier
Easierto
toevaluate
evaluateperformance
performanceof ofthe
theproduct
product
•• Product
Productresponsiveness
responsivenessto tomarket
marketchanges
changes
•• Less
Lessburden
burdenon onthe
thetop
topexecutive
executiveininmaking
makingoperating
operatingdecisions
decisions
Weaknesses
Weaknesses
•• Duplication
Duplicationandandlack
lackof
ofeconomies
economiesof ofscale
scale
•• Problems
Problemsfor forcustomers
customerspurchasing
purchasingacross
acrossmultiple
multipleproduct
product
groups
groups
•• Conflicts
Conflictsbetween
betweenproduct
productgroup
groupand
andcorporate
corporateobjectives
objectives
•• Conflict
Conflictbetween
betweenproduct
productgroups
groups
Product Structure

CEO

Vice President Vice President Vice President Vice President


Product A Product B Product C Product D

Marketing Marketing Marketing Marketing

Operations Operations Operations Operations

Sales Sales Sales Sales

Adapted from Exhibit 7.7: Product Structure


Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
MATRIX

•• An
An organizational
organizational structure
structure that
that simultaneously
simultaneously
groups people
groups people by
by function
function andand by
by product
product team.
team.
•• An
An organization
organization structure
structure thatthat utilizes
utilizes functional
functional
and divisional
and divisional chain
chain ofof command
command simultaneously
simultaneously
in the
in the same
same part
part of
of the
the organization
organization
 Functional
Functional andand divisional
divisional chains
chains of
of command
command
simultaneously.
simultaneously.
 Dual
Dual lines
lines of
of authority.
authority.
 Functional
Functional hierarchy
hierarchy of of authority
authority runs
runs vertically.
vertically.
 Divisional
Divisional hierarchy
hierarchy runsruns laterally.
laterally.
 Violates
Violates the
the unity
unity of
of command
command concept.
concept.
Matrix Organization

Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Matrix Structure
Chief Executive
Officer

Health Beauty Cleaning Food

NA

AP

EMEA

LA

Adapted from Exhibit 7.11: Matrix Structure


Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Matrix Approach

•• Advantagesof
Advantages ofMatrix
MatrixStructures
Structures
•• Moreefficient
More efficientuse
useofofresources
resources
•• Developmentof
Development ofgeneral
generaland
andspecialist
specialistmanagement
managementskills.
skills.
•• Enablescompany
Enables companyto todevelop
developnew
newproducts
productsrapidly,
rapidly,maximizes
maximizes
communicationand
communication andcooperation
cooperationbetween
betweenteam
teammembers,
members,and andpromotes
promotes
creativityand
creativity andinnovation
innovation
•• Structureisisflexible
Structure flexible
•• Disadvantagesof
Disadvantages ofMatrix
MatrixStructures
Structures
•• Increasesrole
Increases roleconflict
conflictand
androle
roleambiguity
ambiguity
•• Cancause
Can causehigh
highlevels
levelsof
ofwork
workstress
stress
•• Individualcontributions
Individual contributionsto toteam
teamefforts
effortsmay
maybebehard
hardto
toidentify
identify
•• Opportunitiesfor
Opportunities forpromotion
promotionarearelimited
limited
•• Morediscussions
More discussionsand andmeetings.
meetings.
Network ORGANIZATION

AArather
ratherlosses
lossesconcept
conceptofofaagroup
groupof
ofindependent
independent
firms
firmsororpeople
peoplethat
thatare
areconnected
connectedthrough
through
usually,
usually,information
informationtechnology.
technology.
Neither
Neitherorganizational
organizationalchart
chartnor
norcentrallized
centrallized
building.
building.
An
Anorganization
organizationstructure
structurethat
thatdisaggregates
disaggregates
major
majorfunctions
functionsinto
intoseparate
separatecompanies
companiesthat
thatare
are
brokered
brokeredby byaasmall
smallheadquarters
headquartersorganization
organization
The Virtual Organization

Independent R & D Advertising


Consulting Firm Agency

Executive
Group

Factories in Commissioned
South Korea Sales Representatives

Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Virtual Network Approach Advantages

• Can draw on expertise worldwide


• Work force flexibility
• Reduced administrative overhead

Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Network Approach Disadvantages
• Lack of control, weak boundaries
• Greater demands on managers
• Employee loyalty weakened

Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
BOUNDERYLESS

•• An
Anflexible
flexibleand
andunstructured
unstructuredorganizational
organizationaldesign
designthat
thatisis
intendedto
intended tobreak
breakdown
downexternal
externalbarriers
barriersbetween
betweenthe
the
organizationand
organization andits
itscustomers
customersand
andsuppliers.
suppliers.
•• Removes
Removesinternal
internal(horizontal)
(horizontal)boundaries:
boundaries:
––Eliminates
Eliminatesthe
thechain
chainof
ofcommand
command
––Has
Haslimitless
limitlessspans
spansof
ofcontrol
control
––Uses
Usesempowered
empoweredteams
teamsrather
ratherthan
thandepartments
departments
The Boundaryless
Organization

Limited Widened Empowered


Chain of Spans of Employee
Command Control Teams

Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Developed by Stephen M.Peters Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.

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