CHAPTER 5

ORGANIZING
 • Organizational architecture
ORGANIZATIONAL • The organizational structure, control systems,
culture, and human resource management systems

STRUCTURE
that together determine how efficiently and
effectively organizational resources are used
DESIGNING
ORGANIZATIONAL
STRUCTURE
• Organizing
• Process by which managers
establish the structure of
working relationships
among employees to allow
them to achieve an
organization’s goals
efficiently and effectively
DESIGNING ORGANIZATIONAL STRUCTURE

• Organizational structure
• Formal system of task and
reporting relationships that
coordinates and motivates
organizational members so
they work together to achieve
organizational goals
DESIGNING ORGANIZATIONAL STRUCTURE

• Organizational design • The challenge facing all companies is to

design a structure and culture that:
• The process by which managers create a
specific type of organizational structure 1. Motivates managers and employees to
and culture so that a company can work hard and to develop supportive job
operate in the most efficient and effective behaviors and attitudes.
way 2. Coordinates the actions of employees,
groups, functions and divisions to
ensure they work together efficiently
and effectively.
FACTORS AFFECTING
ORGANIZATIONAL
STRUCTURE
DESIGNING ORGANIZATIONAL STRUCTURE

• The way an organization’s structure works depends on the choices

managers make about:
1. How to group tasks into individual jobs.
2. How to group jobs into functions and divisions.
3. How to allocate authority and coordinate functions and divisions.
GROUPING TASKS INTO JOBS:
JOB DESIGN
• Job design
• Job Design is the process by which managers decide how
to divide tasks into specific jobs (division of labor).
• The appropriate division of labor results in an effective
and efficient workforce.
JOB DESIGN

• Job simplification
• The process of reducing the number
of tasks that each worker performs

• Job enlargement
• Increasing the number of different
tasks in a given job by changing the
division of labor

• Job enrichment
• Increasing the degree of
responsibility a worker has over a job
THE JOB
CHARACTERISTICS MODEL

• Skill variety
• Employee uses a wide range of skills.
• Task identity
• Worker is involved in all tasks of the job from beginning to
end of the production process.
• Task significance
• Worker feels the task is meaningful to the organization.
• Autonomy
• Employee has freedom to schedule tasks and carry them
out.
• Feedback
• Worker gets direct information about how well the job is
done.
 GROUPING JOBS
INTO FUNCTIONS
FUNCTIONAL STRUCTURE

• Advantages • Disadvantages
• Encourages learning from others doing • Difficult for departments to
similar jobs communicate with others
• Easy for managers to monitor and • Preoccupation with own department
evaluate workers and losing sight of organizational goals
• Allows managers to create the set of
functions they need in order to scan and
monitor the competitive environment
DIVISIONAL
STRUCTURES
• Divisional structure
• An organizational structure
composed of separate business
units within which are the
functions that work together to
produce a specific product for a
specific customer
• Product, geographic, market
TYPES OF DIVISIONAL STRUCTURES

• Product structure
• Managers place each distinct product line or business in its own self-contained division.
• Divisional managers have the responsibility for devising an appropriate business-level strategy to allow the
division to compete effectively in its industry or market.
• GlaxoSmithKline groups research into 8 product divisions to focus on particular clusters of diseases

• Allows functional managers to specialize in one product area

• Allows division managers to become experts in their area
• Removes need for direct supervision of division by corporate managers
• Allows divisional management to improve the use of resources
TYPES OF DIVISIONAL STRUCTURES
• Geographic structure • Market structure
• Divisions are broken down by geographic • Groups divisions according to the particular
location. kinds of customers they serve

• Global geographic structure • Allows managers to be responsive to the

needs of their customers and act flexibly in
• Managers locate different divisions in each of
making decisions in response to customers’
the world regions where the organization
changing needs
operates.
• This generally occurs when managers are
pursuing a multi-domestic strategy.
MATRIX
DESIGN
STRUCTURE
• Matrix structure
• A matrix structure
is an
organizational
structure that
simultaneously
groups people and
resources by
function and
product.
• The structure is
very flexible.
• Each employee
has two bosses.
PRODUCT
TEAM
STRUCTURE
• Product team structure
• Structure in which
employees are
permanently assigned to
a cross-functional team
and report only to the
product team manager
or to one of the
manager’s direct
subordinates
• Does away with dual
reporting relationships
and two-boss managers

• Cross-functional team
• A group of managers
brought together from
different departments to
perform organizational
tasks
ALLOCATING AUTHORITY

• Authority
• Power to hold people accountable for their actions and to make decisions concerning the
use of organizational resources

• Hierarchy of authority
• An organization’s chain of command, specifying the relative authority of each manager
ALLOCATING • Span of control

AUTHORITY
• The number of subordinates who report
directly to a manager
ALLOCATING AUTHORITY

• Line manager
• Someone in the direct line or chain of
command who has formal authority over
people and resources at lower levels

• Staff manager
• Someone responsible for managing a
specialist function, such as finance or
marketing
TALL AND FLAT
ORGANIZATIONS
• Tall structures have many levels of authority
and narrow spans of control.
• As hierarchy levels increase, communication
gets difficult, creating delays in the time being
taken to implement decisions.
• Communications can also become distorted
as they are repeated through the firm.
• Tall structures can become expensive.

• Flat structures have fewer levels and wide

spans of control.
• Results in quick communications but
can lead to overworked managers
CENTRALIZATION AND
DECENTRALIZATION OF
AUTHORITY
INTEGRATING MECHANISMS

• Integrating mechanisms: Organizing tools that managers can use to increase communication and coordination among
functions and divisions

• The greater the complexity of an organization’s structure, the greater is the need to increase communication and
coordination among functions and divisions.

• Liaison Roles

• When the volume of contacts between two functions increases, one way to improve coordination is to give one
manager in each function or division the responsibility for coordinating with the other. The responsibility for
coordination is a part of the liaison’s full-time job. Usually an informal relationship forms between the people involved,
greatly easing strains between functions.
INTEGRATING MECHANISMS

• Task Forces
• If two or more functions share common problems, and direct contact and liaison roles do not provide sufficient coordination, a task force may be
appropriate. One manager from each relevant function or division is assigned to a task force that meets to solve the specific, mutual problem.
Members are responsible for reporting back to their own departments on issues addressed and solutions recommended.
• Task forces are often called ad hoc committees because they are temporary. Once the problem is resolved, the task force is disbanded.
• Cross-Functional Teams
• To address recurring problems effectively, managers are increasingly using permanent integrating mechanisms such as cross-functional teams. An
example of a cross functional team is a new product development committee that is responsible for the choice, design, manufacturing, and
marketing of a new product. Such an activity requires a great deal of integration among functions if new products are to be successfully
introduced. Using a complex integrating mechanism such as a cross-functional team accomplishes this.
• Integrating Roles
• An integrating role is a role whose only function is to increase coordination and integration among functions or divisions to achieve performance
gains from synergies. Usually, senior managers who can envision how to use the resources of the functions or divisions to obtain new synergies are
chosen to perform such roles.
INTEGRATING MECHANISMS
REFERENCES

• Contemporary Management
• 11th Edition
• By Gareth Jones and Jennifer George