5 Org structures - missing 20 slides at beg

Wednesday, July 17, 2024 18:54

• Organizing as a Managerial Function:

○ Organizing is the function of management that involves developing an
organizational structure and allocating human resources to ensure the
accomplishment of objectives. ...
○ Organizing also involves the design of individual jobs within the organization.

Principles of Organizing Teams

○ Authority: The formal right of a manager to make decisions, gives orders, and
expect the orders are carried out.
 Line authority: managers in the direct chain of command for production of goods or
services. Example: Sales.( direct manager regardless of level Top, middle , 1st line )
 Staff authority: managers in positions that give advice to line managers. Example: Legal,
HR.
Not people direct managers but they develop Rules and policy that applies to all
employees

○ Responsibility: The manager/ employee duties to perform assigned tasks.

○ Accountability: The expectations that the manager / employee (with authority and
responsibility) must be able to deliver results to a manager at a higher level.
○ Parity (Equality) Principle: The principle that person who given
responsibility must also be given enough authority to carry out that responsibility.
○ Unity of Command: The principle that each employee should have only one boss.
○ Chain of Command :The principle that the flow of authority in the team must be
clear for all members. It is An unbroken line of authority that extends from the top
of the organization (e.g. a CEO) all the way down to the bottom. All chains of
command clarifies who reports to whom within the organization.

Management Page 1
 ○ Allocation/specification of Tasks: The principle that each employee should have
the task that matches his abilities, skills and experience.
○ Span of Control: refers to the number of workers a manager manages.
○ Centralization: If decision-making power is concentrated at a single point or by a
single person, your organizational structure is centralized.
○ Decentralization: When decision-making power is spread out through a
department or a team, your structure is decentralized.
○ Departmentalization:
 Departmentalization is grouping jobs together to coordinate common
activities and tasks.
 If an organization has rigid departmentalization, each department or team is
highly autonomous, and there is little to no interaction between different
teams.
 On the other hand, loose departmentalization means that different teams
have more freedom to interact and collaborate.
 The organization’s degree of cross-team collaboration and overlap on projects
and within departments will directly affect level of departmentalization.
○ Formalization( task - person relation)
 Formalization also takes into account the degree to which an employee’s tasks
and activities are governed by rules, procedures, and other mechanisms.
 A formal organizational structure seeks to separate the individual from the role
or position, as the role or position stays the same regardless of who’s holding it.
 An informal organization, on the other hand, places more value on the
individual. It allows for the evolution of a role or position based on an
individual’s references, skill set, etc.

• Tall structures have many levels of authority relative to the

organization’s size.
 As levels in the hierarchy increase, communication gets
difficult.

Management Page 2
  The extra levels result in more time being taken to implement
decisions.
 Communications can also become distorted as it is repeated
through the firm.
• Flat structures have few levels but wide spans of control.
 Results in quick communications but can lead to overworked
managers.

The element of who has authority to make decisions and who supervise
which delegates (subordinates).

The element of dividing work into a specific jobs, tasks and assigning jobs
into units.

To build Org Structure , start with two steps :

1- Job Design
2- Departmentalization: Grouping jobs ==> organizing jobs into units
inside an organization

Management Page 3
• Alternatives to Specialization:
○ Job Rotation: systemically moves employees from one job to another.
○ Job enlargement: increase tasks for a given job to reduce boredom.
○ Job enrichment: increases the degree of responsibility a worker has
over a job.
can lead to increased worker involvement.
• Delegation : Assigning task of the manager to most senior employees to
prepare them for managerial levels( Succession)

Organizational structures

Management Page 4
 

 Functional structure
Is the most used structure in the companies
Can be used in many sized company ( small , medium , large)

Company is structured based on function , like Marketing , HR , operation , Engineering , Finance , …

• advantages of Functional Structure:

• It works well with small and medium sized companies where business environment is stable to
somewhat without great change and uncertainty.
• Decision making are centralized at top management.
• Career paths foster professional identity with the business function.
• Specialization, because it permits employees to do specialized tasks, it creates a high degree of
efficiency and builds expertise.
• Easy for managers to monitor & evaluate workers.
• Disadvantages of Functional Structure:
• Poor communication & coordination across functional units.
• Delay in decision making and in response to changes.
• Focusing more on departmental goals more than the overall company objectives (interest
conflict).
• The specialization will lead to a narrow viewpoint and lack of overall perspective.
• Problem of succession: The functional organizational structure develops specialist rather than
generalists ( problem of succession in top executives.

Management Page 5
 generalists ( problem of succession in top executives.

From Lecture:

Advantage
• Clear structure and responsibilities of specialization
• Increase experience about Specialization for each function

Disadvantage :
• Narrow knowledge on other function, which cause Problem of succession planning , can be solved
by Job rotation
• Lack of communication system can cause Isolated island for each function which cause conflict
like maintenance plans during marketing campaigns( can be solved using planning manager ) and
established communication system between functions like ( monthly meetings )

 Divisional Structure :
Company Has multiple division that are like separate companies , with all its included process for each
division like HR
Division can be based on
Product based , geographic , market
Example Samsung

• A division is a collection of functions working together to produce a product (organize employees into
units based on common product, services or market).
• Divisions create smaller, manageable parts of a firm.
• Divisions develop a business-level strategy to compete.
• each division within a divisional structure can have its own marketing team, its own sales team, etc.).
• Functional managers report to divisional managers who then report to corporate management.

• Strengths: Allows units to become accustomed to different products , regions, customers. Best in large
organizations that operate in several regions , products and different markets.
• Weaknesses: Makes integration and standardization across organization are difficult, not economic.
•

• Product structure: divisions created according to the type of product or service.

Management Page 6
 • Geographic structure: divisions based on the area of a country or world served.

• Market structure: divisions based on the types of customers served.

• Process-Based Org Structure: Process-based organizational structures are designed around the
end-to-end flow of different processes

Matrix Structure
• Matrix structure: managers group people by function and product teams simultaneously.
 Results in a complex network of reporting relationships.
 Very flexible and can respond rapidly to change.
 Development of cross functional skills by employees.
 Each employee has two bosses which can cause problems.
 Functional manager gives different directions than product manager & employee cannot satisfy both.

Management Page 7
 Team structure
• Product Team Structure:
• With a product team structure, the staff report to the product manager, with secondary reporting to a functional
manager.
• The functional manager does not have direct authority over staff members or resources dedicated to the product
team.
• In a software environment, for example, this structure means software developers, technical writers, instructional
designers, quality assurance engineers, marketing, personnel and customer service staff are all directly supervised by a
product manager.

• Downside of Product Team Structure:

• If each product team has the same structure, the business risks duplicating effort on shared components,
creating inefficiencies.
• It may increase the potential for agency conflict, where team members focus on a particular product at the
expense of the overall strategy for the company.
• In addition, without a functional management structure, individual contributors don't have the potential for
growth as they mature in their skills, which may lead to higher turnover rates.

 Hybrid structure
 Many large organizations have divisional structures where each manager can select the best
structure for that particular division.
 One division may use a functional structure, one geographic, and so on.

 This ability to break a large organization into many smaller ones makes it much easier to manage

Integrating Mechanisms inside organization ( between function)

• Direct contact: get managers from different divisions or functions together to solve mutual problems.
• Liaison Roles: one manager in each area is responsible for communication with other areas.
• Task Forces: temporary committees formed across divisions to solve a specific problem.
• Cross-functional teams: works much like a permanent task force that deals with recurring problems/task.
• Matrix structure: already contains many integrating mechanisms.

Management Page 8
 

 Strategic Alliances
• Strategic alliance: a formal agreement committing two or more firms to exchange resources to produce a good.
• Network Structure: a whole series of strategic alliances.
○ Created between suppliers, manufacturers, and distributors.
○ Network structures allow firms to bring resources together in a boundary-less organization.

Management Page 9