Chapter

13
1
Managing Organizational
Structure
 Organizational Structure
Organizational Architecture
 The organizational structure,
control systems, culture, and
human resource management
systems that together
determine how efficiently and
effectively organizational
resources are used.

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 Designing Organizational Structure
 Organizing
 The process by which managers establish working
relationships among employees to achieve goals.
 Organizational Structure
 Formal system of task and reporting relationships
showing how workers use resources.
 Organizational design
 The process by which managers make specific
choices that result in a particular kind of
organizational structure.
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 Factors Affecting Organizational
Structure

Figure 10.1 10-4

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 The Organizational Environment
The Organizational Environment
 The quicker the environment changes, the
more problems face managers.
 Structure must be more flexible (i.e.,
decentralized authority) when
environmental change is rapid.

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 The Organizational Environment

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 The Organizational Environment
Strategy
 Different strategies require the use of
different structures.
 A differentiation strategy needs a flexible
structure
 low cost may need a more formal structure.
(managers have greater control)

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 The Organizational Environment
Technology
 The combination of skills, knowledge, tools,
equipment, computers and machines used
in the organization.
 More complex technology makes it harder
for managers to regulate the organization.
 The more routine the technology, the more
appropriate is a formal structure.
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 The Organizational Environment
Technology
 Technology can be measured by:
 Task variety: the number of new problems a manager
encounters.
 Task analyzability: the availability of programmed
solutions to a manager to solve problems.
 High task variety and low analyzability present
many unique problems to managers.
 Low task variety and high analyzability allow
managers to rely on established procedures.

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 Types of Technology
 Small Batch Technology
 Small quantities of one-of-a-kind products are produced by
the skills of the workers who work together in small groups.
 Appropriate structure is decentralized and flexible.
 Suitable for Customized services, low volume products
 Large batch Technology

Automated machines that are programmed to make high

volumes of standard products.
 Formal structure is the best choice for workers who must perform
repetitive tasks.

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 Types of Technology
 Continuous Process Technology
 Totally mechanized systems of automatic
machines.
 A flexible structure is necessary to allow workers to react
quickly to unexpected problems.

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 The Organizational Environment
Human Resources
 Highly skilled workers and whose jobs
require working in teams usually need a
more flexible structure.

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 The Organizational Environment

 Managers must take into account all four

factors (environment,
strategy, technology
and human resources)
when designing the
structure of the
organization.

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 Job Design
 Job Design
 The process by which managers decide how to
divide tasks into specific jobs.
 Job Simplification
 The process of reducing the tasks each worker
performs.
 Too much simplification and boredom results.

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 Enlargement or enrichment?

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 Job Enlargement
 Job Enlargement
 Increasing the number of tasks for a given job
to reduce boredom.
 Increase task identity can gained by concerning
the input and information.
 Used wide range of skill, abilities and
knowledge.
 Secretary: typing, accepting package, mail out
information, arranging meeting…
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 Enlargement or enrichment?

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 Job Design
 Job Enrichment
 Increasing the degree of responsibility a worker
has over a job can lead to increased worker
involvement.
 Schedule various activities and responsible for
reporting to management
 Develop new skills, techniques, and knowledge.
 Increase the responsiveness to unexpected
situation
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 Job Enrichment
 Opportunity to handle new responsibilities.
 Allow employees to monitor and measure their
own performance.
 High job involvement, encourage flexibility.

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 The Job Characteristics Model

Source: Adapted from J. R. Hackman and G. R. Oldham,

Work Redesign (Reading, MA: Addison-Wesley, 1980).

Figure 10.2 10-20

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 Job Characteristics Model
Job Characteristic
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

organization.

Autonomy Employee has freedom to schedule tasks

and carry them out.

Feedback Worker gets direct information about how

well the job is done.
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 Grouping Jobs into Functions
Functional Structure
 An organizational structure composed of all the
departments that an organization requires to produce its
goods or services.
 Advantages
 Encourages learning from others doing similar jobs.
 Easy for managers to monitor and evaluate workers.
 Create the set of functions they need to scan and monitor the
environments.
 Disadvantages
 Difficult for departments to communicate with others.
 Preoccupation with own department and losing sight of
organizational goals.
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 The
Functional
Structure

Figure10.3 10-23
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 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
 Divisions create smaller, manageable parts of a firm.
 Divisions develop a business-level strategy to compete.
 Divisions have marketing, finance, and other functions.
 Functional managers report to divisional managers who
then report to corporate management.

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 Types of Divisional Structures
Product Structure
 Customers are served by self-contained divisions
that handle a specific type of product or service.
 Allows functional managers to specialize in one product
area
 Division managers become experts in their area
 Removes need for direct supervision of division by
corporate managers
 Divisional management improves the use of resources
 Close to their customers and lets them respond quickly
and appropriately.
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 10-26
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 Figure 10.4 10-27
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 Types of Divisional Structures
Geographic Structure
 Each regional or a country or area with
customers with differing needs is served by a
local self-contained division producing products
that best meet those needs.
 Given flexibility to meet the needs of regional
customers
 Difficult to control and manage from one central
location when problems arise from each region.
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 Types of Divisional Structures
Market (Customer) Structure
 Managers group functions according to the
type of customer buying the product, in order to
tailor an organization’s products to each
customer’s unique demands.
 Allows managers to be responsive to the
changing needs of customers.
 Allows to act flexibly to make decision quickly
respond to customer needs.
 Most benefits when time factor is critical
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 10-30
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 Matrix Design Structure
Matrix Structure
 An organizational structure that simultaneously groups
people and resources by function and product.
 Results in a complex network of superior-subordinate
reporting relationships.
 Each employee has 2 bosses (functional manager &
product manager) & possibly cannot satisfy both.
Most use of Human resources because they are part
of the team when their skill needed, leave them
after the completed of assignment/job

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 Matrix Design Structure
 Advantages:

-Most flexible of organizational structures.

-Can maximize the use of human
resources as members are assigned on
and off teams as needs change.
-Can be intrinsically motivating for
employees, who have a high degree of
empowerment.
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 Matrix Design Structure
 Disadvantages:

-Complex, sometimes stressful for

employees and managers.
-Conflict may be a problem.
-Needs to be supported by a culture that
supports collaboration and flexibility.

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 Matrix Structure

Figure 10.7 10-34

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 Product Team Design Structure
Product Team Structure
 The members are permanently assigned to the team
and empowered to bring a product to market.
 Avoids problems of two-way communication and the
conflicting demands of functional and product team
bosses.
 Cross-functional team is composed of a group of
managers from different departments working
together to perform organizational tasks.
 Widely use because of flexibility and easy to operate
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 Product Team Structure

Figure 10.7 10-36

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 Hybrid Structures
Hybrid Structure
 The structure of a large organization that
has many divisions an simultaneously uses
many different organizational structures
 Managers can select the best structure for a
particular division—one division may use a
functional structure, another division may have a
geographic structure.
 The ability to break a large organization into
smaller units makes it easier to manage.
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 Target’s Hybrid Structure

Figure 10.8 10-38

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 Coordinating Functions:
Allocating Authority
 Authority
 The 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..

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 Allocating Authority
 Span of Control
 The number of subordinates that report directly to a

manager
 Line Manager
 Managers in the direct chain of command who have

authority over people and resources lower down.

 Primarily responsible for the production of goods or

services.
 Staff Manager
 Managers who are functional-area specialists that give

advice to line managers.

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 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 garbled as it is
repeated through the firm.
 Flat structures have fewer levels and wide spans
of control.
 Structure results in quick communications but can
lead to overworked managers.
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 Flat Organizations

Figure 10.10
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 Tall Organizations

Figure 10.10 10-43

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 Organizational Structure

 Centralized and Decentralized of Authority

 Decentralization puts more authority at lower levels
and leads to flatter organizations.
 Works best in dynamic, highly competitive environment.
 Stable environment favor centralization of authority.
 Disadvantages for decentralization:-
 Pursue their own goals

 Lack of communication among functions or division.

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 Advantage
 Supports a flat organization, which is
likely to increase decision speed,
 smooth communication,

 require fewer managers.

 Keeps organizations flexible and

responsive to environmental change
and complexity.
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 Disadvantage
 Loss of control.
 Decentralized units may pursue their
own goals at the expense of total
organizational goals.
 Danger of lack of communication
among decentralized units.

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 Integrating Mechanisms

Figure 10.11 10-47

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 Forms of Integrating Mechanisms

Figure 10.12 10-48

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