BA 351 Managing Organizations Managing the Structure and
BA 351 Managing Organizations Managing the Structure and Design of Organizations 1
Organization Structure Formal system of relationships that determine: ØLines of authority – who reports to whom. ØTasks assigned to individuals and units – who does what tasks and with which department. Dimensions structure: of organization ØVertical dimension ØHorizontal dimension 2
The Vertical Dimension of Organization Structure Unity of Command – a subordinate should have only one direct supervisor. A decision can be traced back from the subordinates who carry it out to the manager who made it. 3
The Vertical Dimension of Organization Structure (continued) Authority – The formal right of a manager to make decisions, give orders, and expect the orders to be carried out. ◦ Line Authority ◦ Staff Authority Responsibility – the manager’s duty to perform an assigned task. Accountability – the manager (or other employee) with authority and responsibility must be able to justify results to a manager at a higher level in the organizational hierarchy. 4
The Vertical Dimension of Organization Structure (continued) Line Authority Øentitles a manager to directly control the work of subordinates by hiring, discharging, evaluating, and rewarding them Øline managers hold positions that contribute directly to the strategic goals of the organization Øpart of the chain of command Staff Authority Øthe right to provide advice, recommend, and counsel line managers and others in the organization Østaff managers direct line managers 5
Yes or No Can a manager hold line authority and staff authority at the same time? 6
The Vertical Dimension of Organization Structure (continued) Organization Level Senior Managers Activities Required Skills • Talk with insiders and outsiders about • Vision • Strategy • Other major issues • Conceptualizing • Communicating • understanding the perspectives of others • Help middle managers • Define and redefine their roles • Manage conflict • • • Create and maintain the organization’s culture • Interpersonal influence Listening conflict management Negotiating Motivating 7
The Vertical Dimension of Organization Structure (continued) Organization Level Middle Activities Required Skills • Champion’ strategic ideas • Help firm to remain adaptive • Networking • Communicating • Influencing • Process data and Managers information for use by other individuals • Analysis • Communication • Communicating • Deliver strategic initiatives to lower-level • Motivating managers • Understanding values • Managing stress 8
The Vertical Dimension of Organization Structure (continued) Organization Level Activities Required Skills • Coaching firm’s associates (workers) • • Teaching Listening Understanding personalities Managing stress • • Negotiating Influencing others Counseling Understanding personalities • Removing obstacles for associates • Deal with personal Lower-level Managers problems of associates • Design jobs, teams structures and reward systems • Negotiating • Group dynamics 9
The Vertical Dimension of Organization Structure (continued) Span of control – the feature of vertical structure that outlines: ØThe number of subordinates who report to a manager. ØThe number of managers. ØThe layers of management within an organization. Smaller span – fewer employees supervised by a manager – creates a tall vertical organizational structure Larger span – greater number of employees supervised – creates a flat organizational structure 10
The Vertical Dimension of Organization Structure (continued) Centralization – the location of decision authority at the top of the organization hierarchy. Decentralization – the location of decision authority at lower levels in the organization. Formalization – the degree of written documentation that is used to direct and control employees. 11
The Horizontal Dimension of Organization Structure The organization structure element that is the basis for: ØDividing work into specific jobs and tasks. ØAssigning jobs into units such as departments or teams. Departmentalization: ØFunctional ØDivisional ØMatrix 12
Functional Departmental Structure 13
Advantages and Disadvantages of the Functional Approach Advantages Decision authority is centralized at the top of the organization hierarchy Career paths foster professional identity with the business function High degree of efficiency Economies of scale help develop specialized expertise in employees Disadvantages Communication barriers Conflict between departments Coordination of products and services is difficult Diminished responsiveness to customers’ needs Employees identify with functional department goals and not organization goals or needs of the customer 14
Divisional Organization Structure President Computer Division Software Division Consulting Source Division Production Marketing Finance 15
Geographic-Based Organization Structure 16
Advantages and Disadvantages of the Divisional Approach Advantages Coordination among different business functions Improved and speedier service Accountability for performance Development of general manager and executive skills Disadvantages Duplication of resources by two or more departments Reduced specialization in occupational skills Competition among divisions 17
Coordination Mechanisms Meetings Organization-wide Reward Systems Task Forces and Teams Liaison Roles Integrating Managers Organizational Culture 18
Video – Destination CEO Jim Mc. Cann After Jim Mc. Cann started Flora Plenty, what key strategic events triggered a change in the structure and design of the organization? 19
Organization Design The selection of an organization structure that best fits the strategic goals of the business. Basic organization designs: ØMechanistic ØOrganic ØBoundaryless These designs incorporate vertical and horizontal structural elements. 20
Organization Design (continued) As business strategy changes, so do the structural elements of organization design. Strategic factors that affect the choices of organization design: ØOrganization capabilities ØTechnology ØOrganization size ØEnvironmental turbulence 21
Mechanistic, Organic, and Boundaryless Designs Mechanistic Organic Boundaryless Rigid hierarchical relationships Collaboration (both vertical and horizontal) High formalization Low formalization Collaboration (vertical, horizontal, customers, suppliers, competitors) Low formalization Top-down communication Centralized decision authority Narrowly defined specialized jobs Emphasis on individuals working independently Informal communication Decentralized decision authority Broadly defined flexible jobs Emphasis on teams that also may cross organization boundaries 22
Video – One Smooth Stone Demonstrates: Economic importance of innovation. Why innovation is important for business success Illustrates choosing an organizational structure and the reasons behind that choice. 23
This demonstrates the individual is accountable for that each Coordination B) Responsibility C) Centralization D) Formalization A) 24
Redesigning Organizations Merger Acquisition Divestiture Downsizing 25
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