Organizing as a Management Function: Traditional and Horizontal Organization Structures

1. Chapter 11 Fundamentals of Organizing

2. Planning Ahead — Chapter 11 Study Questions • What is organizing as a management function? • What are the traditional organization structures? • What are the types of horizontal organization structures? • How are organizational designs changing the workplace?

3. Chapter 11 Learning Dashboard • Organizing as a Management Function • What is organization structure? • Formal structures • Informal structures • Traditional Organization Structures • Functional structures • Divisional structures • Matrix structures

4. Chapter 11 Learning Dashboard • Horizontal Organization Structures • Team structures • Network structures • Boundaryless structures • Organizational Designs • Contingency in organizational design • Mechanistic and organic designs • Trends in organizational designs

5. Takeaway 1: Organizing as a Management Function • Organizing as a management function • Organizing • Arranges people and resources to work together to accomplish a goal • Organization structure • The system of tasks, reporting relationships, and communication linkages

6. Figure 11.1 Organizing viewed in relationship with the other management functions

7. Takeaway 1: Organizing as a Management Function • An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. It includes:

8. Takeaway 1: Organizing as a Management Function • Informal structures  • The set of unofficial relationships between organization members • Social network analysis • Identifies informal structures and social relationships in the organization

9. Study Question 1: What is organizing as a management function? • Informal structures  • Potential advantages of informal structures: • Helping people accomplish their work • Overcoming limits of formal structure • Gaining access to interpersonal networks • Informal learning

10. Takeaway 1: Organizing as a Management Function

11. Takeaway 2: Traditional Organization Structures • Traditional organization structures • Departmentalization • Groups people with and jobs into work units or formal teams • These formal teams are linked to create three major types of traditional organizational structures

12. Takeaway 2: Traditional Organization Structures • Functional structures • People with similar skills and performing similar tasks are grouped together into formal work units • Members work in their functional areas of expertise • Are not limited to businesses • Work well for small organizations producing few products or services

13. Figure 11.2 Functional structures in a business, branch bank, and community hospital

14. Takeaway 2: Traditional Organization Structures • Potential advantages of functional structures: • Economies of scale • Task assignments consistent with expertise and training • High-quality technical problem solving • In-depth training and skill development • Clear career paths within functions

15. Takeaway 2: Traditional Organization Structures

16. Takeaway 2: Traditional Organization Structures • Divisional structures • Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region • Common in complex organizations • Avoid problems associated with functional structures

17. Figure 11.3 Divisional structures based on product, geography, customer, and process

18. Takeaway 2: Traditional Organization Structures • Potential advantages of divisional structures: • More flexibility in responding to environmental changes • Improved coordination • Clear points of responsibility • Expertise focused on specific customers, products, and regions • Greater ease in restructuring

19. Takeaway 2: Traditional Organization Structures

20. Takeaway 2: Traditional Organization Structures • Matrix structure • Combines functional and divisional structures to gain advantages and minimize disadvantages of each • Used in:

21. Figure 11.4 Matrix structure in a small, multi-project business firm

22. Takeaway 2: Traditional Organization Structures • Potential advantages of matrix structures: • Better cooperation across functions • Improved decision making • Increased flexibility in restructuring • Better customer service • Better performance accountability • Improved strategic management

23. Takeaway 2: Traditional Organization Structures

24. Takeaway 3: Horizontal Organization Structures • Team structures • Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks • Often use cross-functional teams composed of members from different functional departments • Project teams are convened for a specific task or project and disbanded once completed

25. Figure 11.5 How a team structure uses cross-functional teams for improved lateral relations

26. Takeaway 3: Horizontal Organization Structures • Potential advantages of team structures: • Eliminates difficulties with communication and decision making • Eliminates barriers between operating departments • Improved morale • Greater sense of involvement and identification • Increased enthusiasm for work • Improved quality and speed of decision making

27. Takeaway 3: Horizontal Organization Structures

28. Takeaway 3: Horizontal Organization Structures Network structures • Uses information technologies to link with networks of outside suppliers and service contractors • Own only core components and use strategic alliances or outsourcing to provide other components

29. Figure 11.6 A network structure for a Web-based retail business

30. Takeaway 3: Horizontal Organization Structures Potential advantages of network structures: • Firms can operate with fewer full-time employees and less complex internal systems • Reduced overhead costs and increased operating efficiency • Permits operations across great distances

31. Takeaway 3: Horizontal Organization Structures

32. Takeaway 3: Horizontal Organization Structures Boundaryless organizations • Eliminate internal boundaries among subsystems and external boundaries with the external environment • A combination of team and network structures, with the addition of “temporariness”

33. Takeaway 3: Horizontal Organization Structures Boundaryless organizations • Key requirements: • Absence of hierarchy • Empowerment of team members • Technology utilization • Acceptance of impermanence

34. Takeaway 3: Horizontal Organization Structures Boundaryless organizations • Encourage creativity, quality, timeliness, flexibility, and efficiency • Knowledge sharing is both a goal and essential component

35. Takeaway 3: Horizontal Organization Structures Virtual organization • A special form of boundaryless organization • Operates in a shifting network of external alliances that are engaged as needed, using IT and the Internet

36. Figure 11.7 The boundaryless organization eliminates internal and external barriers

37. Takeaway 4: Organizational Designs Organizational design • Process of creating structures that accomplish mission and objectives • A problem-solving activity that should be approached from a contingency perspective

38. Takeaway 4: Organizational Designs Bureaucracy • A form of organization based on logic, order, and the legitimate use of formal authority • Bureaucratic designs feature … • Clear-cut division of labor • Strict hierarchy of authority • Formal rules and procedures • Promotion based on competency

39. Takeaway 4: Organizational Designs Contingency perspective on bureaucracy asks the questions: • When is a bureaucratic form a good choice for an organization? • What alternatives exist when it is not a good choice?

40. Takeaway 4: Organizational Designs Environment determines the most appropriate design • Mechanistic designs work in a stable environment • Organic designs work in a rapidly changing and uncertain environment • Adaptive organizations operate with a minimum of bureaucratic feature and encourage worker empowerment and teamwork

41. Takeaway 4: Organizational Designs

42. Figure 11.8 A continuum of organizational design alternatives: from bureaucratic to adaptive organizations

43. Takeaway 4: Organizational Designs Contemporary organizing trends include: • Fewer levels of management • Shorter chains of command • Less unity of command • Wider spans of control • More delegation and empowerment • Decentralization with centralization • Reduced use of staff

44. Takeaway 4: Organizational Designs

45. Takeaway 4: Organizational Designs

46. Takeaway 4: Organizational Designs

47. Takeaway 4: Organizational Designs

48. Takeaway 4: Organizational Designs • More delegation and empowerment • Delegation is the process distributing and entrusting work to other persons • The manager assigns responsibility, grants authority to act, and creates accountability • Authority should be commensurate with responsibility

49. Takeaway 4: Organizational Designs Three Steps in Delegation:

50. Takeaway 4: Organizational Designs Decentralization with centralization