2.2 Organizational Structure

1. 2.2 Organizational Structure Chapter 11

2. Why are organizational structures changing? • Employees are better qualified and more knowledgeable • Multinational organizations can take local factors into account • Communication is quicker and faster • Today’s organizations need leaders and team efforts

3. What is an organizational structure? • The internal, formal framework of a business that shows the way in which management is organized and how authority is passed through the organization.

4. Formal Structure • Indicates who has OVERALL responsibility of decision-making • Relationships between people working for an organization • How authority is passed down (chain of command) • The number of subordinates reporting to managers (span of control) • Channels of communication • Identify workers’ supervisors or managers

5. Advantages • Power starts at the top and works down or maybe authority maybe passed down • Divisions can be based on departments, geographic regions, or product category • The levels of promotion are clear for employees • The role of each employee is clear. • Clear chain of command.

6. Disadvantages • Top to bottom communication is typical and not usually efficient • Horizontal communication is usually limited creating tunnel vision • Is often inflexible and leads to resistance of change – managers defend their “turf” and position in the hierarchy

7. Tall Organizations • Communication tends to be slow • Span of Control is narrow • Sense of remoteness at lower levels

8. Flat Organizations • Few hierarchical levels • Wider span of control

9. Factors of Structure • Size of business • Style of leadership • Reducing overhead costs leads to flattening of organizational structure • Corporate objectives – expanding to new markets • New technologies can make current employee types obsolete

10. HL – Delegation Passing Authority on to others

11. HL - Delayering • Removal of one or more of the hierarchy from an organizational structure

12. HL – Centralized / Decentralized • Centralized – Keeping all important decision-making at the head office • Decentralized- Decision making passed down to local or regional managers

13. HL – Centralized/Decentralized

14. HL – Matrix Structure (Tom Peters) • An organizational structure that creates project teams that cut across functional departments. This method is usually task or project focused.

15. HL – Matrix Structure

16. HL – Henry Mintzberg • Theory that companies select management structures based upon “pull factors”. • The better the fit of the structure to its business environment, the more likely it will be successful.

17. HL – Henry Mintzberg • Entrepreneurial OrganizationFlat and informal; lacks standardized procedures; very flexible • Bureaucracy OrganizationStandardization and formalized work. Tight, inflexible, vertical structure • Professional OrganizationHigh degree of specialization by experts that control their own work.

18. HL – Henry Mintzberg • Divisional OrganizationDifferent product lines and business units. • Innovative OrganizationNew and creative industries; companies use teams of experts to form creative, flexible, functional teams

19. HL – The Seven-S Model (Tom Peters) • Seven ElementsPurpose: Increase managers awareness of less tangible but critical factors for an organization to be successful. • 3 Hard “S” – Practical elementsStructure, Strategy, Systems • 4 Soft “S” – Less tangible elements – always changing & based upon people who work for the businessSkills, Staff, Style, Shared Values

20. HL – The Seven-S Model Structure Strategy Systems Shared Values Skills Style Staff

21. HL – Informal Organizations • The network of personal and social relationships developed between people within an organization. • How can informal networks help companies? • How can they hurt companies?

22. HL- Outsourcing HR Functions