ORGANIZATIONAL STRUCTURE AND DESIGN

1. ORGANIZATIONAL STRUCTURE AND DESIGN Akhatjon Nasullaev

2. Outline of the lecture: Part 1 • Organizational structure • Information-sharing perspective on structure • Organization design alternatives • Functional, divisional and geographic design • Matrix structure • Horizontal structure • Visual networks and outsourcing • Hybrid structure Part 2 Case-study Akhatjon Nasullaev

3. Circle your opinion below for each of the following statements: 1. A popular form of organizing is to have employees work on what they want in whatever department they choose so that motivation and enthusiasm stay high. 2. Committees and task forces whose members are from different departments are often worthless for getting things done. Strongly agree Strongly disagree Strongly agree Strongly disagree Akhatjon Nasullaev

4. Circle your opinion below for each of the following statements: 3. Top managers are smart to maintain organizational control over the activities of key work units rather than contracting out some work unit tasks to other firms. Strongly agree Strongly disagree Akhatjon Nasullaev

5. Organizational structure refers to the way in which a group is formed, its lines of communication, and its means for channeling authority and making decisions. It clarifies the formal relationships of individuals in the various positions within the organization 3 key components in the definition of Organization structure: Formal reporting relationships: levels in the hierarchy and span of control Grouping individuals into departments, departments into total org. Design of systems to ensure effective communication, coordination and integration Akhatjon Nasullaev

6. Organizational chart is the visual representation of a whole set of underlying activities and processes in an organizations Akhatjon Nasullaev

7. Q1. A popular form of organizing is to have employees work on what they want in whatever department they choose so that motivation and enthusiasm stay high. Strongly agree Strongly disagree ANSWER: Disagree. A small number of firms have tried this approach with some success, but a typical organization needs to structure its work activi- ties, positions, departments in a way that ensures work is accomplished and coordinated to meet organizational goals. Many managers try to give some consideration to employee choices as a way to keep enthusiasm high. Akhatjon Nasullaev

8. Information-sharing perspective of structure Organization should be designed to provide both vertical and horizontal information flow to accomplish the overall goal. linkages for control and linkages for coordination and collaboration. Akhatjon Nasullaev

9. Vertical information sharing Vertical linkages are used to coordinate activities between top and bottom of org. and are primarily designed for control. Akhatjon Nasullaev

10. Horizontal information sharing Horizontal linkage refers to communication and coordination horizontally across organizational departments. Akhatjon Nasullaev

11. 2. Committees and task forces whose members are from different departments are often worthless for getting things done. ANSWER: Disagree. The point of cross-functional committees and task forces is to share information to coordinate their departmental activities. Meeting, talking, and disagreeing is the work of committee. These groups should not try to get “the things done” in the sense of being efficient. Strongly agree Strongly disagree Raffaella Manzini

12. Example for Full-time integrator Akhatjon Nasullaev

13. Teams used for Horizontal Coordination at Wizard Software Org. Akhatjon Nasullaev

14. Ladder of mechanisms for horizontal linkage and coordination Akhatjon Nasullaev

15. Organization design alternatives The overall design of organization structure indicates three things: Required work activities Reporting relationships (chain of command) Departmental groupings Departmental grouping options: Functional grouping Divisional grouping Multifocused grouping Horizontal grouping Virtual network grouping Akhatjon Nasullaev

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17. Functional structure Activities are grouped together by common function from bottom to top of org. Some organizations have functional structure with horizontal linkages Akhatjon Nasullaev

18. Divisional structure Divisions are organized to individual products, services, product groups, major Projects or programs, businesses… Akhatjon Nasullaev

19. Divisional structure Akhatjon Nasullaev

20. Geographic structure Each region of the country may have distinct tastes and needs. The structure focuses managers and employees on specific geographic Regions and sales targets. Horizontal coordination within a region is emphasized rather than linkages across regions or national offices. Akhatjon Nasullaev

21. Matrix structure Both product divisions and functional structures are implemented simultaneously. Akhatjon Nasullaev

22. Matrix structure Akhatjon Nasullaev

23. Horizontal structure Reengineering or business process reengineering  organized group of related tasks and activities that work together to transform inputs into outputs that create value for customers Akhatjon Nasullaev

24. Horizontal structure

25. Virtual networks and outsourcing Outsourcing – contract out certain tasks or functions, such as manufacturing, human Resources or credit processing to other companies. Virtual network structure – firm subcontracts most of its major functions or processes to separate companies and coordinates their activities from small headquarter org.

26. Hybrid structure Hybrid structure combines characteristics of various approaches tailor to specific Needs: functional, divisional, geographic or network structures.

27. 3. Top managers are smart to maintain organizational control over the activities of key work units rather than contracting out some work unit tasks to other firms. Strongly agree Strongly disagree ANSWER: Disagree. Virtual networks and outsourcing forms of organization design have become popular because they offer increased flexibility and more rapid response in fast-changing environment. Outsourced departments can be added or dropped as conditions change. Keeping control over all activities in-house might be more comfortable for some managers, but it discourages flexibility. Akhatjon Nasullaev

28. Individual working • After reading the information provided to you, try to answer following questions: • What type of organizational structure is described in the text? • Which conditions led organizations to implement that structure? • What kind of obstacles did organizations face during implementation of that • structure?

29. Case-study: Organizational structure of P&G Co. • P&G was created in 1837, Cincinatti, Ohio by William Procter and James Gamble. • In 2014, net sales of the P&G was $ 83,1 billion. • 24 of its products have more than billion $ net annual sales, another 20 between 500 million to 1 billion US $. • August 1, 2014 P&G announced itself as a streamlining company by selling off more than 100 brands from its product portfolio, and keeping only 65 brands. • Current President and CEO – David Taylor • Number of employees – 105 000 (2016) • P&G is present at  North America, Latin America, Europe, the Middle East, Africa, Asia, Australia, and New Zealand. Akhatjon Nasullaev

30. Timeline of P&G Akhatjon Nasullaev

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32. From 1954 P&G shifted into multidivisional product company. Concept of product-category division was introduced. Matrix structure emerged (1987) to balance product-functional influence in the Management decision-making. Akhatjon Nasullaev

33. TIMELINE (cont’d) Akhatjon Nasullaev

34. Timeline (cont’d) Akhatjon Nasullaev

35. P&G’s matrix structure with three dimensions: regional (1), functional (2) and product categories (3). Akhatjon Nasullaev

36. P&G’s skewed matrix leadership

37. P&G’s Restructuring program (1998): from matrix to hybrid matrix structure Durk Jager initiated the restructuring process. The purpose was to achieve $ 900 Million after tax savings by 2004 by voluntary separation of 15000 employees; eliminating six management layers by reducing from 13 to 7 at a cost of 1,9 billion US $ over five years. It was introduced: Global business units with primary responsibility for products; Market development organizations  markets; Global business services  managing internal business processes. 2000 – change in the strategy of P&G: Alan Lefly became CEO of the company Akhatjon Nasullaev

41. P&G Today: • Global Business Units responsible for developing • overall brand strategy, new product • upgrades and innovations and marketing plans. • Baby, Feminine and Family Care • Beauty • Fabric and Home Care • Health and Grooming Selling and Market Operations (SMOs) are responsible for developing and executing go-to-market plans at the local level – and includes dedicated retail customer, trade channel and country-specific teams in 6 regions: Asia Pacific, Europe, Greater China, India, the Middle East and Africa (IMEA) Latin America, North America.

43. Global Business Services (GBS) provides technology, processes and standard data tools to enable the GBUs and the SMOs to better understand the business and better serve consumers and customers. The GBS organization is responsible for providing world-class solutions at a low cost and with minimal capital investment.

44. Raffaella Manzini

45. Checklist for Group presentations: