3 Managing Organisational Structure
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Transcript of 3 Managing Organisational Structure
8/8/2019 3 Managing Organisational Structure
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OrganizationalStructureOrganizationalStructure
88
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Designing Organizational StructureDesigning Organizational Structure
Organizing: the process by which managersestablish working relationships amongemployees to achieve goals.
Organizational Structure : formal system of task &reporting relationships showing how workers useresources.Organizational design : managers make specific choicesresulting in a given organizational structure.
Successful organizational design depends onthe organization’s unique situation.
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Factors Affecting Organizational DesignFactors Affecting Organizational Design
Environment
Strategy
HumanResources
TechnologyDetermine designor organizational
structure
Determine designor organizational
structure
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Determinants of StructureDeterminants of Structures The environment : The quicker the environment
changes, the more problems face managers.Structure must be more flexible when environmental
change is rapid.Usually need to decentralize authority.
s Strategy : Different strategies require the use of different structures.
A differentiation strategy needs a flexible structure,low cost may need a more formal structure.Increased vertical integration or diversification alsorequires a more flexible structure.
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Determinants of StructureDeterminants of StructureTechnology : The combination of skills, knowledge, tools,equipment, computers and machines used in the organization.
More complex technology makes it harder for managers toregulate the organization. Technology can be measured by:
Task Variety : new problems a manager encounters.Task Analyzability : programmed solutions available to amanager to solve problems.
High task variety and low analyzability present manyunique problems to managers.
Flexible structure works best in these conditions.Low task variety and high analyzability allow managersto rely on established procedures.
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Determinants of StructureDeterminants of Structures Human Resources : the final factor affecting
organizational structure.Higher skilled workers who need to work in teamsusually need a more flexible structure.Higher skilled workers often have professional norms(CPA’s, physicians).
Managers must take into account all fourfactors (environment, strategy, technologyand human resources) when designing thestructure of the organization.
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Job DesignJob Design Job Design: group tasks into specific jobs.
Results in a division of labor between workers that iseffective and efficient.
Job simplification: reduction of the tasks each worker performs.Too much and boredom results.
Job enlargement: increase tasks for a given job to
reduce boredom.Job enrichment: increases the degree of responsibilitya worker has over a job.
can lead to increased worker involvement.
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Job Characteristics ModelJob Characteristics Model
Skill VarietyTask Identity
Task Significance
Skill VarietyTask Identity
Task Significance
AutonomyAutonomy
Feedback Feedback
Meaningfulnessof work
Meaningfulnessof work
ResponsibilityResponsibilityfor Work for Work OutcomesOutcomes
ResponsibilityResponsibilityfor Work for Work OutcomesOutcomes
Knowledge of Knowledge of results of results of
work work
Knowledge of Knowledge of results of results of
work work
High:High:MotivationMotivation
PerformancePerformanceSatisfactionSatisfaction
High:High:MotivationMotivation
PerformancePerformanceSatisfactionSatisfaction
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Job Characteristics ModelJob Characteristics Models Jobs have five characteristics describing extent of:
– Skill variety: employee uses a wide range of skills – Task identity: worker involved in all tasks of 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 jobis done.
s These affect the motivation, satisfaction and performance of employees.
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Grouping Jobs into FunctionsGrouping Jobs into FunctionsOnce tasks are grouped into jobs, managersmust decide how to group jobs together.
Function : people working together with similar skills, toolsor techniques to perform their jobs.
Functional structure consists of departments such asmarketing, production, and finance.
Workers can learn from others doing similar tasks.
Easy for managers to monitor and evaluate workers.
Hard for one department to communicate with others. Managers can become preoccupied with their department and forget the firm
ProsProsProsPros
ConsConsConsCons
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A Sample of Pier 1’s Functional StructureA Sample of Pier 1’s Functional Structure
V . P . T V . P . C
V . P . M D i r e c tC o r p . P
E x e c . VF i n a n c e
S e n i o r S t o r e s
D i r e cT r a n s p
V . P .D i s t r i b
S e n i o r L o g i s t i
C l a r k J oC E O
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Divisional StructuresDivisional StructuresA division is a collection of functions working together to produce aproduct.
Divisions create smaller, manageable parts of a firm.
Divisions develop a business-level strategy to compete.A division has marketing, finance, and other functions.
Functional managers report to divisional managers who thenreport to corporate management.
Product structure: divisions created according to the type of product or service.Geographic structure : divisions based on the area of a country or world served.
Market structure: divisions based on the types of customers served.
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Product StructureProduct Structure
W a s h i n g
D i v i s i o
L i g h t i n
D i v i s i o
T e l e v i s
D i v i s i o
C o r p o r M a n a g
C E OC o r p o r
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Geographic StructureGeographic Structure
N o r tR e g
W e sR e g
S o u tR e g
E a s tR e g
C o r pM a n a
C E OC o r p o
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Market StructureMarket Structure
L a r g e BC u s t o m
S m a l l BC u s t o m
E d u c a tI n s t i t u
I n d i v i dC u s t o m
C o r p oM a n a g
C E OC o r p o r
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Matrix & Product TeamsMatrix & Product Teams Matrix structure : managers group people by functionand product teams simultaneously.
Results in a complex network of reporting relationships.
Very flexible and can respond rapidly to change.Each employee has two bosses which can cause
problems.Functional manager gives different directions than
product manager and employee cannot satisfy both.
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Matrix StructureMatrix StructureCEOCEO
Func.Func.ManagersManagers
SalesSales DesignDesign ProductionProduction
ProductProductteam Ateam A
ProductProductteam Bteam B
ProductProductteam Cteam C
Product Team
= two boss employee
TeamManagers
TeamManagers
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Hybrid StructuresHybrid Structures
Many large organizations have divisional structures where each manager can select thebest structure for that particular division.
One division may use a functional structure, onegeographic, and so on.
This ability to break a large organization into
many smaller ones makes it much easier tomanage.
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Coordinating FunctionsCoordinating FunctionsTo ensure sufficient coordination between
functions, managers delegate authority. Authority : the power vested in the manager to make
decisions and use resources.
Hierarchy of authority : describes the relative authorityeach manager has from top to bottom. Span of Control: refers to the number of workers a
manager manages. Line authority: managers in the direct chain of command
for production of goods or services. Example: Sales Staff authority: managers in positions that give advice to
line managers. Example: Legal
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Tall & Flat OrganizationsTall & Flat OrganizationsTall structures have many levels of authority relative to theorganization’s size.
As levels in the hierarchy increase, communication getsdifficult.
The extra levels result in more time being taken toimplement decisions.Communications can also become garbled as it is repeatedthrough the firm.
Flat structures have few levels but wide spans of control.Results in quick communications but can lead tooverworked managers.
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Minimum Chain of CommandMinimum Chain of Command
Managers should carefully evaluate:Do they have the right number of middle managers?Can the structure be altered to reduce levels?
Centralized v. DecentralizedDecentralized operations puts more authority at lower levels and leads to flat organizations.
Workers must be able to reach decisions.Divisions and functions can begin to lose sight of organizational goals and focus only on their small area.