Organizing for Action

Chapter 6June 13, 2012

Learning Objectives

LO 1 Define the characteristics of organization structure: organic or mechanistic, differentiation, and integration.

LO 2 Summarize how authority operates and who generally holds top authority in a company.

LO 3 Discuss how span of control affects structure and managerial effectiveness.

LO 4 Explain how to delegate effectively.

6-2

Learning Objectives (cont.)

LO5 Distinguish between centralized and decentralized organizations.

LO6 Define basic types of organization structures, and summarize their strengths.

LO7 Describe important mechanisms used to coordinate work.

LO8 Discuss how organizations can improve their agility through their strategy, commitment to customers, and use of technology.

6-3

Organizing

• Definition– The deployment of organizational resources to achieve

strategic goals– The process by which managers establish the structure

of working relationships among employees to achieve goals

Organization Structure

• The set of formal tasks assigned to individuals and departments

• Formal reporting relationships• Mechanistic (Bureaucratic/Hierarchical) to

Organic (Learning/Flat/Horizontal)

Factors Influencing Structure

• Organizational environment• Strategy• Technology• Human resources

Organizational chart

• Schematic representation of these arrangements and relationships – The reporting structure and division of labor in an

organization

6-7

Conventional Organization Chart

Differentiation

• Definition– Different units, different tasks, different skills,

different ways• Specialization • Division of labor

Big problem

• Integration• Coordination

Vertical structure

• Definition• Authority

Pyramid

• Top level– Board of Directors– CEO– TMT

• Middle managers– Technology– Bad economy

• Which has led to….

Span of control

• Definition – Narrow vs wide

• Huge issue – how many people can any one person effectively manage?

4 direct reports

19 direct reports

Delegation

• Definition • Key distinctions

– Responsibility– Authority– Accountability

• Advantages

Decentralization

• Centralized organization– An organization in which high-level executives

make most decisions and pass them down to lower levels for implementation

• Decentralized organization– An organization in which lower-level managers

make important decisions– Relationship with delegation????

6-18

Centralized Organization

Decentralized Organization

Horizontal structure

Horizontal structure

Horizontal structure

Horizontal structure

Horizontal structure

• Functional• Divisional• Matrix

The Functional Organization

6-26

The Divisional Organization

6-28

Matrix Organizational Structure

6-29

The Network Organization

6-30

Coordination

• Standardization • Plans • Mutual adjustment

Organizational agility

• Definition• Poster child

Organizational agility

• Core competencies

Organizational agility

• Core competencies• Strategic alliances

Organizational agility

• Core competencies• Strategic alliances• Learning organization

Organizational agility

• Core competencies• Strategic alliances• Learning organization• High-involvement organization

Organizational size

Organizational size

Organizational size