Management Chapter 11: Organization Structures

Management Chapter 11: Organization Structures

• Organizing as a Management Function: Organizing is a management function that involves arranging, connecting, and integrating people and resources to achieve a goal. This includes creating an organization structure—the system of tasks, workflows, reporting relationships, and communication channels connecting work and activities.

Learning Objectives

• 11.1: Explain organizing as a management function and contrast formal and informal organization structures.
• 11.2: Identify the strengths and weaknesses of traditional organizational structures.
• 11.3: Identify the strengths and weaknesses of team, virtual, and network structures.
• 11.4: Discuss how and why organizational designs are changing in today's workplace.

Organizing as a Management Function (Detailed)

• Organization Chart: A diagram illustrating formal reporting relationships and work positions within an organization. It displays division of work, supervisory relationships, communication channels, major subunits, and levels of management.
• Informal Structures: Unofficial working relationships among organization members. Social network analysis (sociometrics) identifies informal structures and social relationships.
• Advantages of Informal Structures: Informal structures allow people to connect with others for assistance, stimulate learning, and provide emotional support/friendship.
• Disadvantages of Informal Structures: Potential disadvantages include susceptibility to rumor, inaccurate information, resistance to change, diversion of work efforts, creation of "in-groups/out-groups," and feelings of alienation by "outsiders".
• Organizing function's relationship to other management functions: Organizing is related to planning (setting the direction), leading (inspiring effort), and controlling (ensuring results).

Traditional Organizational Structures

• Functional Structures: Group people with similar skills and tasks into formal work units. Members specialize in functional areas of expertise. They work well in stable environments and for organizations with few products/services.

• Advantages of Functional Structures: Economies of scale, task assignments aligned with expertise, high-quality technical problem-solving, in-depth training, clear career paths.

• Disadvantages of Functional Structures: Focus on departmental concerns, potential neglect of "big picture" issues, communication barriers between functions, "functional chimneys problem", narrow view of performance goals.

• Divisional Structures: Group people based on product, geography, customer, or process. These structures are common in complex organizations and help avoid problems associated with functional structures.

• Types of Divisional Structures: Product, geographical, customer, and process structures.

• Advantages of Divisional Structures: Increased flexibility in responding to environmental changes, improved coordination across functional areas, clear responsibility for product/service delivery, expertise focused on specific customers/products/regions, ease in restructuring.

• Disadvantages of Divisional Structures: Duplication of resources/efforts across divisions, competition and poor coordination between divisions, emphasis on divisional goals over organizational goals.

• Matrix Structures: Combine functional and divisional structures to combine advantages and minimize disadvantages. Cross-functional teams are created to achieve goals. This structure is used in manufacturing, service industries, and professional fields.

• Advantages of Matrix Structures: Better communication/cooperation across functions, improved decision making/problem-solving, increased flexibility, better customer service, better performance accountability, and improved strategic management.

• Disadvantages of Matrix Structures: Increased costs due to team leaders, potential for power struggles (two-boss system), task confusion/conflict, time-consuming meetings, "groupitis".

Horizontal Organizational Structures

• Team Structures: Use permanent and temporary teams to handle problems, projects, and day-to-day tasks. Often cross-functional with members from various departments. Project teams are convened for specific tasks/projects and disbanded afterwards.

• Advantages of Team Structures: Barriers to collaboration reduced, talents from various areas combined, improved morale, involvement/identification with tasks, higher enthusiasm, increased quality/speed of decision making.

• Disadvantages of Team Structures: Conflicting member loyalties, excessive time spent in meetings, effective use of time dependent on interpersonal relations, group dynamics, and team management.

• Network Structures: Use information technologies to connect with a network of outside suppliers/service contractors. This approach involves only core components and uses strategic alliances/outsourcing for other components.

• Advantages of Network Structures: Operates with fewer full-time employees (reduced overhead). Flexible internal systems. Permit use of outsourcing. Increased operating efficiency.

• Disadvantages of Network Structures: Control and coordination difficulties. Breakdown in one part of the network can affect the entire system. Potential loss of control over outsourced activities. Loyalty issues with contractors . Excessively aggressive outsourcing can be problematic.

Boundaryless Organizations

• Boundaryless Organizations: Remove internal/external boundaries among subsystems/external environment. Combination of team and network structures with a focus on "temporariness" and use of spontaneous teamwork/communication to replace formal lines of authority.
• Key Requirements: Little hierarchy, team member empowerment., technology utilization, acceptance of impermanence.
• Features: Encourages creativity, quality, flexibility and efficiency, and makes knowledge sharing an essential component.
• Virtual Organization: Special form of boundaryless organization. Operates via a shifting network of external alliances, using IT and the Internet, as required.
• Latent Organization: Project-based structure; based on willing people for flexible environments, tasks completed, and key groups may continue later.

Organizational Designs

• Organizational Design: The process of creating structures to achieve mission and objectives It aims to align structures with situational contingencies. Alternatives include mechanistic/bureaucratic (stable environment) and organic/adaptive (rapidly changing environment).

• Bureaucracy: Organization based on logic, order, and legitimate use of formal authority. Features include clearly defined labor division, strict hierarchy, formal rules/procedures, and promotion based on job performance.

• Contingency Perspective: Questions the suitability of bureaucracy in certain situations and the alternatives available.

• Environment & Design: Environment dictates most suitable design. Mechanistic designs are most effective in stable environments. Organic designs better serve rapidly changing/uncertain ones; adaptive designs seek a balance that minimizes bureaucracy and promotes empowerment/teamwork.

• Mechanistic Designs: Predictable goals, centralized authority, numerous rules/procedures, narrow spans of control, specialized tasks, few teams, formal/impersonal coordination

• Organic Designs: Adaptable goals, decentralized authority, few rules/procedures, wide spans of control, shared tasks, many teams, informal/personal coordination.

Contemporary Organizing Trends

• Fewer Levels of Management, Shorter Chains of Command, Less Unity of Command: Streamlining, reducing levels of management, and flatter organizational structures are competitive advantages.
• Wider Spans of Control Supervisors managing more people.
• More Delegation & Empowerment: Distributing responsibilities, granting authority to act, and providing accountability.
• Decentralization with Centralization: Some decisions remain top-level while others are delegated to lower levels. This remains dynamic, not static.
• Reduced Use of Staff: Organizations reducing staff and embracing outsourcing to increase efficiency.

This quiz explores organizing as a crucial management function, focusing on the creation and evaluation of various organizational structures. It covers formal and informal structures, traditional versus modern designs, and the evolving nature of organizations in today's workplace. Test your understanding of these concepts with this engaging quiz.