Chapter 3 Organization Structure PDF

CHAPTER 3 Organization Structure Components That Define Organization Structure Organization structure designates formal positions & reporting relationships, including the number of levels in the hierarchy and the span of control of managers & supervisors. Organization structure identifies...

CHAPTER 3 Organization Structure Components That Define Organization Structure Organization structure designates formal positions & reporting relationships, including the number of levels in the hierarchy and the span of control of managers & supervisors. Organization structure identifies the grouping together of individuals into departments & of departments into the total organization. Organization structure includes the design of systems to ensure effective communication, coordination, & integration of efforts across departments Organization Chart Information-Sharing Perspective on Structure Vertical Information Sharing Vertical Linkages Vertical Linkages are used to coordinate activities between the top and bottom of an organization and are designed primarily for control of the organization. Hierarchical Referral The first vertical device is the hierarchy, or chain of command. If a problem arises that employees don’t know how to solve, it can be referred up to the next level in the hierarchy. When the problem is solved, the answer is passed back down to lower levels. The lines of the organization chart act as communication channels. Rules & Plans To address repetitive problems and decisions, Rules help employees respond without direct manager communication. They offer a standard information source for coordination without constant dialogue. Additionally, Plans serve as ongoing information, allowing lower-level employees to operate independently within their resource allocations. Vertical Information System Enhance vertical information capacity through efficient communication. Include periodic reports, written information, and computer-based communications. Improve communication efficiency within hierarchical structures. Example: AAST Staff Portal Horizontal Information Sharing & Collaboration Collaboration Collaboration is a joint effort among individuals from different departments to achieve a common goal, producing outcomes greater than what could be accomplished individually. Horizontal Linkage Horizontal linkage refers to communication and coordination horizontally across organizational departments. Cross-Functional Information Systems A key way to achieve horizontal linkage in organizations is through cross-functional information systems. These computerized systems allow managers and frontline workers to regularly share updates on progress, problems, opportunities, activities, and decisions. Liaison Roles A higher level of horizontal linkage involves direct contact among managers or employees affected by a problem. Creating a liaison role, or coordinator, can promote this contact. This person works in one department but coordinates with another. Full-time Integrator A full-time integrator, often titled product manager, project manager, program manager, or brand manager, coordinates multiple departments from an external position, rather than reporting to any specific functional department. Task Force A task force is a temporary committee composed of representatives from each organizational unit affected by a problem Cross-Functional Teams Cross-functional teams are permanent groups composed of members from various functional areas, often working with a full-time integrator. They are effective for long-term coordination and collaboration across departments. Relational Coordination The highest level of horizontal coordination Relational Coordination. Relational coordination refers to frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge & mutual respect. Can’t be Seen In The Organzation Chart It’s Good For Multinational Organzations with High Spatial Complexity Functional, Divisional & Geographic Designs Functional Structure In a functional structure, also called a U-form (unitary), activities are grouped together by common function from the bottom to the top of the organization. Strengths Weaknesses Allows economies of scale within functional departments Slow response time to environmental changes Enables in-depth knowledge & skill development May cause decisions to pile on top; hierarchy overload Enables organization to accomplish functional goals Leads to poor horizontal coordination among departments Is best with only one or a few products Results in less innovation Involves restricted view of organizational goals Divisional & Geographic Structures In a divisional structure (M-form or multidivisional), separate divisions are responsible for specific products, services, or profit centers. This structure, also known as a product or strategic business unit structure, groups based on organizational outputs. Geographic Structures is the Same as Divisional Structure but not by responsible for specific products but is responsible for specific geographic location Strengths Weaknesses Suited to fast change in unstable environment Eliminates economies of scale in functional departments Leads to customer satisfaction because product responsibility Leads to poor coordination across product lines and contact points are clear Involves high coordination across functions Eliminates in-depth competence & technical specialization Makes integration and standardization across product lines Allows units to adapt to differences in products, regions, customers difficult Best in large organizations with several products Decentralizes decision making Matrix Structure Organizations may need a multifocused structure that emphasizes both product and function or geography, achievable through a matrix structure. This approach is beneficial when technical expertise and product innovation are vital for meeting goals. The matrix structure combines product divisions and functional structures, allowing product and functional managers to have equal authority. Employees report to both, facilitating strong horizontal linkage and collaborative decision-making. Conditions for the Matrix Structure Pressure to Share Resources: Medium-sized organizations with limited resources must share personnel and equipment across product lines, often assigning staff part-time to multiple projects. Environmental Pressure for Multiple Outputs: Organizations need both in-depth technical expertise and frequent new products, requiring a balance of power between functional and product sides. Complex & Uncertain Environment: High interdependence and frequent changes necessitate extensive coordination and information processing in both vertical and horizontal directions. Strengths Weaknesses Achieves coordination necessary to meet dual demands from Causes participants to experience dual authority, which can be frustrating & customers confusing Flexible sharing of human resources across products Means participants need good interpersonal skills & extensive training Suited to complex decisions and frequent changes in unstable Is time consuming; involves frequent meetings & conflict-resolution sessions environment Provides opportunity for both functional & product skill Will not work unless participants understand it and adopt collegial rather development than vertical-type relationships Best in medium-sized organizations with multiple products Requires great effort to maintain power balance Virtual Network Structure The virtual network structure features a central "hub" organization that manages tasks through external partnerships. Key functions like marketing and design are in-house, while manufacturing and IT are outsourced. This global network allows for flexibility, market responsiveness, and cost efficiency by concentrating on core strengths. Strengths Weaknesses Enables even small organizations to obtain talent & Managers do not have hands-on control over many activities & resources worldwide employees Gives a company immediate scale & reach without huge Requires a great deal of time to manage relationships & potential investments in factories, equipment, or distribution conflicts with contract partners facilities Enables the organization to be highly flexible & responsive There is a risk of organizational failure if a partner fails to deliver or to changing needs goes out of business Employee loyalty and corporate culture might be weak because Reduces administrative overhead costs employees feel they can be replaced by contract services Holacracy Structure A holacracy is a self-management structure that eliminates traditional managerial roles, distributing authority among self-organizing teams called "circles." Each circle manages specific tasks and decision- making within its scope, promoting autonomy, agility, and employee empowerment, making it suitable for innovative and adaptable companies. Characteristics Roles are defined collectively within teams to achieve tasks. Teams can form and dissolve as circumstances change, adapting to new needs. Teams self-design and govern, creating a constitution that outlines operational rules. Leadership is distributed; there are no assigned managers, and responsibilities shift based on needs and team dynamics. Strengths Weaknesses Determining individual & team responsibilities is time Promotes a focus on teamwork and collaboration consuming Promotes rapid, innovative responses to customer Requires changes in management philosophy and needs culture Each employee has a broader view of the Traditional managers may baulk when they have to give organization's purpose up power & authority Decisions are made close to the work Requires significant training of employees in social skills Improves employee growth via sharing responsibility, Can limit in-depth skill development in a specific function making decisions & being accountable for outcomes