Organizational Structures BOH4M PDF

Organizational Structures BOH4M Success Criteria I can draw examples of functional, divisional, and matrix organizational charts. I can create depictions of ideal organizations that fit into traditional and emerging organizational structures. Management Fundame...

Organizational Structures BOH4M Success Criteria I can draw examples of functional, divisional, and matrix organizational charts. I can create depictions of ideal organizations that fit into traditional and emerging organizational structures. Management Fundamentals - Chapter 2 10 Planning Ahead — Chapter 10 Study Questions What is organizing as a management function? What are the major types of organization structures? What are the new developments in organization structures? Management Fundamentals - Chapter 10 3 Study Question 1: What is organizing as a management function? Organizing and organization structure – Organizing The process of arranging people and other resources to work together to accomplish a goal. – Organization structure The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups. Management Fundamentals - Chapter 10 4 Figure 10.1 Organizing viewed in relationship with the other management functions. Management Fundamentals - Chapter 10 5 FORMAL AND INFORMAL STRUCTURES Management Fundamentals - Chapter 6 10  Formal structures – The official, documented framework of an organization. Includes hierarchy, job descriptions, policies and procedures. – An organization chart identifies the following aspects of formal structure: The division of work. (who does what?) Supervisory relationships. (who reports to whom?) Communication channels. (where information comes from?) Major subunits. (smaller organizations within an organization?) Levels of management. (upper, middle, lower?) 7 8  Informal structures – A “shadow” organization made up of the unofficial, but often critical, working relationships between organization members. Not documented and can evolve based on personal interactions and social connections. – Potential advantages of informal structures: Helping people accomplish their work. Overcoming limits of formal structure. Gaining access to interpersonal networks. Informal learning. Management Fundamentals - Chapter 10 9  Informal structures – Potential disadvantages of informal structures: Lack of clarity: confusion regarding roles and responsibilities may work against best interests of entire organization Inequality: forming of cliques can make organization susceptibility to rumor and felling of alienation Information overload or miscommunication Diversion of work efforts from important objectives. Management Fundamentals - Chapter 10 10 Types of Org’l Structures Organization structures: beyond “tall” or “flat” There are the traditional ones: (1) Functional, (2) Divisional, (3) Matrix There are also the modern ones: (4) Team Structures, (5) Network Structures, (6) Boundaryless Structures Management Fundamentals - Chapter 11 10 Functional Divisional Matrix TRADITIONAL TYPES OF ORGANIZATIONAL STRUCTURES 12  #1 – Functional structures – Groups together people with similar skills who perform similar tasks – Members work in their functional areas of expertise. (e.g., marketing, sales, accounting) – Employees report to a department manager who oversees their specific functional area Management Fundamentals - Chapter 10 13 Figure 10.2 Functional structures examples Employees report to a department manager who oversees their specific functional area. Manufacturing problems are the responsibility of the production vice president. Marketing problems are the responsibility of the marketing vice president. Management Fundamentals - Chapter 10 14 Functional Structures Potential advantages of functional structures: – Operational efficiency and economies of scale: streamlined processes within departments can improve productivity – Specialization: employees develop expertise in their specific functions, leading to increase efficiency and high-quality technical problem solving – Clear hierarchy and career path Management Fundamentals - Chapter 10 15 Functional Structures Potential disadvantages of functional structures: – Silo/chimney effect: departments become isolated from one another, leading to poor communication/collaboration – Limited view: focus only on department goals leads to sense of cooperation and common purpose breaking down 16 Functional Structures Example: DSC – Business, Language and Literature, Music, Art, Physical Education – Each have a department head 17  #2 - Divisional structures Divisional structures – Company is divided into semi-autonomous divisions, each responsible for a specific product line, market, or geographical area – Each division operates like a separate business entity, with its own resources, functions, and management Management Fundamentals - Chapter 10 18 Divisional Structures Types of divisional structures and how they group job and activities: – Product: such as a “electronics” or “clothing” team – Geographical: such as a “North America” or “Europe” team – Customer: such as “domestic vs international” or “consumer vs commercial” customers – Process (based on steps in a workflow): such as product development, order fulfillment, customer service Management Fundamentals - Chapter 10 19 Divisional Structures Examples Management Fundamentals - Chapter 10 20 Divisional Structures Potential advantages of divisional structures: – More flexibility in responding to environmental changes, without need to wait for approval from centralized management – Clear points of responsibility so it is easier to measure performance – Expertise focused on specific customers, products, and regions; tailor strategies to meet specific needs Management Fundamentals - Chapter 10 21 Divisional Structures Potential disadvantages of divisional structures: – Duplication of resources and efforts across divisions. We might do the same task in 2 different geographic regions that could have been done in 1 – Inter-divisional competition for resources – Emphasis on divisional goals at expense of organizational goals 22  #3 - Matrix structure Matrix structure – Combines functional and divisional structures to gain advantages and minimize disadvantages of each. Management Fundamentals - Chapter 10 23 Figure 10.4 Matrix structure in a small multiproject business firm. Management Fundamentals - Chapter 10 24  Matrix structure Potential advantages of matrix structures: – Better teamwork across functions. – Improved decision making without silo effect – Increased flexibility in resource reallocation – Better performance accountability. – Improved strategic management. Management Fundamentals - Chapter 10 25  Matrix structure Potential disadvantages of matrix structures: – Two-boss system is susceptible to power struggles. – Two-boss system can create task confusion and conflict in work priorities. – Team meetings are time consuming. – Increased costs. Management Fundamentals - Chapter 10 26 THREE CURRENT DEVELOPMENTS TO ORGANIZATIONAL STRUCTURES 27 #4 - Team structures New Development A – Team structures – Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks. – Often use cross-functional teams. Management Fundamentals - Chapter 10 28 Figure 10.5 How a team structure uses cross-functional teams for improved lateral relations. Management Fundamentals - Chapter 10 29 Team structures Potential advantages of team structures: – Eliminates difficulties with communication and decision making caused by chimney problems – Eliminates barriers between operating departments since people from different parts of organization get to know one another – Improved morale and enthusiasm from greater sense of involvement – Share knowledge and expertise improves quality and speed of decision making Management Fundamentals - Chapter 10 30 Team structures Potential disadvantages of team structures: – Conflicting loyalties among members with both team and functional assignments – Excessive time spent in meetings. – Effective use of time depends on quality of interpersonal relations, group dynamics, and team management. Management Fundamentals - Chapter 10 31 #5 - Network structures New Development B – Network structures – A central core that is linked through networks of relationships with outside contractors and suppliers of essential services. – Own only core components and use strategic alliances or outsourcing to provide other components. Management Fundamentals - Chapter 10 32 Figure 10.6 A network structure for a Web-based retail business. Management Fundamentals - Chapter 10 33 Network structures Potential advantages of network structures: – Fewer full-time employees and less complex internal systems – Reduced overhead costs and increased operating efficiency – Permits operations across great distances Management Fundamentals - Chapter 10 34 Network structures Potential disadvantages of network structures: – Control and coordination problems may arise from network complexity – Potential loss of control over outsourced activities – Potential lack of loyalty among infrequently used contractors – Excessively aggressive outsourcing can be dangerous when key components like finance or logistics are outsourced Management Fundamentals - Chapter 10 35 Network structures Deadly sins of outsourcing (Negative Possibilities): – Outsourcing activities that are part of the core. – Outsourcing to untrustworthy vendors. – Not having good contracts with the vendor. – Overlooking impact on existing employees. – Not maintaining oversight; losing control to vendors. – Failing to anticipate need to change vendors, cease outsourcing. Management Fundamentals - Chapter 10 36  #6 - Boundaryless organizations New Development C – Boundaryless organizations – Eliminate traditional barriers within organization and between the organization and its environment – Can be viewed as a combination of team and network structures – Key requirements: Absence of hierarchy Empowerment of team members Technology utilization: remote work, virtual teams Level of “temporariness” Management Fundamentals - Chapter 10 37 Figure 10.7 The boundaryless organization eliminates internal and external barriers. Management Fundamentals - Chapter 10 38  Boundaryless organizations – Encourage creativity, quality, timeliness, flexibility, and efficiency – Knowledge sharing is both a goal and essential component – Virtual organization. A special form of boundaryless organization. Operates in a shifting network of external alliances that are engaged as needed, using IT and the Internet. Management Fundamentals - Chapter 10 39