Organizational Structures PDF

II. THE MAIN STRUCTURES never stop daring II. THE MAIN STRUCTURES A. The simple or entrepreneurial structure Most businesses starting out adopt a simple structure: The management of the company is heart of the organization. It is related to the whole of the actors and holds all powers....

II. THE MAIN STRUCTURES never stop daring II. THE MAIN STRUCTURES A. The simple or entrepreneurial structure Most businesses starting out adopt a simple structure: The management of the company is heart of the organization. It is related to the whole of the actors and holds all powers. 54 II. THE MAIN STRUCTURES A. The simple or entrepreneurial structure ADVANTAGES DISADVANTAGES Low specialization of work The functioning of the business depends on Lack of formal rules and procedures: the personality and skills of the business coordination occurs through mutual owner. adjustment She can be overwhelmed and fail to A sharing of responsibilities and a climate of coordinate and control the activity of trust employees. Low cost operation She may lack skills in some areas. Flexibility and the ability to adapt to changes If she encounters problems, the information and decision-making center disappears with him. 55 II. THE MAIN STRUCTURES B. The functional structure When the company develops it adopts a so-called functional structure : Related or similar tasks are grouped within functions (marketing, production, sales, accounting, etc. ) and supervised by a director. In France, almost one in two companies has a functional structure (48%). It is very present in small companies (especially single-product companies). 56 II. THE MAIN STRUCTURES B. The functional structure 57 II. THE MAIN STRUCTURES B. The functional structure ADVANTAGES DISADVANTAGES Provides for a high degree of specialization Isolation of departments from each other (Taylor) since they tend to form “silos,” Simple and straightforward reporting system Closed mindsets (diluted responsibility - within departments concern for one’s department) Intra-functional communication is easy (same Poor communication across departments, skills and “language”) Slow decision-making and poor coordination Offers economies of scale of tasks across departments Not difficult to scale if and when the Competition for power and resources organization grows. Monotony (routine tasks) Direct supervision of tasks 58 II. THE MAIN STRUCTURES B. The functional structure Advantages : The specialisation (basic principle of the Taylorian conception : Organization Scientist of Work ). A strong hierarchical line. Coordination is done from the top through direct supervision ( formal instructions, strict procedures, control of compliance with procedures, etc.: centralized and pyramidal structure). Communication is facilitated within units because members share the same skills. 59 II. THE MAIN STRUCTURES B. The functional structure Limits : Lack of flexibility and relative rigidity : slowness in decision- making depending on the length of the hierarchical line. Routine tasks Partitioning between services Poor flow of information Diluted responsibilities : each actor will tend to favor their function to the detriment of the overall coherence of the company. 60 II. THE MAIN STRUCTURES C. The divisional structure When a company develops several activities (diversification) it adopts a divisional structure : It is divided into specialized divisions (units): By Products / Services Regions / Sales areas Types of customers / Markets In France, 22% of companies have a divisional structure. Ex. Engie is divided into divisions: natural gas transport, gas distribution, liquefied natural gas terminals and natural gas storage. 61 II. THE MAIN STRUCTURES C. The divisional structure In this structure the general management: Develop the overall strategy Monitors divisional performance Distributes resources between divisions Provides common services (legal, etc.) However, each division is autonomous: it has its director and brings together most of the resources (human, infrastructure, etc.) necessary for its activity. Divisions often operate on a functional model and standardization is the preferred mechanism for coordinating activities. 64 II. THE MAIN STRUCTURES C. The divisional structure ADVANTAGES DISADVANTAGES Customer contact and service can be quicker Divisions can easily become isolated and Proximity of divisions to their market insular from one another – eventual (responsiveness). competition Decentralized decision-making means that Incompatibility of systems (technology, headquarters does not have to micromanage accounting, advertising, budgets) can occur, all the divisions. which creates a strain on company strategic Flexibility of the company in the context of goals and objectives. (coordination) organizational changes (integration or Job or resource redundancy, (many people in elimination of a division). organization doing same thing) diseconomies Coordination within a divisional grouping is of scale easier. Different systems, such as accounting, or Everyone can more easily know their finance, may suffer from poor and infrequent responsibilities and accountability communication and coordination of 65 expectations enterprise mission, direction, and values. II. THE MAIN STRUCTURES C. The divisional structure Advantages : Proximity of divisions to their market (responsiveness). Flexibility of the company in the context of organizational changes (integration or elimination of a division). Management can optimize the distribution of resources between divisions ( economies of scale resulting from the centralization of part of the support functions). 66 II. THE MAIN STRUCTURES C. The divisional structure Limits : Risk of dispersion of resources between divisions ( diseconomies of scale : risk of redundancies in positions and activities: purchasing, finance, accounting, etc.). Risk of conflicts and coordination difficulties between divisions which may find themselves in competition. 67 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) The matrix structure is adopted when a segmentation criterion (function or product) is not sufficient to organize the activities. In this structure, we juxtapose 2 segmentation criteria. It combines the advantages of structures: Functional (one specialist per function) and Divisional (one specialist per division) It is particularly suitable for large multi-activity and / or multi- market companies. 68 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) This structure combines the advantages of structures: Functional (one specialist per function) and Divisional (one specialist per division) Each employee therefore has 2 superiors (duality of command): a functional head (permanent) and a divisional manager (project manager who can evolve according to needs). 69 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) Boeing was one of the first companies to adopt this type of structure. The work teams belong to both: A specialty : wings, guidance system… And to their program department corresponding to the type of aircraft: 727, 737, 747… 70 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) 71  II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) Product or Project Dimension 72 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) It is based on a principle of dual command/reporting: each employee has 2 superiors: One of the often referred to as “dotted line” management as it is probably weaker) Breaks rule of “unity of command” 73 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) There are 3 types of matrix structures , giving more or less authority to the department head and the project manager: The strong matrix (the project manager holds a greater part of the decision-making power compared to the department head). The balanced matrix (authority is shared between the department head and the project manager). The weak matrix (the project manager has less authority compared to the department head). 74 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) ADVANTAGES DISADVANTAGES It promotes decentralization, the circulation of information, Risks of conflicts relating to the distribution of decision- participation and motivation. making power. Personal development Power struggles between functional and product managers that may have different goals It is scalable and adapts flexibility to environmental and organizational changes: entire sections of the organization A risk of role confusion. Report to who? Priorities? are born and die with products or projects. Team members from different functional areas may find it Synergy effects through the mobilization of specialized skills difficult to work together. and transversality within the company. Makes control and coordination difficult. Efficient use of resources (resources should flow to where Critical skills (ex. negotiation) required of managers they are most valued) Teamwork – increase innovation – pooled skills. Sense of ownership can improve productivity. Use conflict resolution (product vs function) as a source of improvement 75 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) Advantages : It promotes decentralization, the circulation of information, participation and motivation. It is scalable and adapts to environmental and organizational changes : entire sections of the organization are born and die with products or projects. Synergy effects through the mobilization of specialized skills and transversality within the company. 76 II. THE MAIN STRUCTURES D. The matrix structure (Galbraith, 1970) Limits : Slow decision making Risks of conflicts relating to the distribution of decision-making power. A risk of confusion in the hierarchy of priorities. The matrix structure is therefore complex and makes control and coordination difficult. In France, 25% of companies have a matrix structure. 77 II. THE MAIN STRUCTURES E. Project structure The project structure (team structure) is based on the occasional creation of teams intended to initiate and implement time-limited projects. Example: launching new products, improving quality, reducing costs, customer satisfaction, etc. 78 II. THE MAIN STRUCTURES E. Project structure Organization by projects works very well in a company that has adopted a matrix-type structure. Examples of companies using this structure: NASA, Google, start-ups, advertising agencies, consulting firms, etc. 79 II. THE MAIN STRUCTURES E. Project structure ADVANTAGES DISADVANTAGES Very flexible structure perfectly suited to Lack of consistency between projects changing environments. Poor combination of individual skills within The role of managers in this type of project teams organization is to act as a facilitator, mentor The permanent dissolution of teams can and coach. They support the teams and hinder the accumulation of knowledge... provide the necessary resources to get the job done efficiently. 80 II. THE MAIN STRUCTURES E. Project structure Advantages : Very flexible structure perfectly adapted to changing environments. The role of managers in this type of organization is to act as a facilitator, mentor and coach. They support teams and provide the necessary resources to accomplish the work efficiently. Motivation of employees. 81 II. THE MAIN STRUCTURES E. Project structure Limits : Lack of consistency between projects. Poor mix of individual skills within project teams. The permanent dissolution of teams can hinder the accumulation of knowledge… In France, 6% of companies operate in project mode. 82 II. THE MAIN STRUCTURES F. The extended enterprise The rise of ICT to give rise to new forms of organizations: 1. The unstructured company (boundaryless organization ) : Organization which is not determined by boundaries linked to a predefined structure. The president of General Electric, Jack Welch was the first to speak of a destructured company to improve performance (Work-out program). We eliminate: horizontal boundaries (between departments) and vertical boundaries (between hierarchical levels) The external boundaries between the organization and its customers, suppliers and other stakeholders. 83 II. THE MAIN STRUCTURES F. The extended enterprise 2. The virtual company: It is made up of a small core of permanent employees supplemented by external experts who are recruited temporarily depending on current projects. By working with independent contractors: the company benefits from a network of skills without having to endure administrative burden and structural complexity. 84 II. THE MAIN STRUCTURES F. The extended enterprise 3. The network organization: is based both on its own collaborators and on a network of external members ( suppliers, transporters, financiers, competitors, etc. ). The units remain independent of each other but are linked by partnership and contractual relationships. The network business has no defined border. Its size and number of units fluctuate depending on the projects developed. 85 II. THE MAIN STRUCTURES F. The extended enterprise Advantages : Pooling of skills Pooling of costs It is an evolving structure : the partners change depending on the projects. 86 II. THE MAIN STRUCTURES Organisational Complexity Environmental Uncertainty 87 II. THE MAIN STRUCTURES G. And tomorrow the liberated company? The objective is to put people at the heart of the company's operations. The principles : Let employees take individual initiatives rather than following directives imposed by their superiors. The hierarchy is removed : the pyramidal hierarchical structure is replaced by a flat structure where each employee directs themselves or organizes themselves into small teams (controls and surveillance are a thing of the past). 88 II. THE MAIN STRUCTURES G. And tomorrow the liberated company? Advantages : Employees are more productive and efficient : by improving their quality of life , their well-being at work and their personal involvement , employees are more motivated. Internal cohesion is stronger : by highlighting collaborative work and collective intelligence , employees form a strong and united collective. 89 II. THE MAIN STRUCTURES G. And tomorrow the liberated company? The organization becomes more agile : decision-making is faster and the structure can adapt almost instantly to changes in the markets. The company becomes more innovative : the autonomy of the teams allows everyone to express their ideas and take initiatives without going through months and months of internal research. 90 II. THE MAIN STRUCTURES G. And tomorrow the liberated company? Limits : French employees are not ready : the pyramid hierarchy is strongly anchored in the culture of French companies. A risk of anarchy An increase in pressure : with the increase in everyone's responsibilities there is increased stress and the risk of burn-out. 91 CONCLUSION There is no ideal structure. A structure is effective when it adapts to a particular situation. Organizations are therefore not fixed in a structure. They constantly evolve and adapt (in a more or less brutal way). 92