Management: Organization Structures PDF

Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 11 Organization Structures This slide deck contains animations. Please disable animations if...

Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 11 Organization Structures This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. 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. Copyright ©2021 John Wiley & Sons 2 Canada, Ltd. Organizing as a Management Function (1 of 6) Organizing as a management function Organizing o Arranges, connects, integrates people and other resources to accomplish a goal Organization structure o The system of tasks, workflows, reporting relationships, and communication channels connecting work and activities Copyright ©2021 John Wiley & Sons 3 Canada, Ltd. Organizing as a Management Function (2 of 6) Organizing viewed in relationship with the other management functions Copyright ©2021 John Wiley & Sons 4 Canada, Ltd. Organizing as a Management Function (3 of 6) An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. It includes: Division of work Supervisory relationships Communication channels Major subunits Levels of management Copyright ©2021 John Wiley & Sons 5 Canada, Ltd. Organizing as a Management Function (4 of 6) Informal structures  The set of unofficial working relationships among organization members Social network analysis (sociometrics) o Identifies patterns of informal structures and social relationships in the organization Copyright ©2021 John Wiley & Sons 6 Canada, Ltd. Organizing as a Management Function (5 of 6) Informal structures and social networks Potential advantages of informal structures: o Allow people to make contacts with others who can help them get things done o Stimulate informal learning as people work and interact together o Sources of emotional support and friendship that satisfy members’ social needs Copyright ©2021 John Wiley & Sons 7 Canada, Ltd. Organizing as a Management Function (6 of 6) Potential disadvantages of informal structures: Susceptibility to rumor May carry inaccurate information May breed resistance to change Diversion of work efforts from important objectives Presence of “in and out groups” Feeling of alienation by “outsiders” Copyright ©2021 John Wiley & Sons 8 Canada, Ltd. Traditional Organization Structures (1 of 13) Traditional organization structures: 1. Functional Structures 2. Divisional Structures 3. Matrix Structures Copyright ©2021 John Wiley & Sons 9 Canada, Ltd. Traditional Organization Structures (2 of 13) 1. Functional Structures o People with similar skills and performing similar tasks are grouped together into formal work units o Members work in their functional areas of expertise o Are not limited to businesses o Work well in stable environments and for organizations producing few products or services Copyright ©2021 John Wiley & Sons 10 Canada, Ltd. Traditional Organization Structures (3 of 13) Functional structures in a business, branch bank, and community hospital Copyright ©2021 John Wiley & Sons 11 Canada, Ltd. Traditional Organization Structures (4 of 13) Potential advantages of functional structures: Economies of scale with efficient use of resources Task assignments consistent with expertise and training High-quality technical problem-solving In-depth training and skill development within functions Clear career paths within functions Copyright ©2021 John Wiley & Sons 12 Canada, Ltd. Traditional Organization Structures (5 of 13) Potential disadvantages of functional structures: focus primarily on their own concerns avoid communications with other functions neglect “big picture” issues Functional chimneys problem o Sense of cooperation and common purpose break down o Narrow view of performance objectives o More common as organizations grow larger Copyright ©2021 John Wiley & Sons 13 Canada, Ltd. Traditional Organization Structures (6 of 13) 2. Divisional Structures o Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region o Common in complex organizations o Avoid problems associated with functional structures Copyright ©2021 John Wiley & Sons 14 Canada, Ltd. Traditional Organization Structures (7 of 13) Divisional structures based on product, geography, customer, and process Copyright ©2021 John Wiley & Sons 15 Canada, Ltd. Traditional Organization Structures (8 of 13) Potential advantages of divisional structures: More flexibility in responding to environmental changes Improved coordination across functional areas Clear points of responsibility for product or service delivery Expertise focused on specific customers, products, and regions Greater ease in restructuring Copyright ©2021 John Wiley & Sons 16 Canada, Ltd. Traditional Organization Structures (9 of 13) Potential disadvantages of divisional structures: Duplication of resources and efforts across divisions Competition and poor coordination across divisions Emphasis on divisional goals at expense of organizational goals Copyright ©2021 John Wiley & Sons 17 Canada, Ltd. Traditional Organization Structures (10 of 13) 3. Matrix Structures Combine functional and divisional structures to gain advantages and minimize disadvantages of each Create permanent, cross-functional teams to achieve goals Used in: o Manufacturing o Service industries o Professional fields o Non-profit sector Copyright ©2021 John Wiley & Sons 18 o Multi-national corporations Canada, Ltd. Traditional Organization Structures (11 of 13) Matrix structure in a small, multi-project business firm Copyright ©2021 John Wiley & Sons 19 Canada, Ltd. Traditional Organization Structures (12 of 13) Potential advantages of matrix structures: Better communication and cooperation across functions Improved decision-making, problem-solving Increased flexibility in restructuring Better customer service Better performance accountability Improved strategic management Copyright ©2021 John Wiley & Sons 20 Canada, Ltd. Traditional Organization Structures (13 of 13) Potential disadvantages of matrix structures: Increased costs due to adding team leaders to structure 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 Team may develop “groupitis ” Copyright ©2021 John Wiley & Sons 21 Canada, Ltd. Horizontal Organization Structures (1 of 14) 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 composed of members from different functional departments Project teams are convened for a specific task or project and disbanded once completed Copyright ©2021 John Wiley & Sons 22 Canada, Ltd. Horizontal Organization Structures (2 of 14) How a team structure uses cross-functional teams for improved lateral relations Copyright ©2021 John Wiley & Sons 23 Canada, Ltd. Horizontal Organization Structures (3 of 14) Potential advantages of team structures: Breakdown of interpersonal barriers and mobilizing of diverse talents Improved morale Greater sense of task involvement and identification Increased enthusiasm for work. Improved quality and speed of decision making Copyright ©2021 John Wiley & Sons 24 Canada, Ltd. Horizontal Organization Structures (4 of 14) Potential disadvantages of team structures: Conflicting loyalties among members Excessive time spent in meetings Effective use of time depends on quality of interpersonal relations, group dynamics, and team management Copyright ©2021 John Wiley & Sons 25 Canada, Ltd. Horizontal Organization Structures (5 of 14) Network structures Use information technologies to link with networks of outside suppliers and service contractors Own only core components and use strategic alliances or outsourcing to provide other components Copyright ©2021 John Wiley & Sons 26 Canada, Ltd. Horizontal Organization Structures (6 of 14) A network structure for a Web-based retail business Copyright ©2021 John Wiley & Sons 27 Canada, Ltd. Horizontal Organization Structures (7 of 14) Potential advantages of network structures: Firms can operate with fewer full-time employees and less complex internal systems Reduced overhead costs and increased operating efficiency Permit employment of outsourcing strategies and contracted services Copyright ©2021 John Wiley & Sons 28 Canada, Ltd. Horizontal Organization Structures (8 of 14) Potential disadvantages of network structures: Control and coordination problems may arise from network complexity A breakdown in one part of the network can cause the entire system to fail Potential loss of control over outsourced activities Potential lack of loyalty among infrequently used contractors Excessively aggressive outsourcing can be dangerous Copyright ©2021 John Wiley & Sons 29 Canada, Ltd. Horizontal Organization Structures (9 of 14) Boundaryless organizations Eliminate many internal boundaries among subsystems and external boundaries with the external environment A combination of team and network structures, with the addition of “temporariness” Spontaneous teamwork and communication replace formal lines of authority Copyright ©2021 John Wiley & Sons 30 Canada, Ltd. Horizontal Organization Structures (10 of 14) Boundaryless organizations Key requirements: o Little hierarchy o Empowerment of team members o Technology utilization o Acceptance of impermanence Copyright ©2021 John Wiley & Sons 31 Canada, Ltd. Horizontal Organization Structures (11 of 14) Boundaryless organizations Encourage creativity, quality, timeliness, flexibility, and efficiency Knowledge sharing is both a goal and an essential component Copyright ©2021 John Wiley & Sons 32 Canada, Ltd. Horizontal Organization Structures (12 of 14) 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 Copyright ©2021 John Wiley & Sons 33 Canada, Ltd. Horizontal Organization Structures (13 of 14) Latent organization A project based structure Based on connected people who are willing to work in a flexible environment The workers disperse when the project or task is complete Key groups continue to band together for future projects Copyright ©2021 John Wiley & Sons 34 Canada, Ltd. Horizontal Organization Structures (14 of 14) The boundaryless organization, which eliminates internal and external barriers Copyright ©2021 John Wiley & Sons 35 Canada, Ltd. Organizational Designs (1 of 8) Organizational design Process of creating structures that accomplish mission and objectives An attempt to achieve a good match between structure and situational contingencies Alternatives include mechanistic or bureaucratic at one extreme, and organic or adaptive at the other Copyright ©2021 John Wiley & Sons 36 Canada, Ltd. Organizational Designs (2 of 8) Bureaucracy A form of organization based on logic, order, and the legitimate use of formal authority Bureaucratic designs feature … o Clear-cut division of labour o Strict hierarchy of authority o Formal rules and procedures o Promotion based on competency Copyright ©2021 John Wiley & Sons 37 Canada, Ltd. Organizational Designs (3 of 8) Contingency perspective on bureaucracy asks the questions: When is bureaucracy a good choice for an organization? When it isn’t, what alternatives are available? Copyright ©2021 John Wiley & Sons 38 Canada, Ltd. Organizational Designs (4 of 8) Environment determines the most appropriate design Mechanistic designs work in a stable environment Organic designs work in a rapidly changing and uncertain environment o Adaptive organizations operate with a minimum of bureaucratic feature and encourage worker empowerment and teamwork Copyright ©2021 John Wiley & Sons 39 Canada, Ltd. Organizational Designs (5 of 8) Mechanistic Designs Predictable goals Centralized authority Many rules and procedures Narrow spans of control Specialized tasks Few teams and task forces Formal and impersonal means of coordination Copyright ©2021 John Wiley & Sons 40 Canada, Ltd. Organizational Designs (6 of 8) Organic Designs Adaptable goals Decentralized authority Few rules and procedures Wide spans of control Shared tasks Many teams and task forces Informal and personal means of coordination Copyright ©2021 John Wiley & Sons 41 Canada, Ltd. Organizational Designs (7 of 8) Organizational design alternatives: From bureaucratic to adaptive organizations Copyright ©2021 John Wiley & Sons 42 Canada, Ltd. Organizational Designs (8 of 8) Contemporary organizing trends include: Fewer levels of management o Shorter chains of command o Less unity of command Wider spans of control More delegation and empowerment Decentralization with centralization Reduced use of staff Copyright ©2021 John Wiley & Sons 43 Canada, Ltd. Trends in Organizational Designs (1 of 8) Fewer levels of management Chain of command o Links all employees with successively higher levels of authority Span of control o The number of persons directly reporting to a manager Copyright ©2021 John Wiley & Sons 44 Canada, Ltd. Trends in Organizational Designs (2 of 8) Fewer levels of management Organizing trend: o Organizations are being “streamlined” by cutting unnecessary levels of management o Flatter structures are viewed as a competitive advantage Copyright ©2021 John Wiley & Sons 45 Canada, Ltd. Trends in Organizational Designs (3 of 8) More delegation and empowerment A common management failure is unwillingness to delegate Delegation leads to empowerment Organizing trend: o Managers are delegating more and finding more ways to empower people at all levels Copyright ©2021 John Wiley & Sons 46 Canada, Ltd. Trends in Organizational Designs (4 of 8) More delegation and empowerment Delegation is the process of distributing and entrusting work to other persons The manager assigns responsibility, grants authority to act, and creates accountability Authority should be commensurate with responsibility Copyright ©2021 John Wiley & Sons 47 Canada, Ltd. Trends in Organizational Designs (5 of 8) Three Steps in Delegation: Step 1: Assign responsibility – explain task and expectations Step 2: Grant authority – allow others to make decisions and act Step 3: Create accountability – require others to report back on results Copyright ©2021 John Wiley & Sons 48 Canada, Ltd. Trends in Organizational Designs (6 of 8) Decentralization with centralization Centralization is the concentration of authority for making most decisions at the top levels of the organization Decentralization is the dispersion of authority to make decisions throughout all levels of the organization Copyright ©2021 John Wiley & Sons 49 Canada, Ltd. Trends in Organizational Designs (7 of 8) Decentralization with centralization Centralization and decentralization not an “either/or” choice Organizing trend: Delegation, empowerment, and horizontal structures contribute to more decentralization in organizations Advances in information technology allow for the retention of centralized control Copyright ©2021 John Wiley & Sons 50 Canada, Ltd. Trends in Organizational Designs (8 of 8) Reduced use of staff Staff positions provide technical expertise for other parts of the organization Organizing trend: Organizations are downsizing Organizations are lowering costs and increasing efficiency by employing fewer staff personnel and using smaller staff units Copyright ©2021 John Wiley & Sons 51 Canada, Ltd. Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. 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