Management Course 6

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MANAGEMENT (6)MANAGEMENT (6)Organizational StructureOrganizational Structure

CCătălinaătălina RADU, MBA, PhD.RADU, MBA, PhD.BucharestBucharest UniversityUniversity of of EconomicEconomic StudiesStudies

Organizational Structure Organizational Structure ––Proposed QuotesProposed Quotes

GROUPSGROUPS 917917 andand 918918:: "Every"Every companycompany hashas twotwoorganizationalorganizational structuresstructures:: TheThe formalformal oneone isis writtenwritten onon thethechartscharts;; thethe otherother isis thethe everydayeveryday relationshiprelationship ofof thethe menmenandand womenwomen inin thethe organizationorganization.."" -- HaroldHarold SS.. GeneenGeneen

GROUPGROUP 920920:: “I“I trytry toto motivatemotivate peoplepeople andand alignalign ourourindividualindividual incentivesincentives withwith organizationalorganizational incentivesincentives.. AndAndthenthen letlet peoplepeople dodo theirtheir bestbest..”” –– JohnJohn LiuLiuthenthen letlet peoplepeople dodo theirtheir bestbest.. JohnJohn LiuLiu

GROUPGROUP 922922:: "You"You havehave to,to, inin youryour ownown life,life, getget peoplepeople totowantwant toto workwork withwith youyou andand wantwant toto helphelp youyou.. TheTheorganizationalorganizational chart,chart, inin mymy opinion,opinion, meansmeans veryvery littlelittle.. IIneedneed mymy bosses'bosses' goodwill,goodwill, butbut II needneed thethe goodwillgoodwill ofof mymysubordinatessubordinates eveneven moremore.."" -- LloydLloyd BlankfeinBlankfein

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Organizing and Organizing and Organization ChartOrganization Chart

Organizing the process by which managers Organizing = the process by which managers establish working relationships among employees to achieve goals;

Organizational structure = formal system of task and reporting relationships;Organization chart A chart that shows the Organization chart = A chart that shows the structure of the organization including the title of each manager’s position and, by means of connecting lines, who is accountable to whom and who has authority for each area.

Structure Key Terms (1)Structure Key Terms (1)

Chain of command Chain of command –– The continuous line of The continuous line of authority that extends from authority that extends from upper levels upper levels of an of an organisationorganisation to the lowest levels of to the lowest levels of the the organisationorganisation and clarifies who reports to and clarifies who reports to who: who: the management principle states that no the management principle states that no person should report to more than one boss person should report to more than one boss ((unity of commandunity of command););

Span of control Span of control –– the number of subordinates a the number of subordinates a manager can direct efficiently and effectively;manager can direct efficiently and effectively;

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Structure Key Terms (2)Structure Key Terms (2)

AuthorityAuthority –– the rights inherent in a managerial the rights inherent in a managerial position to give orders and expect them to be position to give orders and expect them to be obeyed;obeyed;

ResponsibilityResponsibility –– aan obligation to perform n obligation to perform assigned activities;assigned activities;PowerPower An individual’s capacity to influenceAn individual’s capacity to influence PowerPower –– An individual’s capacity to influence An individual’s capacity to influence decisions.decisions.

Types of Organizational Structures (1)Structures (1)


Functional structure Functional structure– Function: people working together with

similar skills, tools or techniques to perform skills, tools or techniques to perform their jobs; functional structure consists of their jobs; functional structure consists of departments such as marketing, departments such as marketing, production, and finance.production, and finance.

Di i i l t t Divisional structure– Division: a collection of functions working

together to produce a product => product structure, geographic structure, market structure

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Matrix structure– Matrix: managers group people by function managers group people by function

and product teams and product teams simultaneously; this simultaneously; this structure results structure results in a complex network of in a complex network of reporting reporting relationships; it is very relationships; it is very flexible flexible and can respond rapidly to and can respond rapidly to change; each change; each employee has twoemployee has two bossesbosses which can causewhich can causeemployee has two employee has two bosses, bosses, which can cause which can cause problems.problems.

Hybrid structure– Selection; one division may use a functional

structure, one geographic, etc.

Centralization versus Centralization versus DecentralizationDecentralization

Centralization Centralization– A function of how much decision-making

authority is pushed down to lower levels in an organization; the more centralized an organization, the higher the level at which decisions are made

D t li ti Decentralization– The pushing down of decision-making

authority to the lowest levels of an organization

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Centralization / Centralization / Decentralization RulesDecentralization Rules

Decentralize decisions that affect only one division or area and that would take a long time for upper management to make.

Centralize decisions that could adversely Ce t a e dec s o s t at cou d ad e se yaffect the entire firm and that upper management can fairly quickly and easily.

FormalizationFormalization

Formalization refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.

Highly formalized jobs offer little discretion g y jover what is to be done.

Low formalization means fewer constraints on how employees do their work.

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Mechanistic versus Organic Mechanistic versus Organic OrganizationOrganization

Mechanistic OrganicMechanistic Organic

• High specialization • Cross-functional teams

• Rigid departmentalization • Cross-hierarchical teams

• Clear chain of command • Free flow of information

• Narrow spans of control • Wide spans of control

• Centralization • Decentralization

• High formalization • Low Formalization

Factors Influencing Factors Influencing Organizational StructureOrganizational Structure

Factors Influencing Factors Influencing Organizational StructureOrganizational Structure

E i tEnvironment

Strategy TechnologyDesign or organizational

structure

HumanResources

structure

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Job DesignJob DesignJob DesignJob Design

Job Design refers to grouping tasks into specific jobs, in order to obtain a division of labor between workers that is effective and efficient.– Job simplification: reduction of the tasks

each worker performs; eac o e pe o s;– Job enlargement: increasing tasks for a

given job in order to reduce boredom;– Job enrichment: increasing the degree of

responsibility a worker has over a job.

Job Characteristics Model Job Characteristics Model (1)(1)


Five characteristics:Skill i t l id f Skill variety: employee uses a wide range of skills

Task identity: worker involved in all tasks of job from beginning to end of the production process

Task significance: worker feels the task is Task significance: worker feels the task is meaningful to organization.

Autonomy: employee has freedom to schedule tasks and carry them out.

Feedback: worker gets direct information about how well the job is done.

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Task Significance

Skill VarietyTask Identity

Task Significance

Autonomy

Meaningfulnessof work

ResponsibilityResponsibilityfor Workfor Work

High:High:MotivationMotivation

PerformancePerformance

Feedback

OutcomesOutcomes

Knowledge ofKnowledge ofresults ofresults of

workwork

PerformancePerformanceSatisfactionSatisfaction

Flexible Work Arrangements Flexible Work Arrangements (1)(1)


Telecommuting: employees work at home and are linked to the workplace by computer;

Compressed work-week: employees work longer hours per day, but fewer days per week;

Flextime (flexible work hours):employees are Flextime (flexible work hours):employees are required to work a specific number of hours a week, but are free to vary those hours within certain limits.

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Job-sharing: the practice of having two or more people split a full-time job;

Contingent workers: temporary, freelance or contract workers whose employment is contingent upon demand for their services.

*** QUOTES ABOUT OUR COURSE ****** QUOTES ABOUT OUR COURSE ***Let’s look again!Let’s look again!

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Organizational Structure Organizational Structure ––Proposed QuotesProposed Quotes

GROUPSGROUPS 917917 andand 918918:: "Every"Every companycompany hashas twotwoorganizationalorganizational structuresstructures:: TheThe formalformal oneone isis writtenwritten onon thethechartscharts;; thethe otherother isis thethe everydayeveryday relationshiprelationship ofof thethe menmenandand womenwomen inin thethe organizationorganization.."" -- HaroldHarold SS.. GeneenGeneen

GROUPGROUP 920920:: “I“I trytry toto motivatemotivate peoplepeople andand alignalign ourourindividualindividual incentivesincentives withwith organizationalorganizational incentivesincentives.. AndAndthenthen letlet peoplepeople dodo theirtheir bestbest..”” –– JohnJohn LiuLiuthenthen letlet peoplepeople dodo theirtheir bestbest.. JohnJohn LiuLiu

GROUPGROUP 922922:: "You"You havehave to,to, inin youryour ownown life,life, getget peoplepeople totowantwant toto workwork withwith youyou andand wantwant toto helphelp youyou.. TheTheorganizationalorganizational chart,chart, inin mymy opinion,opinion, meansmeans veryvery littlelittle.. IIneedneed mymy bosses'bosses' goodwill,goodwill, butbut II needneed thethe goodwillgoodwill ofof mymysubordinatessubordinates eveneven moremore.."" -- LloydLloyd BlankfeinBlankfein

THANK YOU.THANK YOU.andandand…and…

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Documents

Management Course 6