Chapter 8: Organization Structures and Design
ORGANIZATION AS A MANAGEMENT FUNCTION
Organizing: arranges people and resources to work toward a goal
What is Organization Structure:
Organization structure: is a system of tasks, reporting relationships and communication linkages
• Structure should:
- allocate tasks through division of labour
- provide for the coordination of performance results
Organization Chart: describes the arrangement of work positions within an org.
• identifies various positions and job titles, lines of authority and comm. between them
Formal structure: is the official structure of the org.
Learn the basics of an org.'s formal structure:
• Division of work
• Supervisory relationships
• Communication channels
• Major subunits
• Levels of management
Informal structure: is the set of unofficial relationships among an org.s members
• shows who talks to who, regardless of titles and relationships
Social Network Analysis: identifies the informal structures and their embedded social relationships that are active in an
• draw with lines running from person to person according to the frequency and type of relationship maintained
• during times of change
• out‐of‐date formal structures may fail to provide the support people need to deal with new or unusual situations
• allow people to make contacts with others who can help them get things done
• sources of emotional support and friendship that satisfy important social needs
• susceptible to rumor
• carry inaccurate info.
• breed resistance to change
• divert work efforts from important objectives
• Economies of scale with efficient use of resources.
T• Task assignments consistent with expertise and training.
Departmentalization: is the process of grouping people and jobs into work units
• In‐depth training and skill development within functions. 1
• Clear career paths within functions 3 types of org.al structures
1. Functional Structures: groups people together with similar skills who perform similar tasks
• difficulties in pinpointing responsibilities for things like cost containment, product or service quality, and innovation
Functional Chimneys Problem: is a lack of communication and coordination across functions
• sense of common purpose gets lost to self‐centered and narrow viewpoints
• slows decision‐making
• harm organizational performance
2. Divisional Structures
Divisional Structures: groups together people working on the same products, in the same area, with similar customers or
on the same processes
Product Structures: groups people and jobs together focused on a single product or service
Geographical Structures: groups people and jobs together performed in same location
Customer Structures: groups people and jobs together that serve the same customer or clients
Work Process: is a group of related tasks that collectively creates a valuable work product
Process Structure: groups jobs and activities together that are part of the same processes
• More flexibility in responding to environmental changes.
• Improved coordination across functional departments.
• Clear points of responsibility for product or service delivery.
• Expertise focused on specific customers, products, and regions.
• Greater ease in changing size by adding or closing down divisions.
• reduce economies of scale and increase costs through the duplication of resources and efforts across divisions
• unhealthy rivalries as divisions compete for resources and top management attention, and emphasize division needs to
the detriment of the goals of the org. as a whole
3. Matrix Structure:
Matrix Structure: combines the functional and divisional approaches to emphasize project or program teams
2 • Better cooperation across functions
• Increased flexibility in adding, removing, or changing operations to meet changing demands.
• Better customer service
• Better performance accountability through the program, product, or project managers.
• Improved strategic management
• susceptible to power struggles, as functional supervisors and team leaders vie with one another to exercise authority
• creates task confusion and conflicting work priorities
• Team meetings takes lots of time
• higher costs
HORIZONTAL ORGANIZATION STRUCTURES
Team Structures: uses permanent and temporary cross-functional teams to improve lateral relations
Cross-Functional Teams: brings member