Business Administration 1220E Lecture 7: Organizational Behaviour: Structure
17 May 2018
School
Department
Professor
Basic Forms
Functional
Organizations are divided into units that perform similar functions
Example: marketing department, finance department
○
•
Each department becomes differentiated and adopts similar values, goals and
orientation
May make coordination with other departments more difficult
○
•
Organized by the inputs to the organization
•
Works for small to medium organizations that produce a single or closely
related set of products/services
•
Advantages
Disadvantages
Resources are used efficiently
no duplication of resources/efforts
•
Typically poor intergroup
coordination
Professional development is promoted
Group members can learn from one
another
•
Goals of the organization
can often become
secondary to the goals of
the group
Comfortable setting for socialization & evaluation
Ease of interaction due to similar interests
and backgrounds
•
Evaluations are conducted by someone
knowledgeable in the area
•
Organization tends to be
more formalized and less
flexible, as work is divided
between functions
There is diffuse
accountability for the final
product/service of the
organization
Divisional
Organized by the outputs the organization produces •
Each division contains all the functional areas necessary to serve its specified
market
•
Can be organized by set of products, geographical markets, or clients•
Excellent when the predominant goal of the organization is to respond
effectively to satisfy clients in a particular market segment
Since each division has the necessary complement of skills, it can respond
quickly to the changing needs of its market
○
•
Works best in medium to large organizations that operate in heterogeneous
environments and produce multiple products, serve different customers, and/or
sell products in different geographic regions
•
Advantages Disadvantages
Corporate control is more effective because
each division can be held accountable for its
own performance
Often duplication of
resources
Good coordination of activities
Everyone who is responsible for a single
product is grouped together and the
groups are relatively small
•
Professional development is
not as clear in terms of
developing specialized
talents
More attention towards organizational goal
rather than individual functional group goals
Loss of "economies of scale"
Increased flexibility
Organization can respond to changes in
their market by adding or deleting
divisions as required with little negative
impact on other parts of the organization
•
Setting for socialization &
evaluation is less
comfortable
Evaluations may
become problematic
because individuals
may be evaluated by
someone with little
expertise in their area
•
Matrix
Combines functional and divisional form•
Organization wants benefits of both functional and divisional forms
Deep technological expertise within functions
○
Coordination across functions
○
•
Employees maintain a “home-base” in a functional group while working on
projects for specific products, regions or clients
•
Works best when the organization:
faces environmental pressures from 2 sources, such as function and
product or function and region
○
Is in an uncertain and complex task environment
○
Requires economies of scale in the use of internal resources
○
•
Advantages Disadvantages
Adapts easily to a changing workload
Projects are added and deleted
as required
•
Relatively high cost
Tracking of individuals, constant
renegotiation for project
assignments
•
Resources are used efficiently
No need to duplicate specialists
across projects
•
Power struggles between project
groups and between project and
functional groups in determining
personnel assignments to tasks
Provides a home base for specialists
Expertise can be pooled•
Conflict for the individual on whether to
listen or be evaluated by the project
manager or functional manager
Flexibility for workers and variety in
their task assignments
High degree of dependency on
teamwork, which may not be preferred
for everyone
Promotes innovations
People with diverse
backgrounds are drawn
together on projects
•
Lack of stability in the work
environment for individuals
Owing to the constant change of
projects and considerable
variation in time demands
•
Holacracy
Seeks to distribute authority and decision making to those doing purpose driven
work
•
Uses a system of interlocking teams (circles) that form and disband based on
the work needing to be done
•
Makes companies more agile and to respond better to, and to be able to benefit
more from, the ongoing flux in the competitive environment
•
Advantages Disadvantages
Circles are linked and authority is
distributed
Keeps company lean and
adaptable
•
Everyone must agree before action is
taken
Structure
40
Business Administration 1220E Full Course Notes
Verified Note
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Document Summary
Organizations are divided into units that perform similar functions. Each department becomes differentiated and adopts similar values, goals and orientation. May make coordination with other departments more difficult. Works for small to medium organizations that produce a single or closely related set of products/services. Resources are used efficiently no duplication of resources/efforts. Ease of interaction due to similar interests and backgrounds. Evaluations are conducted by someone knowledgeable in the area. Goals of the organization can often become secondary to the goals of the group. Organization tends to be more formalized and less flexible, as work is divided between functions. There is diffuse accountability for the final product/service of the organization. Each division contains all the functional areas necessary to serve its specified market. Can be organized by set of products, geographical markets, or clients. Excellent when the predominant goal of the organization is to respond effectively to satisfy clients in a particular market segment.
