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week 11 - Chapter 14 .docx

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Teal Mc Ateer

Chapter 14 – Organizational Structure What is Organizational Structure?  PETS  people, environment, tech, strategy/situation  The manner in which an organization divides its labour into specific tasks and achieves coordination among these tasks  To achieve its goals, an organization has to:  Divide labour among its members  Coordinate what has been divided Division of Labour (see teals #3)  Labour must be divided because everyone cannot do everything  Two dimensions: Horizontal and Vertical Vertical Division of Labour  Assigning authority for planning and decision making  “Who gets to tell whom what to do?”  Looking at the separation of those who perform tasks from those we administer/organize them  Autonomy  Domain of authority is decreased as the number of levels in the hierarchy increases  Communication  With more levels, communication and coordination are harder to achieve  President ----- Vice Presidents ----- Middle Managers ----- Supervisors ------ Worker  ^ vertical (president top/worker bottom)  more levels the more difficult proper communication is Horizontal Division of Labour • Groups the basic tasks that must be performed into jobs and then into departments so that the organization can achieve its goals • As the organization grows, horizontal division of labour increases • Implications for job design and degree of coordination • Making Goods ---- Selling Goods ---- Handling Finances ---- Dealing with Human Resources • Job Design Ex. an organization offers a product/service that consists of A work, B work, C work (fabrication, inspection, packaging) - must structure in three ways: o form an ABC Department in which all workers do ABC work o form ABC department in which workers specialize in A,B, or C o form a separate A, B and C department • Differentiation (departmentalized) – As horizontal division increases, so does differentiation – Tendency for managers in separate functions or departments to differ in terms of goals, styles, time etc. Departmentation  How to group jobs to make them effective  Core aspects of horizontal division of labour  Unit, section, group Functional Departmentation  Employees with closely related skills and responsibilities are assigned to the same department (e.g. Marketing, Finance, Production, HR)  Advantages:  Efficiency: Resources can be allocated more efficiently  Enhanced communication (p.465 ex.14.2) o President communicates directly to all vice president (R&D, marketing, Finance, production, HR)  Easier to measure and evaluate performance  Disadvantages:  High degree of differentiation between departments  Leads to poor coordination and slow response to organizational problems  Conflict between departments Product Departmentation  Departments are formed on the basis of a particular product, product line or service (e.g. shampoo division)  Advantages:  Better coordination and communication among functional specialists who work on particular product  Can be evaluated as profit centers (independent control centers)  Can serve the customer better  Disadvantages:  Economies of scale are threatened (p.466) o no sharing of resources, etc.  P  VP – hardware  R&D, production, marketing  P  VP – software  R&D, production, marketing Matrix Departmentation  Employees remain members of a functional department while also reporting to a product or project manager  Attempt to capitalize on strengths of other forms  Advantages:  Provides a degree of balance between the demands of the product or project and the people who do the work  Flexible  Better communication among the representatives of the various functional areas.  **Disadvantages:  Managers (product and functional) may not see eye to eye  Can create conflict (role conflict and stress) because employees must report to both product/project and functional managers. Other Forms of Departmentation  Geographic Departmentation  relatively self-contained units delver al organizations products or services in a specific geographic territory  Advantages: o Shortens communication channels, o caters to regional tastes o some local control to clients and customers Ex. national retailers, oil companies  Disadvantages: o Parallel those for product departmentation  P  VP – west coast region  marketing, production  P  VP – mid-west region  marketing, production  P  VP – east coast region  marketing, production  Customer Departmentation  self-contained units deliver an organizations g/s to specific customer groups  Advantages: o better service to each customer group through specialization  disadvantages: o parallel those for product departmentation  P  VP – industrial sales  marketing, production, finance  P  VP – gov’t sales  marketing, product, finance  Hybrid Departmentation  structure based on some mixture of functional, product, geographic, or customer Departmentation  Hybrids attempt to capitalize on the strengths of various structures while avoiding the weaknesses or others  P  talks to all deans, talks to all VPs, directors Coordinating Divided Labour  Coordination  a process of facilitating timing, communication and feedback among work tasks Least worker discreation 1. Direct supervision  Chain of command (designate managers/supervisors to coordinate work of subordinates) 2. Standardization of work processes  Routinization of tasks  Rules and regulations 3. Standardization of outputs  Physical or economic standards  Budgets 4. Standardization of Skills (groups of
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