Chapter 4: Fundamentals of Organizational Structures Flashcards
Organizational Structure:
- Designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors (span control - how many people report to you)
- Identifies the grouping together of individuals into departments and of departments into the total organization;
- Includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments.
Vertical linkages
communication and coordination activities connecting the top and bottom of an organization
Hierarchical referral
chain of command - a formal line of authority in a hierarchy
Rules and Plans
rules or procedures can be established so employees know how to respond without communicating directly with their manager
Vertical Information Systems
the periodic reports, written information, and computer-based communication distributed to managers
Horizontal Linkages
overcomes barriers between departments and provides opportunities for coordination among employees to achieve unity of effort and organizational objectives
Information systems
computerized information systems can enable managers or workers throughout the organization to routinely exchange information about problems, opportunities, activities, or decisions
Direct contact
direct contact between managers or employees
Liaison role
the function of a person located in one department who is responsible for communicating and achieving coordination with another department
Task forces
a temporary committee composed of representatives from each department affected by a problem
Full-Time Integrator
a position or department created solely to coordinate several departments
- Ex - product manager, program manager, brand manager, (located outside the departments being coordinated)
Teams
permanent task forces often used in conjunction with a full-time integrator
Relational coordination
frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge, and mutual respect
Virtual cross-functional teams -
- teams comprising individuals from different functions who are separated in space and time as well
Virtual team
made up of organizationally or geographically dispersed members who are linked through advanced information and communication technologies, members frequently use the internet and collaborative software to work together rather than meet face to face
Organizational Design Alternatives:
- Required work activites - departments are created to perform tasks considered strategically important
- Reporting relationships (chain of command) - links all persons in an org shows who reports to who
- Departmental grouping - employees share a common supervisor and resources, collaborate with one another
Functional grouping -
The placing together of employees who perform similar functions or work processes, or who bring similar knowledge and skills t bear on a task
Divisional grouping
a grouping in which people are organized according to what the produces
Multifocused grouping
a structure in which an organization embraces structural grouping alternatives simultaneously
Horizontal grouping
the organizing of employees around core work processes rather than by function, product, or geography
Virtual network grouping
organization that is loosely connected cluster of separate components
Functional Structure:
the grouping of activities by common function
- Ex - R&D dep, manufacturing, accounting marketing
Functional Structure
- pros
- Economies of scale, efficient
- In-depth knowledge and skill development
- Organization can accomplish functional goals
- Best with only one or a few products
- Improve agility by adding more horizontal linkages (direct contact)
Functional Structure
- Cons
- Slow response to changes in the environment
- Decisions can pile up: hierarchy overload
- Poor horizontal communication
- Less innovation
- Causes restricted views of company goals
Divisional Structure:
- The structuring of the organization according to individual products, services, product groups, or profit centers; also called product structure or strategic business units
- Decentralized decision making
- Each product has their own departments: marketing, accounting, etc.
Divisional Structure
- pros
- Suits fast change, unstable environment
- High coordination across functions
- Units adapt to different customers, regions, products
- Improves customer satisfaction
- Decentralizes decision-making
- Best for large orgs with multiple products
Divisional Structure
- Cons
- Eliminates economies of scale in functional departments
- Poor coordination across product lines
- Reduces specialization and in-depth competence
- Integration and standardization across product lines is difficult
Geographical Structure
splitting up different regions of the country who may have distinct tastes and needs
Matrix Structure
A strong form of horizontal linkage in which both product and functional structures (horizontal and vertical) are implemented simultaneously
Conditions for the matrix
- Pressure exists to share scare resources across product lines
- Environmental pressure exists for two or more critical outputs, such as for in-depth technical knowledge (functional structure) and frequent new products (divisional structure)
- The environmental domain of the organization is both complex and unstable
Functional matrix
a structure in which functional bosses have primary authority, and product or project managers simply coordinate product activities.
Product matrix
a variation of the matrix structure in which project or product manager have primary authority, and functional managers simply assign personnel to projects and provide advisory expertise
Matrix Strengths
- Achieves coordination necessary to meet dual demands from consumers
- Flexible sharing of human resources across products
- Suited to complex decisions and frequent changes in unstable environment
- Provide opportunity for both functional and product skill development
- Best in medium-sized organizations with multiple products
Product Matrix - Weakness
- Causes participants to experience dual authority, which can be frustrating and confusing
- Means participants need good interpersonal skills and extensive training
- Is time consuming; involves frequent meetings and conflict resolution sessions
- Will not work unless participants understand it and adopt collegial rather than vertical type relationship
- Requires great effort to maintain power balance
Horizontal Structure
A structure that virtually eliminates both the vertical hierarchy and departmental boundaries by organizing teams of employees around core work processes; the end-to-end work, information, and material flows that provide value directly to customers
Re-engineering
redesigning a vertical organization along its horizontal workflows and processes
Process
organized group of related tasks and activities that work together to transform inputs into outputs that create value for customers
Horizontal Structure Characteristics
- created around cross-functional core processes
- self directed teams
- team members are given skills, tools - they are cross trained
- teams have freedom to think creativly and flexability
- culture is on of openess and trust
Horizontal structure strengths
- Promotes flexibility and rapid responses to changes in customer needs
- Directs attention of everyone toward the production and delivery value to the customer
- Each employee has a broader view of organizational goals
- Promotes a focus on teamwork and collaboration
- Improves quality of like from employees by offering them the opportunity to share responsibility, make decisions, and be accountable for outcomes
Horizontal structure weaknesses
- Determines core processes is difficult and time consuming
- Requires changes in culture, job design, management philosophy, and information and reward systems
- Traditional managers may balk when they have to give up power and authority
- Requires significant training of employees to work effectively in a horizontal team environment
- Can limit in depth-skill development
Virtual Network Structure:
the organization that is loosely connected cluster of separate components. The firm subcontracts many or most of its major processes to separate companies and coordinates their activities from a small headquarters organization
Outsourcing
contracting out certain functions, such as manufacturing, information technology, or credit processing, to other organization
Virtual network
- Strengths
- Enables even small organizations to obtain talent and resources worldwide
- Gives a company immediate scale and reach without huge investments in factories, equipment, or distribution facilities
- Enables the organization to be highly flexible and responsive to changing needs
- Reduces administrative overhead cost
Virtual network
- weaknesses
- Managers do not have hands on control over many activities and employees
- Requires a great deal or time to manage relationships and potential conflicts with contract partners
- There is a risk of organizational failure if a partner fails to deliver or goes out of business
- Employee loyalty and organizational culture might be weak because employees feel they can be replaced by contract services
Hybrid Structures
A structure that combines characteristics of various structural approaches (functional, divisional, geographical, horizontal) tailored to specific strategic needs
Symptoms of Structural Deficiency
Signs of the organization structure being out of alignment, including delayed or poor-quality decision making, failure to respond innovatively to environmental changes, and too much conflict
