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06 OrganizationalStructures

The document outlines key principles of organizational structures, including common elements such as purpose, coordinated effort, and hierarchy of authority. It discusses various organizational structures like functional, product, customer, geography, and matrix organizations, as well as team-based and modular structures. Additionally, it addresses factors impacting organizational design, trends in job design, and the growth cycle of organizations.

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6 views17 pages

06 OrganizationalStructures

The document outlines key principles of organizational structures, including common elements such as purpose, coordinated effort, and hierarchy of authority. It discusses various organizational structures like functional, product, customer, geography, and matrix organizations, as well as team-based and modular structures. Additionally, it addresses factors impacting organizational design, trends in job design, and the growth cycle of organizations.

Uploaded by

18-QADEER AHMAD
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Principles of Management

Module 6: Organizational Structures


The Purpose of Organization
Common Elements

• Common Purpose. Unifies


employees and helps them
understand organization’s direction
• Coordinated Effort. Maximizes
resources with the common
purpose in mind- managers need
to leverage employee skills and
experiences
• Specialization and the Division of
Labor
Common Elements Continued

• Hierarchy of Authority: Determines formal, position-based reporting lines and


expresses who reports to whom
• CEO, business sales, office staff, customer service
• Centralization and Decentralization: Degree to that decision making is
concentrated to the top of the organization (key decisions made by
executive team)
• Formalization: Extent to which jobs within an organization are standardized
Common Organizational Structures
Departmentalization

• Functional Structure
• Groups employees based on their expertise (e.g., operations and finance)
• Generally used to allow for a higher degree of specialization
• Product Structure
• Groups employees based on product lines (e.g., aviation and transportation)
• Generally used in organizations with multiple products
• Customer Structure
• Groups employees based on which customers they do their work for (e.g., outpatient
and urgent care)
• Generally used in organizations that have products or services unique to specific
market segments
• Geography Structure
• Groups employees based on their physical location
• Generally used in large organizations that span multiple regions
Matrix Organizations

• Organized by two
dimensions (e.g., product
and geography)
• Each employee will have
two “bosses”
• Combines the localization
benefits of the geography
structure with those of the
functional structure.
• Advantage: Provides both
flexibility and more
balanced decision making
• Disadvantage: Complexity
which can lead to confusion
Team-based Structures, Networks, and Modular
Organizations
• Team-based Structure. Focused on a few objectives and usually disbanded
at project’s end
• Team. Made up of people with complementary skills who are working toward
a common purpose- created by grouping employees in a way that
generates a variety of expertise
• Network Structure. Little bureaucracy and features decentralized decision
making- holacracy which attempts to achieve control and coordination by
distributing power
• Modular Organizations. Business that has areas that can be easily separated
from company without jeopardizing it
Factors Impacting Organizational Design
External and Internal Environment

• External • Internal
• Greater external forces, greater • Skill variety: degree to which job
complexity of external environment requires use of high-level skills
• Task identity: degree to which person
is in charge of completing work
• Task significance: degree to which
person’s job affects customers
• Autonomy: degree to which person
has freedom to perform their tasks
• Feedback: degree to which people
learn how effective they are being
Growth Cycle

1. Creativity. Marked by early growth of company due to emphasis on


product creation
2. Direction. Installs functional organizational structure with formal
communication
3. Delegation. Marked by application of decentralized organizational
structure
4. Coordination. Merging of local units into product groups and establish
formal planning procedures
5. Collaboration. Takes collaboration with key leaders, managers, and
employees to create better structure
Class Activity: Organization Design

• Design an organizational structure for the following hypothetical businesses:


• A mature manufacturing company with a narrow product line and customers world-
wide.
• A startup software company.
• An apparel company with five brand businesses distributed internationally,
• A media company composed of several acquisitions with business focused on TV,
film, internet and a streaming service.
Current Trends in Organization and Job
Design
Understanding Current Trends in Organization and
Job Design
• Flatter Organizational Structures: focuses on horizontal growth, digging
deeper, expanding knowledge, and getting better at core competencies
• Employee Empowerment: trust employee’s ability and give them the
authority to make decisions
• Flexible work arrangements- reduced workload, compressed work weeks, and remote
work
Practice Question 2

Studies have shown the recent trend of self-organizing teams, flexible work
hours, employee empowerment, and flatter organizations fosters which of the
following benefits?

1. Enhanced employee job satisfaction.


2. Increased employee engagement.
3. Improved customer service.
4. Increased productivity.
Quick Review

• Can you correctly explain the efficiencies created by specialization and


division of labor?
• Are you now able to describe characteristics of organizational structures?
• Please list Edgar Schein’s four common elements of an organization
• Can you differentiate between four basic types of departmentalization?
• Are you able to differentiate between team-based structures?
• Please distinguish matrix organizations from traditional departments
More Quick Review

• Can you correctly identify aspects of the external/internal environment that


influence the design of an organization’s structure?
• Please explain how business growth cycle affects organization
• Can you explain the advantages of flatter organizational structures?
• Please explain the benefits of employee empowerment
• Are you able to explain the trend toward flexible work schedules?

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