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Organizational Structure
Organizational Architecture
The organizational structure, control systems,
culture, and human resource management systems that together determine how efficiently and effectively organizational resources are used.
Organizing
The process by which managers establish working
Organizational Structure
Formal system of task and reporting relationships
Organizational design
The process by which managers create a specific
type of organizational structure and culture so that a company can operate in the most efficient and effective way
Figure 10.1
problems face managers. Structure must be more flexible (i.e., decentralized authority) when environmental change is rapid.
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structures.
- A differentiation strategy needs a flexible structure, low
cost may need a more formal structure. - Increased vertical integration or diversification also requires a more flexible structure.
equipment, computers and machines used in the organization. More complex technology makes it harder for managers to regulate the organization.
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teams usually need a more flexible structure. Higher skilled workers (e.g., CPAs and doctors) often have internalized professional norms and values.
Human Resources
Managers must take into account all four factors
(environment, strategy, technology and human resources) when designing the structure of the organization.
Job Design
Job Design
The process by which managers decide how to
divide tasks into specific jobs. The appropriate division of labor results in an effective and efficient workforce.
Job Design
Job Simplification
The process of reducing the tasks each worker
performs.
- Too much simplification and boredom results.
Job Design
Job Enlargement
Increasing the number of different tasks in a given
Job Enrichment
Increasing the degree of responsibility a worker has
over a job
Job Enrichment
1. 2. 3. 4.
Empowering workers to experiment to find new or better ways of doing the job Encouraging workers to develop new skills Allowing workers to decide how to do the work Allowing workers to monitor and measure their own performance
Source: Adapted from J. R. Hackman and G. R. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980).
Figure 10.2
Function
Group of people, working together, who possess
similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs
Functional Structure
An organizational structure composed of all the
Functional Structure
Advantages
Encourages learning from others doing similar jobs.
Easy for managers to monitor and evaluate
workers. Allows managers to create the set of functions they need in order to scan and monitor the competitive environment
Functional Structure
Disadvantages
Difficult for departments to communicate with
others. Preoccupation with own department and losing sight of organizational goals.
Figure10.3
Divisional Structures
Divisional Structure
Managers create a series of business units to
Figure 10.4
Product Structure
Managers place each distinct product line or
business in its own self-contained division Divisional managers have the responsibility for devising an appropriate business-level strategy to allow the division to compete effectively in its industry
Product Structure
Allows functional managers to specialize in one product area Division managers become experts in their area Removes need for direct supervision of division by corporate managers Divisional management improves the use of resources
Geographic Structure
Divisions are broken down by geographic location
world regions where the organization operates. Generally, occurs when managers are pursuing a multi-domestic strategy
deciding where to manufacture its products and how to market them in foreign countries worldwide
Figure 10.5
Market Structure
Groups divisions according to the particular kinds of
customers they serve Allows managers to be responsive to the needs of their customers and act flexibly in making decisions in response to customers changing needs
Matrix Structure
An organizational structure that simultaneously
groups people and resources by function and product. - Results in a complex network of superiorsubordinate reporting relationships. - The structure is very flexible and can respond rapidly to the need for change. - Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy both.
Matrix Structure
Figure 10.6
two-boss managers Functional employees are permanently assigned to a cross-functional team that is empowered to bring a new or redesigned product to work
Figure 10.6
Hybrid Structures
Hybrid Structure
The structure of a large organization that has many
Figure 10.7
Authority
The power vested in a manager to make decisions
and use resources to achieve organizational goals by virtue of his position in an organization
Hierarchy of Authority
An organizations chain of command, specifying the
Allocating Authority
Line Manager Someone in the direct line or chain of command who has formal authority over people and resources Staff Manager Managers who are functional-area specialists that give advice to line managers.
Figure 10.8
Tall structures have many levels of authority and narrow spans of control.
As hierarchy levels increase, communication gets
difficult creating delays in the time being taken to implement decisions. Communications can also become distorted as it is repeated through the firm. Can become expensive
Tall Organizations
Figure 10.9
Flat Organizations
Figure 10.9
with the fewest levels of authority necessary to efficiently and effectively use organizational resources
Decentralizing authority
giving lower-level managers and non-managerial
employees the right to make important decisions about how to use organizational resources
Decentralizing Authority
Disadvantages
Teams may begin to pursue their own goals at the
Integrating Mechanisms
Figure 10.10
Organizational Culture
Organizational culture
shared set of beliefs, expectations, values, and
norms that influence how members of an organization relate to one another and cooperate to achieve organizational goals
Figure 10.11
Ultimate source of organizational culture is the people that make up the organization Members become similar over time which may hinder their ability to adapt and respond to changes in the environment
Organizational Ethics
Organizational Ethics
moral values, beliefs, and rules that establish the
appropriate way for an organization and its members to deal with each other and people outside the organization
Employment Relationship
achieve the organizations goals, How attached they will be to it Whether or not they will buy into its values and norms
Organizational Structure
In a centralized organization:
people have little autonomy
norms that focus on being cautious, obeying
authority, and respecting traditions emerge predictability and stability are desired goals
Organizational Structure
their own activities norms that focus on being creative and courageous and taking risks appear gives rise to a culture in which innovation and flexibility are desired goals.
Adaptive cultures
values and norms help an organization to build
momentum and to grow and change as needed to achieve its goals and be effective
Inert cultures
Those that lead to values and norms that fail to
motivate or inspire employees Lead to stagnation and often failure over time
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