Fundamentals of Organization Structure

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0 Chapter Three Fundamentals of Organization Structure Thomson Learning © 2004 

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A Sample Organization Chart 

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Relationship of Organization The Design to Efficiency vs. Learning Outcomes Horizontal Organization Designed for Learning Horizontal structure is dominant * Shared tasks, empowerment * Relaxed hierarchy, few rules * Horizontal, face-to-face communication * Many teams and task forces tralized decision making || Vertical structure is dominant * Specialized tasks + Strict hierarchy, many rules * Vertical communication and reporting systems + Few teams, task forces or ۱ Dominant Structura Approach VerticabOraan Designed for Efficiency Thomson Learning © 2004 33 

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Ladder of Mechanisms for Horizontal Linkage and fp Coordination 22 = ها Amount of Horizontal Coordination Requires 6 Lo HG > Cost of Coordination in ee Time and Human Resources Thomson Learning © 2004 

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Project Manager Location in the Structure President ۱ 1 1 Finance | Engineering [Marketing| [Purchasing Department Pepartment Departmen! Pepartmen Financial laccountant| | Product 0/0 ‏و‎ ‎Market New Designer | JResearcher| Product A Buyer—}— Budget Analyst | raftsperso —ladwertising Iroject Manager Specialist_| New Buyer_| | Product 8 anagemen| lAccountant} |} Electrical elect Manager Designer Market New Planner Buyer_| ۵۵ Thomson Learning © 2004 3-5 

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Teams Used for Horizontal Coordination at Wizard Software Company President. 1 rogramming Vice Preg Marketing Vice Pres. Research Vice Pres ۲ ideogames Basic Researc logames Videogames Manager Chief Engineer Supervisor ‘ations and Testing Supervisor [Memory Products [[ Memory Products [|_| Memory Products | Sales Manager hief Programmer|] _ | Research Supervisor f Memory Products Tnternational Manager [ Customer Service 2-0-5 [Advertising Manager Manager Supervisor Thomson Learning © 2004 36 

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Structural Design Options for Grouping Employees into ۳۹ Departments DP —= ‏سب‎ 

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Strengths and Weaknesses of Functional Organization Structure = STRENGTHS: = WEAKNESSES: * Allows economies of = Slow response time to scale within functional environmental changes departments 5 50 * Enables in-depth May cause decisions to knowledge and skill pile on top, hierarchy development overload * Enables organization = Leads to poor horizontal to accomplish coordination among functional goals departments = Is best with only one = Results in less innovation or a few products = Involves restricted view of organizational goals *““Fhomson Learning © 2004 38 

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Strengths and Weaknesses of Divisional Organization Structure = WEAKNESSES: " Eliminates economies of scale in functional departments = Leads to poor coordination across product lines = Eliminates in-depth competence and technical specialization Makes integration and standardization across product lines difficult 39 = Suited to fast change in unstable environment Leads to client satisfaction because product responsibility and contact points are clear Involves high coordination across functions Allows units to adapt to differences in products, regions, clients Best in large organizations with several products Decentralizes decision-making Thomson Learning © 2004 8 STRENGTHS: Sure: ape fm Robt Duan, “Wit the ] ‏لس‎ 

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Reorganization from Functional Structure to Divisional Structure at ۳۹ Info-Tech Ep ae Cresta | Info-Tech President ace Virtual Autom ation Reality Electronic Publishing وا او | و | | ‎[rao‏ | واا وم | وا | ‎wate] [neo‏ ۱۱۱ | ] ۷۱ ۷ Thomson Learning © 2004 3-10 

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Structural Design Options for Grouping Employees fe (Continued) i ‏ىر‎ Thomson Learning © 2004 

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Structural Design Options for Grouping Employees fe (Continued) 

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Geographical Structure + for Apple Computer 

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Dual-Authority Structure in a Matrix Organization President Bz IT] Procure- Vice Controller ment _President_ ‏ال‎ al Es] Thomson Learning © 2004 

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otrengtns and Weaknesses of Matrix Organization Structure = STRENGTHS: = WEAKNESSES: * Achieves coordination = Causes participants to experience necessary to meet dual dual authority, which can be demands from customers __ frustrating and confusing Flexible sharing of human * Means participants need good resources across products __ interpersonal skills and extensive = Suited to complex training decisions and frequent —_* Is time consuming; involves frequent changes in unstable meetings and conflict resolution environment sessions = Provides opportunity for = Will not work unless participants both functional and understand it and adopt collegial product skill development _rather than vertical-type = Best in medium-sized relationships organizations with multiple * Requires great effort to maintain products power balance ‘Segntenton sruturer Deca Tees Anais Proves tneT HOMSON Learning Aawer"Orpuntationa Dynamics Winter 1979) 42 © 2004 3-15 

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Matrix Structure for Worldwide Steel Company 3۳۳1۳ ‏ون جع ام بمب‎ Mtg. ‏اديه‎ ‎Mfg. [Marketing Financ jetallurdsfeld Sal] “لي ععالا | | ۷6۵ | زک | عتلا | | الا | | معنا : ‎Vice |‏ لالت نعم ماله نكمم تر بر و يي لالت متعم مكلك تممه اله 0 لمم 1 ‎Open Die‏ ‎siness Mg‏ 0 ۶ ‎siness Mg‏ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎Thomson Learning © 2004 ‎ ‎ ‎ ‎ 

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‎Horizontal Structure‏ دز © © © 55 ‎CS ‏موس‎ tai Gate) ۳ 9 9 @ ‎ ‎ ‎ ‎10050 

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Strengths and Weaknesses of Horizontal Structure = STRENGTHS: = WEAKNESSES: * Flexibility and rapid response to * Determining core processes to changes in customer needs organize around is difficult Directs the attention of everyone _ and time-consuming toward the production and delivery Requires changes in culture, of value to the customer job design, management = Each employee has a broader view Philosophy, and information of organizational goals and reward systems * Promotes a focus on teamwork anti Traditional managers may balk collaboration—common when they have to give up commitment to meeting objectives Power and authority = Improves quality of life for * Requires significant training of employees by offering them the employees to work effectively opportunity to share responsibility, in a horizontal team make decisions, and be environment accountable for outcomes * Can limit in-depth skill development Source: Base on Fras Ost TheHanzstal Ogio at the ‏ا‎ THOMSON Learning sad Ricar Da Ocpeniaton Taco’ and Dene Set, © 2004 3-18 

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Hybrid Structure Part 1. Sun Petrochemical ۳۹ Products i Functional Structure Product - Structure 

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Human Resources Hybrid Structure Part 2. Ford Customer Service Division Vice President and General Manager Strategy and Finance ‘ommunicatio Technical Support Group Ant dept ont a tanapaty Campi ‏لسن سس‎ 0۳0500 Learning 3-20 04 هه Director and / ۲ rocess Owner Neem fehicle Service Grot Director and rocess Owner Director and rocess Owner Functional [Structure Horizontal Structure 

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Organization Contextual Variables that Influence Structure Strategy, Technology Goals 78 © ۱ للع جوم اندم ‎‘Chapters 4, 6‏ Thomson Learning © 2004 

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The Relationship of Structure to Organization’s Need for Efficiency vs. Learning Functional with ۱ ۱ Functionakross-functionalDivisional Matrix Horizon Modula Structurteams, integratorStructure Structu _ tal a ee ۰٩ ee | Horizontal: Coordinatio Dominan' a) n Structura See * Learning Approach| ۱ ‏نز‎ * Innovation * Efficiency ibility * Stability * Reliability Thomson Learning © 2004 3-22 

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Symptoms of Structural Deficiency = Decision making is delayed or lacking in quality = The organization does not respond innovatively to a changing environment = Too much conflict is evident Thomson Learning © 2004