Chapter 7 - Designing organizational structure. The main goals of this chapter are to: Identify the factors that influence managers’ choice of an organizational structure; explain how managers group tasks into jobs that are motivating and satisfying for employees; describe the types of organizational structures managers can design, and explain why they choose one structure over another; | Designing Organizational Structure Chapter Seven Learning Objectives LO7-1 Identify the factors that influence managers’ choice of an organizational structure LO7-2 Explain how managers group tasks into jobs that are motivating and satisfying for employees LO7-3 Describe the types of organizational structures managers can design, and explain why they choose one structure over another LO7-4 Explain why managers must coordinate jobs, functions, and divisions using the hierarchy of authority and integrating mechanisms. Designing Organizational Structure Organizing The process by which managers establish the structure of working relationships among employees to achieve goals 3 Designing Organizational Structure Organizational Structure Formal system of task and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals 4 Factors Affecting Organizational Structure Figure The Organizational Environment The quicker the environment changes, the more problems face managers. Structure must be more flexible (., decentralized authority) when environmental change is rapid. Strategy Different strategies require the use of different 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 Technology The combination of skills, knowledge, tools, equipment, computers and machines used in the organization More complex technology makes it harder for managers to regulate the organization Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization 5 The Job Characteristics Model Figure Grouping Jobs into Functions Functional Structure An organizational structure composed of all the departments that an organization requires to produce its goods or services 7 Divisional Structures Divisional Structure An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer 8 Divisions create smaller, manageable parts of a firm Divisions develop a business-level strategy to compete Divisions have marketing, finance, and other functions Functional managers report to divisional managers who then report to corporate management Types of Divisional Structures Product Structure Each product line or business is handled by a self-contained division 9 Figure Product, Market, and Geographic Structures Global Geographic and Global Product Structures Figure Matrix Design Structure Matrix Structure An organizational structure that simultaneously groups people and resources by function and product 12 Matrix Structure Figure The matrix 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 13 Allocating Authority Line Manager someone in the direct line or chain of command who has formal authority over people and resources Staff Manager Someone responsible for managing a specialist function, such as finance or marketing. 14 Strategic Alliances Knowledge Management System A company-specific virtual information system that allows workers to share their knowledge and expertise and find others to help solve problems.
