MODULE 13

ORGANIZATION STRUCTURES

“It’s all about working

together”

• What is organizing as a
managerial responsibility?
• What are the most common types
of organization structures?
ORGANIZATION STRUCTURES

Organizing As A Management Responsibility

MODULE GUIDE 13.1

 Organizing is one of the management

functions.
 Organization charts describe the formal
structures of organizations.
 Organizations also operate with important
informal structures.
 Informal structures have good points and
bad points.
ORGANIZATION STRUCTURES

Organizing As A Management Responsibility

 Organizing
 process of arranging people and resources to work
toward a common goal.
ORGANIZATION STRUCTURES

Organizing As A Management Responsibility

 Structure
 system of tasks, reporting relationships, and communication that links
people and positions within an organization.
 Organization Charts
 describe the formal structure, how an organization should ideally work.
ORGANIZATION STRUCTURES

Organizing As A Management Responsibility

 What You Can Learn from an Organization Chart

 Division of work - Positions and titles show work responsibilities.

 Supervisory relationships - Lines between positions show who reports to whom

in the chain of command.

 Span of control - The number of persons reporting to a supervisor.

 Communication channels - Lines between positions show routes for formal

communication flows.

 Major subunits - Which job titles are grouped together in work units,
departments, or divisions.

 Staff positions - Staff specialists that support other positions and parts of the
organization.

 Levels of management - The number of management layers from top to bottom.

ORGANIZATION STRUCTURES

Organizing As A Management Responsibility

 Division of Labor
 People and groups performing different jobs
 Formal Structure
 The official structure of the organization
 Informal Structure
 the unofficial relationships that develop
among an organization’s members.
ORGANIZATION STRUCTURES

Organizing As A Management Responsibility

ORGANIZATION STRUCTURES

Organization Structures
MODULE GUIDE 13.2

 Functional structures group together people using

similar skills.
 Divisional structures group together people by products,
customers, or locations.
 Matrix structures combine the functional and divisional
structures.
 Team structures use many permanent and temporary
teams.
 Network structures extensively use strategic alliances
ORGANIZATION STRUCTURES

Functional Structures
 Departmentalization
 Grouping together people and jobs into one unit
 Functional Structures
 group together people using similar skills to perform similar activities.

Potential Advantages of Functional Structures

• Economies of scale make efficient use of human resources.

• Functional experts are good at solving technical problems.
• Training within functions promotes skill development.
• Career paths are available within each function.
ORGANIZATION STRUCTURES

Functional Structures
ORGANIZATION STRUCTURES

Functional Structures

 Functional Chimneys Problem

 A lack of communication and coordination
across functional organizations
ORGANIZATION STRUCTURES

Divisional Structures

 Divisional structures group together

people who work on a similar product,
work in the same geographical region, or
serve the same customers.
Potential Advantages of Divisional Structures
•Expertise focused on special products, customers,
regions
•Better coordination across functions within divisions
•Better accountability for product or service delivery
•Easier to grow or shrink in size as conditions change
ORGANIZATION STRUCTURES

Divisional Structures
ORGANIZATION STRUCTURES

Customer & Matrix Structures

 Customer Structure
 Groups together people and jobs that serve
the same customers or clients
 Matrix Structure
 uses permanent cross functional teams to
try to gain the advantages of both the
functional and divisional approaches.
ORGANIZATION STRUCTURES

Matrix Structures

Potential Advantages of Matrix Structures

 Performance accountability rests with program, product, or project managers.
 Teams enable better communication and cooperation across functions.
 Teams make more decisions and solve more problems at their levels.
 Top managers spend more time on strategic issues.
 A cross-functional team brings together members from different functional departments.
ORGANIZATION STRUCTURES

Team Structures
 Team Structures
 make extensive use of permanent and temporary
teams, often cross functional, to improve
communication, cooperation, and problem solving.

Potential Advantages of Team Structures

•Team assignments improve communication, cooperation, and
decision-making.
•Team members get to know each other as persons, not just job
titles.
•Team memberships boost morale, and increase enthusiasm and
task involvement.
ORGANIZATION STRUCTURES

Team Structures
ORGANIZATION STRUCTURES

Network Structures
 Network structures maintain a staff of core fulltime
employees and use contracted services and strategic
alliances to accomplish many business needs.
ORGANIZATION STRUCTURES

Virtual Structures
 Virtual Structure
 Uses information technologies to operate as a
shifting network of alliances.

MANAGEMENT TIPS
Seven deadly sins of outsourcing:
1. Outsourcing activities that are part of the core competency
2. Outsourcing to untrustworthy vendors
3. Agreeing to unfavorable contracts with the vendor
4. Overlooking impact on existing employees
5. Not maintaining oversight; losing control to vendors
6. Overlooking hidden costs of managing contracts
7. Failing to anticipate need to change vendors or cease outsourcing