Chapter 6 – Organizational Structure

and Communication
McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Principles of Organization

 Organizational structure - The way

managers design their firms to achieve
their organization’s mission and goals.

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Principles of Organization

 Division of Labor and

Departmentalization
– Division of labor - Degree to which tasks
are subdivided into separate jobs.
– Specialization can lead to efficiency and
increased performance, but if jobs become
too specialized and boring, performance
can decrease.
– Departmentalization – Grouping of related
activities into units.

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Principles of Organization

 Chain of Command
– Line of authority from the top to the bottom
of the organization.
– Tells you who your boss is and who to go to
for help.
– To work quickly, employees at all levels
need to communicate directly, and who the
boss is can change according to the task to
be performed.

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Principles of Organization

 Span of Management
– It is the number of employees reporting to
a manager.
– The number of employees reporting to one
manager affects the number of levels of
managers.
– With downsizing, the trend has clearly been
to increase the span of management.

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Principles of Organization

 Centralized and Decentralized Authority

– With centralized authority, top managers
make important decisions.
– With decentralized authority, middle and
first-line managers make important
decisions where the action is.
– Decentralization allows more input into
decision making and greater employee
commitment to carrying out the decisions.

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Principles of Organization

 Coordination
– With the division of labor and
departmentalization comes the need to
coordinate the work of all departments.
– Is difficult with wider spans of management
and decentralization.

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Exhibit 6.2 - Organization
Chart

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Common Types of
Departmentalization

 Functional Departmentalization
– Involves organizing departments around
essential input activities, such as production
and operations, finance and accounting,
marketing and sales, human resources.
 Product (Service) Departmentalization
– Involves organizing departments around
goods and services provided.

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Common Types of
Departmentalization

 Customer Departmentalization
– Involves organizing departments around
the needs of different types of customers.
 Territory (Geographic)
Departmentalization
– Involves organizing departments in each
area in which the enterprise does business.

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Common Types of
Departmentalization

 Divisional Departmentalization (M-

Form)
– The firm develops independent lines of
business that operate as separate
companies, all contributing to the
corporation profitability.

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Common Types of
Departmentalization

 Matrix Departmentalization
– Combines the functional and product
departmentalization structures.
– Its flexibility is a major advantage.
 Combination
– Many large companies have more than one
form of departmentalization.

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Contemporary Organization

 Team organizations and reengineering

– Contemporary organizations are using
teams as a central coordinating
organizational principle.
– The coordinating focus is horizontal rather
than vertical.
– Cross-functional teams have members
from different departments to coordinate
tasks between departments.

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Contemporary Organization

 Team organizations and reengineering

– Reengineering is the redesign of work to
combine fragmented tasks into streamlined
processes that save time and money.

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Contemporary Organization

 Virtual organizations
– They are also called network organizations
because of the need for a good network of
vertical inter-organizational relationships.
– It outsources major business functions and
focuses on core competencies.
– Core competencies are the functions an
organization does well.

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Contemporary Organization

 Boundaryless organizations
– Break down vertical and horizontal barriers
within the firm and between the firm and
its suppliers and customers.
– Use an outsourcing network.
– Include the characteristics of learning
organizations, team organizations, and e-
organizations.

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Contemporary Organization

 e-Organizations
– Use e-business.
– Communicate over the Internet, Intranets,
and Extranets.
– All employees can quickly and easily get
information from sources both inside and
outside the organization to break down
boundary barriers.

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Contemporary Organizations
Affect Human Relations

 Human relations are changing in the

global economy with contemporary
organizations.
 Face-to-face team meetings are not
common in international business.
 Virtual meetings are being held
regularly over the Internet with e-
written communications.
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Organizational
Communication

 Is the compounded interpersonal

communication process across an
organization.
 The interpersonal communication
building blocks affect the organization’s
performance.

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Vertical Communication

 The flow of information is both up and

down the chain of command and is
called as formal communication.
 Downward communication – The
process of higher-level management
telling those below them what to do.
 Upward communication - Employees
send a message to their manager.
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Horizontal Communication

 The flow of information is between

colleagues and peers.
 Most messages processed by an
organization are carried via informal
channels.
 Also called as informal communication
or lateral communication.

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Grapevine Communication

 The grapevine is the informal vehicle

through which messages flow
throughout the organization.
 To help prevent incorrect rumors, keep
the information flowing through the
grapevine as accurate and rumor-free
as possible.

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Communication Networks

 Are sets of employees who have stable

contact through which information is
generated and transmitted.
 Two major types of communication
networks are those within organizations
and those within departments and
small groups.

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Exhibit 6.3 - Small Group
Communication Networks

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Oral Communication Media

Face-to-Face Telephone

Meetings Presentations

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Written Communication

 Is appropriate for sending general

information; messages requiring future
action; and formal, official, or long-
term messages.
 Common channels include memos,
letters, reports, bulletin board notices,
posters, computers/e-mail, and fax.
 Should follow grammar, syntax, and
writing rules.
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Nonverbal Communication

Facial Vocal
Expressions Qualities

Gestures Posture

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Emotions

 There are six universal emotions—

happiness, surprise, fear, sadness,
anger, and disgust.
 Emotional labor
– Requires the expression of desired
emotions during interpersonal relations.
– Managers give speeches to emotionally
charge employees and motivate them to
increase performance.

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Emotions

 Understanding feelings
– Feelings are subjective; they tell you
people’s attitudes and needs.
– Feelings are usually disguised as factual
statements.
– Feelings are neither right nor wrong but
behavior is.

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Emotions

 According to research, women are

more emotional than men because:
– Girls are socialized to be nurturing and to
show emotions.
– Women may be genetically better at
dealing with emotions.
– Women may have a greater need for social
approval.

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Emotions

 Global differences
– Some cultures lack words to express
feelings such as anxiety, depression,
sadness, and guilt, and they interpret the
same emotions differently.
– Emotional labor expectations vary
culturally.

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Dealing with Emotional
Employees

 Calm the emotional person by

encouraging them to express their
feelings in a positive way.
 Use empathic listening.
 Do not agree or disagree with the
feelings; identify them verbally with
reflecting responses, paraphrasing the
feeling to the employee.
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Criticism

 People do not enjoy being criticized,

even when it is constructive.
 When you get criticism, whether you
ask for it or not, view it as an
opportunity to improve, stay calm, and
don’t get defensive.

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Guidelines for Giving
Effective Criticism

 Give more praise than criticism.

 Criticize immediately.
 Criticism should be performance
oriented.
 Give specific and accurate criticism.
 Open on a positive note and close by
repeating what action is needed.

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