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Chapter 7 and 8

Organizational Structure and Managing Change

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Designing Organizational Structure

• Organizing– The process by which managers establish the

structure of working relationships among employees to achieve goals

• Organizational Structure– Formal system of task and reporting relationships

that coordinates and motivates organizational members so that they work together to achieve organizational goals

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Factors Affecting Organizational Structure

Figure 7.1

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Job Design

Job Design The process by which managers decide how to

divide tasks into specific jobsJob Enlargement

Increasing the number of different tasks in a given job by changing the division of labor

Job Enrichment Increasing the degree of responsibility a worker

has over a job

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Departmentalization- by Function

Functional Structure An organizational structure composed of all the

departments that an organization requires to produce its goods or services

Advantages Encourages learning from others doing similar jobs Easy for managers to monitor and evaluate workers

Disadvantages Difficult for departments to communicate with others Preoccupation with own department and losing sight of

organizational goals

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Departmentalization: by Divisions

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

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Departmentalization: by Product Structure

Product Structure Each product line or business is handled by a self-

contained division

AdvantagesAllows functional managers to specialize in one product

areaDivision managers become experts in their areaRemoves need for direct supervision of division by

corporate managersDivisional management improves the use of resources

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Figure 7.4

Product, Market, and Geographic Structures

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Departmentalization: by Geographic

Geographic Structure Each region of a country or area of the world is

served by a self-contained divisionGlobal geographic structure

Managers locate different divisions in each of the world regions where the organization operates

Generally, occurs when managers are pursuing a multi-domestic strategy

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Departmentalization

Global Product Structure Each product division, not the country or regional

managers, takes responsibility for deciding where to manufacture its products and how to market them in foreign countries

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Global Geographic and Global Product Structures

Figure 7.5

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Departmentalization: By market

Market Structure Each kind of customer is served by a self-

contained division Also called customer structure

Matrix Structure An organizational structure that simultaneously

groups people and resources by function and product

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Matrix StructureFigure 7.6

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Product Team Structure

Product Team Structure Employees are permanently assigned to a cross-

functional team and report only to the product team manager or to one of his direct subordinates

Cross-functional team group of managers brought together from

different departments to perform organizational tasks

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Coordinating Functions and Divisions

Authority The power to hold people accountable for their

actions and to make decisions concerning the use of organizational resources

Hierarchy of Authority An organization’s chain of command, specifying

the relative authority of each manager

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Allocating Authority

Span of Control The number of subordinates that report directly to a

managerLine 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.

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Tall & Flat Organizations

Figure 7.9

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Tall & Flat Organizations

Figure 7.9

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Tall and Flat Organizations

Decentralizing authority giving lower-level managers and nonmanagerial

employees the right to make important decisions about how to use organizational resources.

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Organization Change

Organization Change Movement of an organization away from its present state and

toward some desired future state to increase its efficiency and effectiveness

Top-down change A fast, revolutionary approach to change in which top

managers identify what needs to be changed, decide what to do, and then move quickly to implement changes throughout the organization

Bottom-up change A gradual approach to change in which managers at all levels

work together to develop a plan for change

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Four Steps in the Organizational Change Process

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Description onOrganizational Change Process

1.Recognize the need for change: The change agent can use a variety of techniques to diagnose problems in need of changes to solve them.

2.Identify possible resistance to the change and plan how to overcome it: Follow the guidelines in step 1.

3.Plan the change interventions: Based on the diagnosis of the problem, the appropriate intervention must be selected.

4.Implement the change interventions: The change agent, or someone selected, conducts the intervention to bring about the desired change.

5.Control the change: Follow up to ensure that the change is implemented and maintained. Make sure the objective is met. If not, take corrective action.

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Resistance to Change and Ways to Overcome Resistance

Why employees resist change?

Uncertainty--- Fear of the unknown outcome of change

Learning anxiety--- Nervousness or fear of change that requires learning new ways of working

Self-interest--- People resist change that threatens their own self interest

Loss --- Lost job or change in salary/benefits

Control --- Change can also result in an actual or perceived loss of power, status, security and control, feeling that someone else is controlling their destiny

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Overcome Resistance to Change

Ways to overcome resistance to change: Develop a positive trust climate for change --- Develop and maintain good

human relations

Plan --- Take good planning. Identify the possible resistance to change and plan how to overcome it.

Communication ---Clearly state why the change is needed and how it will affect company or employees

Create a win-win situation --- Company should guarantee that employees will not lose jobs, pay or other loses, at least within a short period of time

Involve employees --- Employees who have participated in developing changes are more committed to them than those who have not

Provide support --- Give advance notice and providing training before the change take place.