organizational structure and organizational structure and structure
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Organizational Organizational Structure and Structure and Organizational Organizational Structure and Structure and
C H A P T E RC H A P T E R 1717
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e
Structure and Structure and DesignDesignStructure and Structure and DesignDesign
The Decentralization of CocaThe Decentralization of Coca--ColaCola
Coca-Cola decentralized its
organizational structure by
cutting half of the staff at its
Atlanta headquarters and
moving the regional chieftains
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e
moving the regional chieftains
closer to their local markets. In
India, decision making has
been moved further down to
different areas of that diverse
country.
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Division of LaborDivision of Labor
Subdivision of work into separate jobs assigned to different people
Potentially increases work efficiency
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work efficiency
Necessary as company grows and work becomes more complex
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Forms of Work CoordinationForms of Work Coordination
Informal communication�Sharing information�High media-richness� Important in teams
Formal hierarchy�Direct supervision
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�Direct supervision�Common in larger firms �Problems -- costly, slow, less
popular with young staff
Standardization�Formal instructions�Clear goals/outputs�Training/skills
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OrganizationalOrganizational
Span ofSpan ofControlControl
DepartmentDepartment--alizationalization
Elements of Organizational StructureElements of Organizational Structure
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OrganizationalOrganizational
StructureStructure
ElementsElements
CentralizationCentralizationFormalizationFormalization
Span of ControlSpan of Control
Number of people directly reporting to the next level
Assumes coordination through direct supervision
Wider span of control
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Wider span of control possible when:� with other coordinating methods
� subordinates’ tasks are similar
� tasks are routine
Flatter structures require wider span (if same # of people in the firm)
Span of Control at Ducks UnlimitedSpan of Control at Ducks Unlimited
Ducks Unlimited Canada
recently flattened its
organizational structure by
removing layers of
management. The
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e
management. The
environmental conservation
group wanted the flatter
structure to empower
employees, and let them make
decisions quickly without
having to go up the hierarchy.
Ducks Unlimited/Darin Langhorst
•• Organizational crisesOrganizational crises•• Management desire for controlManagement desire for control
•• Increase consistency, reduce costsIncrease consistency, reduce costs
CentralizationCentralization
Forces for (De)centralizationForces for (De)centralization
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•• Increase consistency, reduce costsIncrease consistency, reduce costs
•• Complexity Complexity ---- size, diversitysize, diversity•• Desire for empowermentDesire for empowerment
DecentralizationDecentralization
Mechanistic vs. Organic StructuresMechanistic vs. Organic Structures
Mechanistic
•• High formalizationHigh formalization
Organic
•• Low formalizationLow formalization
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•• High formalizationHigh formalization
•• Narrow span of controlNarrow span of control
•• High centralizationHigh centralization
•• Low formalizationLow formalization
•• Wide span of controlWide span of control
•• Low centralizationLow centralization
Effects of DepartmentalizationEffects of Departmentalization
Establishes work teams and supervision
structure
Creates common resources, measures of
performance, etc
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performance, etc
Encourages informal communication among
people and subunits
Organizes employees around skills or
other resources (marketing, production)
PresidentPresident
Functional Organizational StructureFunctional Organizational Structure
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PresidentPresident
FinanceFinance ProductionProduction MarketingMarketing
Organizes employees around geographic
areas, products, or clients
Divisionalized StructureDivisionalized Structure
PresidentPresident
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PresidentPresident
EnterpriseEnterprise
SystemsSystems
LaserjetLaserjet
SolutionsSolutions
ConsumerConsumer
ProductsProducts
EngineeringEngineeringManagerManager
MarketingMarketingManagerManager
SoftwareSoftwareManagerManager
Employees are temporarily assigned to a specific
project team and have a permanent functional unit
ProjectProject--Based Matrix StructureBased Matrix Structure
PresidentPresident
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Project CProject CManagerManager
Project BProject BManagerManager
Project AProject AManagerManager
ManagerManager ManagerManager ManagerManager
Team Structure at Jabil CircuitsTeam Structure at Jabil Circuits
Jabil Circuits relies on a team-
based organizational structure at
its manufacturing operations.
Each production team is
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e
Each production team is
responsible for a specific
customer group. Team members
have a high degree of autonomy
and are cross-trained. Courtesy of Jabil Circuits
Features of TeamFeatures of Team--Based StructuresBased Structures
Self-directed work teams
Teams organized around work processes
Very flat span of control
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Very flat span of control
Very little formalization
Usually found within divisionalized structure
Courtesy of Jabil Circuits
CoreCore
FirmFirm
ProductProductDevelopmentDevelopment
FirmFirm(France)(France)
MarketingMarketingFirmFirm
(U.K.)(U.K.)
Network Organizational StructureNetwork Organizational Structure
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FirmFirm
(U.S.A.)(U.S.A.)CustomerCustomerServiceService
FirmFirm(Canada)(Canada)
ProductionProductionFirmFirm
(China)(China)
AccountingAccountingFirmFirm
(U.S.A.)(U.S.A.)
HighHighAnalyzabilityAnalyzability Assembly
Line
Engineering
Projects
Types of Organizational TechnologyTypes of Organizational Technology
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LowLowAnalyzabilityAnalyzability
High High VarietyVariety
Low Low VarietyVariety
Scientific
Research
Skilled
Trades
Org. Environment & StructureOrg. Environment & Structure
DynamicDynamic
• High rate of change
• Use organic structure
StableStable
• Steady conditions, predictable change
• Use mechanistic structure
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ComplexComplex
• Many elements (such as stakeholders)
• Decentralize
SimpleSimple
• Few environmental elements
• Less need to decentralize
Org. Environment & Structure (con’t)Org. Environment & Structure (con’t)
DiverseDiverse
• Variety of products, clients, locations
• Divisional form aligned with the diversity
IntegratedIntegrated
• Single product, client, location
• Don’t need divisional form
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HostileHostile
• Competition and resource scarcity
• Use organic structure for responsiveness
MunificentMunificent
• Plenty of resources and product demand
• Less need for organic structure
Organizational Organizational Structure and Structure and Organizational Organizational Structure and Structure and
C H A P T E RC H A P T E R 1717
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. McShane/ Von Glinow 2/e
Structure and Structure and DesignDesignStructure and Structure and DesignDesign