organizational structure and design.ppt...

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


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.

© AFP/CORBIS

Division of LaborDivision of Labor

Subdivision of work into separate jobs assigned to different people

Potentially increases work efficiency


work efficiency

Necessary as company grows and work becomes more complex

© AFP/CORBIS

Forms of Work CoordinationForms of Work Coordination

Informal communication�Sharing information�High media-richness� Important in teams

Formal hierarchy�Direct supervision


�Direct supervision�Common in larger firms �Problems -- costly, slow, less

popular with young staff

Standardization�Formal instructions�Clear goals/outputs�Training/skills

© AFP/CORBIS

OrganizationalOrganizational

Span ofSpan ofControlControl

DepartmentDepartment--alizationalization

Elements of Organizational StructureElements of Organizational Structure


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


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


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


•• 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


•• 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


performance, etc

Encourages informal communication among

people and subunits

Organizes employees around skills or

other resources (marketing, production)

PresidentPresident

Functional Organizational StructureFunctional Organizational Structure


PresidentPresident

FinanceFinance ProductionProduction MarketingMarketing

Organizes employees around geographic

areas, products, or clients

Divisionalized StructureDivisionalized Structure

PresidentPresident


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


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


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


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


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


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


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


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


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