Simple Structure In a simple organizational structure: an organizational chart is usually not needed do not rely on formal systems of division of

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1 Simple Structure In a simple organizational structure: an organizational chart is usually not needed do not rely on formal systems of division of labor a firm is owned and operated by a single individual or a small group of people tasks are usually assigned informally strategic decisions are highly centralized (owner) Advantage: encourages creativity and individualism and high responsiveness Disadvantage: lack of clear guidance; confusing when more employees are hired 11

2 In a functional structure: Functional Structure formalized structures with emphasis on hierarch and vertical links divides employees into departments that handle activities related to a functional area of the business (e.g., marketing, production, customer service, human resources, etc.) Each area is often headed up by a manager with all employees reporting to their respective manager Advantage: each person tends to learn much about their particular function (specialization) grouping keep cost low and create efficiency conflicts within departments are relatively rare Disadvantage: conflicts within departments are relatively rare slow to execute change 12

3 Multidivisional Structure In a Multidivisional structure: firm begins to offer more than a few products or services (often across a wide geographical area), they often require a more responsive organizational structure employees are divided into departments based on product areas and/or geographic regions Advantage: allows firms to act quickly helps an organization to better serve customers needs Disadvantage: when divisions are loosely-coupled and are generally unaware and/or unmotivated to align with the firms overarching strategy do not benefit from the efficiency of single departments across the entire company tend to be more costly to operate than functional structures 13

4 Matrix Structure In a matrix structure: rely more on horizontal linkages Creates cross-functional teams that work on different projects Advantages: maximize organizational flexibilities, enhancing communication across functional lines, and creating a spirit of teamwork and collaboration Disadvantages: Violates the unity of command principle potentially creating confusion and/or conflict between managers Good for firms that need to maximize flexibility (high technology, engineering, and consulting firms 14

5 Boundaryless Organizations Boundaryless organizations = remove the usual barriers between parts of the organization and between them and other organizations Eliminating all internal and external barriers is impossible BUT moving toward being boundaryless can help an organization become more flexible and responsive Structural boundaries can inhibit and constrain firms, but can also provided needed order 15

6 Reasons for Changing Structures Must revisit an organization s structure over time Should be cognizant of danger signs (e.g., slow response time, poor performance) Structures become too complex and need to be simplified. 16

7 Creating Organizational Control Systems Effective structure and strategy depends on skillful use of organizational control systems Control systems allow: to track organizational performance identify concern areas take action to address concerns Three types of control systems: Output control Behavioral control Clan control 17

8 Output Control Focuses on measurable results within an organization Executives decide: what output (performance) level is acceptable, communicate their expectations to employees track performance make changes to either the goals or employees (feedback) as needed 18

9 Behavioral Control Focuses on controlling the actions of individuals that ultimately lead to a result Reflect policies and procedures that are often communicated to employees through a rules and regulations handbook Can be difficult to implement; Key is a proper motivation/incentives 19

10 Clan Control Relies on traditions, expectations, values, and norms to lead individuals to work toward the good of the organization An informal type of control Based on organizational culture While effective, it can be extremely hard to change as culture is inertial 20