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1 17 C H A P T E R Organizational Structure and Design
2 The 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 closer to their local markets. In India, decision making has been moved further down to different areas of that diverse country. AFP/CORBIS
3 Division of Labor Subdivision of work into separate jobs assigned to different people Potentially increases work efficiency Necessary as company grows and work becomes more complex AFP/CORBIS
4 Forms of Work Coordination Informal communication Sharing information High media-richness Important in teams Formal hierarchy Direct supervision Common in larger firms Problems -- costly, slow, less popular with young staff Standardization Formal instructions Clear goals/outputs Training/skills AFP/CORBIS
5 Elements of Organizational Structure Department- alization Span of Control Organizational Structure Elements Formalization Centralization
6 Span of Control Number of people directly reporting to the next level Assumes coordination through direct supervision 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)
7 Span of Control at Ducks Unlimited Ducks Unlimited/Darin Langhorst Ducks Unlimited Canada recently flattened its organizational structure by removing layers of 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.
8 Forces for (De)centralization Centralization Organizational crises Management desire for control Increase consistency, reduce costs Complexity -- size, diversity Desire for empowerment Decentralization
9 Mechanistic vs. Organic Structures Mechanistic Organic High formalization Narrow span of control High centralization Low formalization Wide span of control Low centralization
10 Effects of Departmentalization Establishes work teams and supervision structure Creates common resources, measures of performance, etc Encourages informal communication among people and subunits
11 Functional Organizational Structure Organizes employees around skills or other resources (marketing, production) President Finance Production Marketing
12 Divisionalized Structure Organizes employees around geographic areas, products, or clients President Enterprise Systems Laserjet Solutions Consumer Products
13 Project-Based Matrix Structure President Employees are temporarily assigned to a specific project team and have a permanent functional unit Engineering Manager Marketing Manager Software Manager Project A Manager Project B Manager Project C Manager
14 Team Structure at Jabil Circuits Jabil Circuits relies on a teambased organizational structure at its manufacturing operations. 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
15 Features of Team-Based Structures Self-directed work teams Teams organized around work processes Very flat span of control Very little formalization Usually found within divisionalized structure Courtesy of Jabil Circuits
16 Network Organizational Structure Product Development Firm (France) Customer Service Firm (Canada) Core Firm (U.S.A.) Accounting Firm (U.S.A.) Marketing Firm (U.K.) Production Firm (China)
17 Types of Organizational Technology High Analyzability Assembly Line Engineering Projects Low Analyzability Skilled Trades Scientific Research Low Variety High Variety
18 Org. Environment & Structure Dynamic High rate of change Use organic structure Stable Steady conditions, predictable change Use mechanistic structure Complex Many elements (such as stakeholders) Decentralize Simple Few environmental elements Less need to decentralize
19 Org. Environment & Structure (con t) Diverse Variety of products, clients, locations Divisional form aligned with the diversity Integrated Single product, client, location Don t need divisional form Hostile Competition and resource scarcity Use organic structure for responsiveness Munificent Plenty of resources and product demand Less need for organic structure
20 17 C H A P T E R Organizational Structure and Design
CHAPTER 9 ORGANIZATIONAL STRUCTURE AND DESIGN. Copyright 2005 Prentice Hall, Inc. All rights reserved. 10 1
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