BOH4M – Grade 12 Business Leadership – Organizing

Chapter 10: Organizing

 

Organizing As A Management Function

 

  • Organizing: The process of arranging people and other resources to work together to accomplish a goal
  • Organization structure: The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups
  • Organization chart: A diagram describing reporting relationships and the formal(official) arrangement of work positions within an organization
    • An organization chart identifies:
      • The division of work
      • Supervisory relationships
      • Communication channels
      • Major subunits
      • Levels of management

 

  • Behind every formal structure typically lies an informal structure: Set of unofficial working relationships between organization members
    • Advantages of informal structures
    • Help people accomplish their work
    • Gain access to interpersonal networks
    • Informal learning
    • Connect with people who can assist in task performance
  • Disadvantages of informal structures
  • May work against best interests of organization as a whole
  • Susceptibility to rumor
  • May carry inaccurate information
  • Breed resistance to change
  • Divert work efforts from important objectives
  • Feeling of alienation by “outsiders”

 

 

 

 

Traditional Organizational Structures

 

  • Departmentalization: The process of grouping together people and jobs into work units
  • Three major types of organizational structures:
  1. Functional structures: People with similar skills and performing similar tasks are grouped together into work units
  • Members of each function work within their areas of expertise
  • Work well for small organizations producing few products or services in relatively stable environments
  • Advantages of functional structures:
    • Economies of scale
    • Task assignments consistent with expertise and training
    • High-quality technical problem solving
    • In-depth training and skill development
    • Clear career paths within functions
  • Disadvantages of functional structures:
    • Difficulties in pinpointing responsibilities
    • Functional chimneys problem: lack of communication and coordination across functions
    • Sense of cooperation and common purpose break down
    • Narrow view of performance objectives
    • Excessive upward referral of decisions

 

  1. Divisional structures: Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region.
  • Common in complex organizations; avoids problems associated with functional structures

 

 

 

 

 

 

 

 

  • Major types of divisional structures include:
  • Product structure groups together people and jobs working on a single product or service
  • Geographical structure groups together people and jobs performed in the same location or geographical region
  • Customer structure groups together people and jobs that serve the same customers
  • Process structure groups jobs and activities that are part of the same processes
  • Advantages of divisional structures:
    • More flexibility in responding to environmental changes
    • Improved coordination
    • Clear points of responsibility
    • Expertise focused on specific customers, products, and regions
    • Greater ease in restructuring
  • Disadvantages of divisional structures:
    • Duplication of resources and efforts across divisions
    • Competition and poor coordination across divisions
    • Emphasis on divisional goals at expense of organizational goals

 

  1. Matrix structure: Combines functional and divisional structures to gain advantages and minimize disadvantages of each.
  • Workers belong to at least two formal groups at the same time – a functional group, and a product, program or project team
  • They also report to two bosses – one within the function and one within the team. Used in:
  • Manufacturing and Service industries
  • Professional fields
  • Non-profit sector
  • Multi-national corporations
  • Organizations pursuing growth strategies in dynamic environments
  • Advantages of matrix structures:
  • Better inter-functional cooperation
  • Increased flexibility in restructuring
  • Better customer service
  • Better performance accountability
  • Improved decision making and strategic management
  • Disadvantages of matrix structures:
  • Two-boss system is susceptible to power struggles
  • Can create task confusion and conflict in work priorities
  • Team meetings are time consuming
  • Team loyalties may cause loss of focus on larger organizational goals
  • Increased cost of adding team leaders

 

 

Directions in Organizational Structures

 

  • Traditional vertical structures are giving way to more horizontal ones, with teams serving as the basic building blocks

 

  • Team structures use permanent and temporary cross-functional teams to solve problems, complete special projects, and accomplish day-to-day tasks
  • Cross-functional teams bring together members from different functional departments
  • Project teams are often assembled for a particular task or project, and are disbanded once it is completed
  • Advantages of team structures:
  • Eliminates barriers between operating departments
  • Improved morale due to cross-functional interaction
  • Improved quality and speed of decision making
  • Increased enthusiasm for work
  • Disadvantages of team structures:
    • Conflicting loyalties among members
    • Excessive time spent in meetings
    • Effective use of time depends on quality of interpersonal relations, group dynamics, and team management

 

  • Network structures operate with a central core that is linked through “networks” of relationships with contractors and outside suppliers of essential services
  • Use communications and information technology to support shifting strategic alliances and outsourcing where the business function is contracted to an outside supplier

 

 

 

  • Advantages of network structures:
    • Firms can operate with fewer full-time employees and less complex internal systems
    • Reduced overhead costs and increased operating efficiency
    • Permits operations across great distances
  • Disadvantages of network structures:
    • Control and coordination problems may arise from network complexity
    • Potential loss of control over outsourced activities
    • Potential lack of loyalty among infrequently used contractors

 

 

  • Boundaryless organizations are organizations in which teamwork and intense communication replace formal lines of authority
  • Combination of the team and network structures
  • Eliminates internal and external barriers
  • Internal boundaries are eliminated as people work together as needed; external boundaries vary as alliances change with shifting needs/circumstances
  • Key requirements are the absence of hierarchy, empowerment of team members and acceptance of impermanence
  • Sometimes take the form of a virtual organization that uses IT and the Internet to engage a shifting network of strategic alliances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organizing Trends and Practices

 

    • Shorter chains of command: reducing the line of authority that vertically link each position with successively higher levels of authority
  • Streamlining of organizations by cutting unnecessary managerial levels
  • Flatter and more horizontal structures viewed as a competitive advantage

 

  • Less unity of command: improve on the principle stating that each person reports to one and only one supervisor
  • Using more cross functional teams, task forces and horizontal structures
  • Employees working for more than one boss

 

    • Wider span of control: increasing number of persons reporting to one manager
  • Levels of management are eliminated
  • Managers taking responsibility for larger number of subordinates who operate with less direct supervision

 

    • More delegation and empowerment: managers distributing and entrusting more work to others
  • Managers finding more ways to empower people at all levels by assigning responsibility, granting authority to act, and creating accountability

 

    • Decentralization with centralization: centralization is the concentration of authority for making most decisions at the top level of the organization; decentralization is the dispersion of authority to make decisions throughout all organization levels
  • Delegation, empowerment and horizontal structures contribute to more decentralization in organizations, while advances in information technology simultaneously allow for the retention of centralized control

 

    • Reduced use of staff
  • Specialized staff: perform technical or special problem-solving expertise to other parts of the organization
  • Personal staff: people working in “assistant-to” positions that provide special support to higher-level positions
  • Organizations are seeking lower costs and increased operating efficiency by employing fewer staff personnel and using smaller staff units