Transcript The process of moving to matrix organization consists of

Structure and Design
of Organizations
Peter Drucker: While a poor structure
makes a high performance impossible,
the best structure in the world will not
ensure good performance
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Organization structure
 The way component parts and
activities are grouped, controlled and
coordinated to achieve specific aims
and outcomes.
 How jobs tasks are formally divided, grouped
and coordinated
 Structure is a means for attaining the objectives
and goals of an organization
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The Organization Chart
The chart is an illustration in box andlines informing about the formal
lines of authority and the division
of labor.
The Vertical Hierarchy of
Authority: A glance up and a
glance down shows the chain of
command
The Horizontal Specialization: A
glance to the left and right on the
line of an organization chart
shows the different jobs or work
specialization
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Chart—Example for a Hospital
Board of
Directors
Strategic
Planning Advisor
Chief Executive
Officer
Legal Counsel
President
Cost Containment
Staff
Executive
Administrative
Director
Director of
Personnel
Director of
Admissions
Director of
Patient &
Public
Relations
Executive
Medical Director
Director of
Nutrition &
Food
Services
Director of
Accounting
Director of
X-Ray &
Laboratory
Services
Director
of
Pharmac
y
Director of
Surgery
Chief
Physician
Director of
Outpatient
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Organization’s Major Elements
Authority refers to the rights inherent in a managerial
position to make decisions, give orders, and utilize
resources.
Delegation is the process of assigning
managerial authority and responsibility to
managers and employees lower in the hierarchy
Responsibility is the obligation you have to
perform the tasks assigned to you
Accountability managers must report and justify
work results to managers above them
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Key elements in org.structure
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Work specialization: To what degree are tasks subdivided into
separate jobs?
Departmentalization: On what basis will jobs be grouped
together? By function, product, customer, By territory…
Chain of command: To whom individuals and groups report?
Span of control: How many individuals can a manager direct?
Important factors: Required Contact. Degree of Specialization.
Ability to Communicate…
Centralization and decentralization: Where does decisionmaking authority lie? Centralized Authority: important decisions are
made by higher-level managers. Decentralized Authority: important
decisions are made by middle-level and supervisory-level managers
Formalization: To what degree will there be rules to direct
employees and managers. Refers to the extent to which
expectations regarding the means and ends of work are
specified and written
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Spans of Control: Narrow versus Wide
Key:
T = Top manager
M = Middle manager
F = First-line (supervisory) manager
CEO
Narrow
T
M
F
T
M
F
F
M
F
F
M
F
F
F
M
F
F
F
F
F
F
M
F
F
F
F
M
F
F
M
F
F
F
F
F
F
CEO
M
M
F
F
M
F
Wide
F
T
M
F
F
F
F
M
F
F
M
F
F
F
F
M
F
F
M
F
F
F
F
M
F
F
M
F
F
F
F
F
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F
Contingency Design
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Is the process of fitting the
organization to the environment.
Factors Affecting contingency
Design are:
1. Mechanistic vs. Organic
2. Differentiation vs.
Integration
3. Size
4. Technology
5. Life Cycle
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Characteristics of Mechanistic
& Organic Organizations
Mechanistic
organizations
Organic
organizations
Centralized hierarchy of authority
Decentralized hierarchy of authority
Many rules and procedures
Few rules and procedures
Specialized tasks
Shared tasks
Formalized communication
Informal communication
Few teams or task forces
Many teams or task forces
Narrow span of control, taller structure
Wider span of control, flatter structure
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Types of Organizational Structures
1.
2.
3.
4.
5.
6.
7.
8.
Simple Structure
Functional Structure
Divisional Structure
Conglomerate Structure
Hybrid Structure
Matrix Structure
Team-Based Structure
Network Structure
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Simple Structure
Owner
Administrative
Assistant
There is only one hierarchical level of
management beneath the owner
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Functional Structure
Structure for
a business
Vice
President,
Marketing
Structure for
a hospital
Chief of
Medical
Services
President
Vice
President,
Finance
Vice
President,
Production
Vice
President,
Human
Resources
Chief
Administrator
Director of
Administrative
Services
Director of
Outpatient
Services
Director of
Nutrition &
Food Services
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Divisional Structure
1.
FunctionProduct Divisions group activities
are arranged around similar products or services
2.
Customer Divisions group activities around
common customers or clients
3.
Geographic Divisions group activities around
defined regional locations
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Divisional Structure
Product Divisional
Structure
Motion
Pictures & TV
Division
President
Customer Divisional
Structure
Consumer
Loans
Internet
Products
Division
President
Mortgage
Loans
Geographic Divisional
Structure
Western
Region
Magazine &
Book
Division
Music
Division
Business
Loans
Agriculture
Loans
President
Northern
Region
Southern
Region
Eastern
Region 14
Conglomerate Structures
This resembles the structure of General Electric
President
Lighting
Products
Appliances
Aircraft
Engines
Plastics
Financial
Services
Broadcasting
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Hybrid Structures
Product
Divisional
Structure
President
President
Cadillac
VicePresident,
Production
Manager
Region I
President
Buick
VicePresident,
Marketing
Manager
Region II
President
Pontiac
VicePresident,
Finance
Manager
Region III
Manager
Region IV
VicePresident,
Human
Resources
President
Chevrolet
Functional
divisional
structure
Geographical
divisional structure
A Hypothetical example of what GM might use
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Matrix Structure
Project
structure
Vice
President,
Engineering
President
Vice
President,
Finance
Vice
President,
Production
Functional
Structure
Vice
President.
Marketing
Project
Manager,
Taurus
Project
Manager,
Mustang
Project
Manager,
Explorer
Project
Manager,
Expedition
Example of Ford Motor Company
Subordinate
reports to
both Vice
President of
marketing &
to project
Manager for
Mustang
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Advantages of Matrix
Organization
 Efficient use or resources
 Flexibility in conditions of change and
uncertainty
 Technical excellence
 Freeing top management for long-run
planning
 Improving motivation and commitment
 Providing opportunities for personal
development
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Team-Based Structures
Functional
structure
Vice
President,
Research &
Development
Project
teams
Product Team
Manager,
Manufacturing
Light Trucks
Project
team
members
President
Vice
President,
Design
Vice
President,
Engineering
Product Team
Manager,
Manufacturing
Sedans
Vice
President,
Marketing
Product Team
Manager,
Manufacturing
Sport Cars
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Network Structure
Design
Studio
Components
Assembly
Sweden
Mexico, Asia
Core of
personal
computer
company
USA
Engineering
Company
Distribution
Company
Japan
Canada
Accounting
& Finance
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USA
Organizational Life Cycle
• Birth Stage the nonbureaucratic stage in which the organization is created
• Youth Stage the organization is in a prebureaucratic stage, a stage of growth
and expansion
• Midlife Stage the organization becomes bureaucratic, a period of growth
evolving into stability
• Maturity Stage the organization becomes very bureaucratic, large and
mechanistic
Consequences of Structural Deficiencies:
•Motivation and morale can be affected
•Decision making can be slow and of poor quality
•Conflict and lack of coordination can occur
•Failure to respond to changing circumstances
•Rising costs
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