Organizational Structure

Chapter 10 – Organizational Structure     Why businesses need an internal structure How structure changes when businesses expand How organizational charts describe internal structures of an organization Ideas of ◦ ◦ ◦ ◦ ◦ Hierarchical Structure Chain of Command Span of Control Line and Staff Managers Delegation  Business that are ◦ Centralized ◦ Decentralized  Different forms of decentralization  It refers to the ◦ Levels of management ◦ Division of responsibilities …… within an organization  Shown on an Organizational Chart   Main Tasks Working Conditions   Giving a subordinate the authority to perform tasks NOT THE FINAL RESPONSIBILITY Authority to arrange the shelves in the store. Authority to order the stock. Authority to arrange the shelves in the store. Increased trust in workers by supervisors & managers. Delegation must mean: A reduction in direct control by supervisors & managers once the tasks are done by workers. Authority to arrange the shelves in the store. Advantages  Managers ◦ look after more important jobs ◦ make less mistakes ◦ measure success of staff more easily Authority to arrange the shelves in the store. Advantages  Subordinate ◦ work more interesting & rewarding ◦ feel more important ◦ training for progress ◦ career opportunities Authority to arrange the shelves in the store. Risk of Failure Task completed better Complete Control Chief Executive (Bill Murray) Marketing Director Store Manager Assistant Store managers Shop Workers Purchase Manager Financial Director Human Resource Director Book-keeping Administration Assistant   Hierarchy Chief Executive (Bill Murray) Marketing Director Departments Store Manager  Chain of Command Assistant Store managers Shop Workers Purchase Manager Financial Director Human Resource Director Book-keeping Administration Assistant       Linkages Chief Executive (Bill Murray) Communication channels Position in organization Taking orders Accountability Sense of belonging Marketing Director Store Manager Assistant Store managers Shop Workers Purchase Manager Financial Director Human Resource Director Book-keeping Administration Assistant Chief Executive (Bill Murray) Marketing Director Store Manager Assistant Store managers Shop Workers Purchase Manager  Financial Director Human Resource Director Book-keeping Administration Assistant Structure of the organization which allows instructions to be passed down from senior management to the lower levels Chief Executive (Bill Murray) Marketing Director Store Manager Assistant Store managers Shop Workers Purchase Manager  Financial Director Human Resource Director Book-keeping Administration Assistant The number of subordinates working directly under a manager Longer Chain of Command Taller Organizational Structure Narrower Span of Control Shorter Chain of Command Shorter Organizational Structure Wider Span of Control Longer Chain of Command Taller Organizational Structure Narrower Span of Control Features Supervisor/Manager responsible for low amount of subordinates  Less delegation  More control over subordinates  less watchfulness for the subordinates Longer Chain of Command Taller Organizational Structure Narrower Span of Control Features Communication  Slower & less accurate  message through many levels Workers less trusted Make less decisions Less job satisfaction  Less room for mistakes  Features Supervisor/Manager responsible for many subordinates More delegation Less direct control of subordinates Leads to job enrichment Shorter Chain of Command Shorter Organizational Structure Wider Span of Control Features  Communication  quicker & more accurate  message through fewer levels Workers more trusted Make more decisions More job satisfaction  More room for mistakes  Shorter Chain of Command Shorter Organizational Structure Wider Span of Control STAFF MANAGERS • Specialists in their area • Offer advice & support • Report to Board of Directors (BOD) • Very qualified experts Chief Executive IT Manager Production Director Financial Food and Process Factory Managers Financial Accountant Factory Workers Director Book-keeper Economic Forecaster Marketing Purchasing Director Specialist Product Buyers Specialist Product Buyers Director Sales Manager Store Manger Assistant Store Manager Shop Workers Head of French Division Human Resource Director Administration Officer FUNCTIONAL DEPARTMENTS • One important responsibility • Specialist skills • Often efficient •Loyal to their department (maybe not to the whole company) • MANAGERS in these departments are called LINE MANAGERS Chief Executive IT Manager Production Director Financial Food and Process Factory Managers Financial Accountant Factory Workers Director Book-keeper Economic Forecaster Marketing Purchasing Director Specialist Product Buyers Specialist Product Buyers Director Sales Manager Store Manger Assistant Store Manager Shop Workers Head of French Division Human Resource Director Administration Officer REGIONAL DIVISIONS • Look after stores in other countries • Specialist knowledge of the local market • Popular products in given country • Legalities Chief Executive IT Manager Production Director Financial Food and Process Factory Managers Financial Accountant Factory Workers Director Book-keeper Economic Forecaster Marketing Purchasing Director Specialist Product Buyers Specialist Product Buyers Director Sales Manager Store Manger Assistant Store Manager Shop Workers Head of French Division Human Resource Director Administration Officer FUNCTIONAL DEPARTMENTS • One important responsibility • Specialist skills • Often efficient •Loyal to their department (maybe not to the whole company) • MANAGERS in these departments are called LINE MANAGERS Chief Executive IT Manager Production Director Financial Food and Process Factory Managers Financial Accountant Factory Workers Economic Forecaster Marketing Purchasing Director Director Specialist Product Buyers Book-keeper STAFF MANAGERS • Specialists in their area • Offer advice & support • Report to Board of Directors (BOD) • Very qualified experts Specialist Product Buyers Director Sales Manager Store Manger Assistant Store Manager Shop Workers Head of French Division Human Resource Director Administration Officer REGIONAL DIVISIONS • Look after stores in other countries • Specialist knowledge of the local market • Popular products in given country • Legalities   Staff Managers provide advice to line managers on particular issues Line managers have opportunity to concentrate on their main tasks Chief Executive IT Manager Financial Production Director Director Food and Process Factory Managers FUNCTIONAL DEPARTMENTS LINE MANAGERS Financial Accountant Factory Workers Economic Forecaster Marketing Purchasing Director Specialist Product Buyers Specialist Product Buyers Book-keeper Sales Manager Head of French Division Administration Officer Store Manger Assistant Store Manager STAFF MANAGERS Human Resource Director Director Shop Workers REGIONAL DIVISIONS  Conflict & frustration between the two groups   Different points of view on matters Line employees confused about who to take orders / instructions from Chief Executive IT Manager Financial Production Director Director Food and Process Factory Managers FUNCTIONAL DEPARTMENTS LINE MANAGERS Financial Accountant Factory Workers Economic Forecaster Marketing Purchasing Director Specialist Product Buyers Specialist Product Buyers Book-keeper Director Sales Manager Store Manger Assistant Store Manager STAFF MANAGERS Shop Workers Head of French Division Human Resource Director Administration Officer  Decentralized ◦ Many decisions delegated to lower levels of management  Centralized ◦ Most decisions by the center  Higher levels of management       Important Issues Investment Projects worth a large sum of money Taking over of other businesses Overall aims and objectives of the business Firm’s Growth Strategy Environmental Objectives   Decisions made by those that are “close to the action” Delegation makes lower level management ◦ Feel more trusted ◦ More Job Satisfaction  Quicker Decision Making Marketing Production Company Finance Human Resources Cars Pick-ups Vehicle Manufacturing Vans Trucks Asia Multinational Company USA Middle East Europe First Class Aircraft Design Business Class Premium Economy Economy    Draw & explain the significance of a simple organizational chart Understand the changes that occurs to a business when the business expands Know the difference between ◦ Span of Control ◦ Levels of Hierarchy ◦ Line and Staff Managers   Understand the importance of delegation Analyze the difference between a centralized and decentralized Organization  Explain the different forms of decentralization

Organizational Structure

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