Understanding
Management
First Canadian Edition
Slides prepared by
Janice Edwards
College of the Rockies
Copyright © 2009 Nelson Education Ltd.
Chapter 7
Structure and
Fundamentals of
Organizing
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Learning Objectives
1.
2.
3.
4.
Discuss the fundamental characteristics of organizing,
including such concepts as work specialization, chain of
command, span of management, and centralization versus
decentralization.
Describe functional and divisional approaches to structure.
Explain the matrix approach to structure and its application
to domestic and international organizations.
Describe the contemporary team and virtual network
structures and why they are being adopted by
organizations.
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Learning Objectives (Cont’d)
5.
6.
7.
8.
Explain why organizations need coordination across
departments and hierarchical levels, and describe
mechanisms for achieving coordination.
Identify how structure can be used to achieve an
organization’s strategic goals.
Illustrate how organization structure can be designed to fit
environmental uncertainty.
Define production technology (manufacturing, service,
and digital) and explain how it influences organization
structure.
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Organizing
•
•
The deployment of organizational resources to achieve
strategic goals.
The deployment of organization resources is reflected in
the division of labour into:
•
•
•
Specific departments and jobs
Normal lines of authority
Mechanisms for coordinating diverse organization tasks
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Organization Structure
The framework in which the organization defines how tasks
are divided, resources are deployed, and departments are
coordinated.
An Organization Chart is the visual representation of an
organization’s structure.
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Work Specialization
•
•
•
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•
Tasks are subdivided into individual jobs.
Employees perform only the tasks relevant to their
specialized function.
Jobs tend to be small, but they can be performed
efficiently.
There is a concern that employees may become isolated,
and do only a single boring job.
Many organizations are moving away from this principle.
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Chain of Command
•
•
Unbroken line of authority that links all persons in the
organization and shows who reports to whom.
Associated with two underlying principles:
•
Unity of command.
•
Scalar principle.
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Authority
Formal and legitimate right of a manager
to make decisions, issue orders, and to
allocate resources to achieve
organizationally desired outcomes.
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Characteristics of Authority
•
•
•
Authority is vested in organizational
positions, not people.
Authority is accepted by subordinates.
Authority flows down the vertical hierarchy.
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Accountability
•
•
•
Mechanism through which authority and responsibility
are brought into alignment.
People are subject to reporting and justifying task
outcomes to those above them in the chain of command.
Can be built into the organization structure.
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Delegation
•
•
Process managers use to transfer authority and
responsibility to positions below them in the
organization.
Organizations encourage managers to delegate
authority to lowest possible level.
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Line and Staff Authority
•
•
Line authority means that people in management
positions have formal authority to direct and control
immediate subordinates.
Staff authority includes the right to advise, recommend,
and counsel in the staff specialist’s area of expertise.
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Span of Management
•
•
•
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The number of employees reporting to a
supervisor.
Traditional view, seven or so per
manager.
Many organizations today, 30 or more
per manager.
Generally, when supervisors must be
closely involved with employees, span
should be small.
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Factors Associated with
Large Spans of Control
•
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Work is stable or routine.
Similar task is performed by everyone.
A single location.
Employees are highly trained.
Rules and procedures are available.
Support systems and personnel are available for
supervisor.
Little time is required in nonsupervisory activities.
Personal preferences and styles of management favour a
large span.
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Tall versus Flat Structure
•
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Span of control used in an organization determines
whether the structure is tall or flat.
Tall structure has a narrow span and more
hierarchical levels.
Flat structure has a wide span, is horizontally
dispersed and fewer hierarchical levels.
The trend has been toward wider spans of control.
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Ex. 7.2 Reorganization to Increase Span of Management
for President of an International Metals Company
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Centralization versus Decentralization
•
Centralization: decision authority is located near
the top of the organization.
•
Decentralization: authority is pushed downward
to lower organizational levels.
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Figure 7.3
Five Approaches to Structural Design
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Figure 7.3
Five Approaches to Structural Design (Cont’d)
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Figure 7.3
Five Approaches to Structural Design (Cont’d)
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Team Approach
•
•
Cross-functional teams consist of employees from
various functional departments who meet as a team to
solve problems.
Permanent teams solve ongoing problems; employees
come from several functional areas.
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Virtual Network Structure
•
The firm subcontracts most of its major functions
to separate companies and coordinates their
activities from a small headquarters organization.
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Figure 7.6
Evolution of Organizational Structures
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Structural Design
•
Task Force: a temporary team or committee formed to
solve a specific short-term problem.
•
Project Manager: a person responsible for coordinating
the activities of several departments.
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Ex. 7.9
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Relationship of Strategic Goals
to Structural Approach
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Structure Reflects the Environment
•
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Increased differences occur among departments.
Organizations need increased coordination
among departments.
Organizations must adapt to change.
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