Chapter 8 and 9
Organizational Structure and
Managing Change
S. Chan
Head, Department of Business Administration
http://home.chuhai.hk/~charmaine/
charmaine@chuhai.edu.hk
7-1
Designing Organizational Structure
Organizing
 The process by which managers establish the
structure of working relationships among
employees to achieve goals
Organizational Structure
 Formal system of task and reporting relationships
that coordinates and motivates organizational
members so that they work together to achieve
organizational goals
7-2
Factors Affecting
Organizational Structure
Figure 7.1
7-3
Job Design
Job Design
 The process by which managers decide how to
divide tasks into specific jobs
Job Enlargement
 Increasing the number of different tasks in a
given job by changing the division of labor
Job Enrichment
 Increasing the degree of responsibility a worker
has over a job
7-4
Departmentalization- by Function
Functional Structure
 An organizational structure composed of all the
departments that an organization requires to produce
its goods or services
Advantages
 Encourages learning from others doing similar jobs
 Easy for managers to monitor and evaluate workers
Disadvantages
 Difficult for departments to communicate with others
 Preoccupation with own department and losing sight of
organizational goals
7-5
Departmentalization:
by Divisions
Divisional Structure
 An organizational structure composed of
separate business units within which are the
functions that work together to produce a
specific product for a specific customer
7-6
Departmentalization:
by Product Structure
 Product Structure
 Each product line or business is handled by a selfcontained division
Advantages
 Allows functional managers to specialize in one
product area
 Division managers become experts in their area
 Removes need for direct supervision of division by
corporate managers
 Divisional management improves the use of
resources
7-7
Figure 7.4
Product,
Market, and
Geographic
Structures
7-8
Departmentalization: by Geographic
Geographic Structure
 Each region of a country or area of the world is
served by a self-contained division
Global geographic structure
 Managers locate different divisions in each of the
world regions where the organization operates
 Generally, occurs when managers are
pursuing a multi-domestic strategy
7-9
Departmentalization
Global Product Structure
 Each product division, not the country or regional
managers, takes responsibility for deciding where
to manufacture its products and how to market
them in foreign countries
7-10
Global Geographic and
Global Product Structures
Figure 7.5
7-11
Departmentalization: By market
Market Structure
 Each kind of customer is served by a selfcontained division
 Also called customer structure
Matrix Structure
 An organizational structure that simultaneously
groups people and resources by function and
product
7-12
Matrix Structure
Figure 7.6
7-13
Product Team Structure
Product Team Structure
 Employees are permanently assigned to a crossfunctional team and report only to the product
team manager or to one of his direct
subordinates
Cross-functional team
 group of managers brought together from
different departments to perform organizational
tasks
7-14
Coordinating Functions and Divisions
Authority
 The power to hold people accountable for their
actions and to make decisions concerning the use
of organizational resources
Hierarchy of Authority
 An organization’s chain of command, specifying
the relative authority of each manager
7-15
Allocating Authority
Span of Control
 The number of subordinates that report directly to a
manager
Line Manager
 someone in the direct line or chain of command who
has formal authority over people and resources
Staff Manager
 Someone responsible for managing a specialist
function, such as finance or marketing.
7-16
Tall & Flat Organizations
Figure 7.9
7-17
Tall & Flat Organizations
Figure 7.9
7-18
Tall and Flat Organizations
Decentralizing authority
 giving lower-level managers and nonmanagerial
employees the right to make important decisions
about how to use organizational resources.
7-19
Organization Change
 Organization Change
 Movement of an organization away from its present state
and toward some desired future state to increase its
efficiency and effectiveness
 Top-down change
 A fast, revolutionary approach to change in which top
managers identify what needs to be changed, decide
what to do, and then move quickly to implement changes
throughout the organization
 Bottom-up change

A gradual approach to change in which managers at all
levels work together to develop a plan for change
7-20
Four Steps in the
Organizational Change Process
7-21
Description on
Organizational Change Process
1.Recognize the need for change: The change agent can use a variety of
techniques to diagnose problems in need of changes to solve them.
2.Identify possible resistance to the change and plan how to overcome it:
Follow the guidelines in step 1.
3.Plan the change interventions: Based on the diagnosis of the problem,
the appropriate intervention must be selected.
4.Implement the change interventions: The change agent, or someone
selected, conducts the intervention to bring about the desired change.
5.Control the change: Follow up to ensure that the change is implemented
and maintained. Make sure the objective is met. If not, take corrective
action.
7-22
Resistance to Change and
Ways to Overcome Resistance
Why employees resist change?
Uncertainty--- Fear of the unknown outcome of change
Learning anxiety--- Nervousness or fear of change that requires learning new
ways of working
Self-interest--- People resist change that threatens their own self interest
Loss --- Lost job or change in salary/benefits
Control --- Change can also result in an actual or perceived loss of power, status,
security and control, feeling that someone else is controlling their destiny
7-23
Overcome Resistance to Change
Ways to overcome resistance to change:
Develop a positive trust climate for change --- Develop and maintain good
human relations
Plan --- Take good planning. Identify the possible resistance to change and plan
how to overcome it.
Communication ---Clearly state why the change is needed and how it will affect
company or employees
Create a win-win situation --- Company should guarantee that employees will not
lose jobs, pay or other loses, at least within a short period of time
Involve employees --- Employees who have participated in developing changes
are more committed to them than those who have not
Provide support --- Give advance notice and providing training before the change
take place.
7-24