Organization-structure

OrganizingLectureSevenOrganizationalStructure(1)LecturegivenbyMaggie,onApr15,2015QuestionstoThinkAbout…Whydoweneedanorganizationalstructure?Howdoweunderstandorganizationalstructure?Whataredifferenttypesoforganizationalstructure?Youtrytothinkaboutthepurposeofanorganizationalstructure.Yougettoknowdifferentpositionsinorganizationalstructureandtheirrelationship,andsoon.Youstarttolearnhowdifferenttypesoforganizationalstructurefitdifferentneedsofcompanies.①ThePurposeofOrganizationalStructureToensurethatallemployeesareinpositionswheretheycanbeproperlyguidedandmonitoredbysomeoneabovethemtodotheirjobsefficientlyPurpose②DefinitionofOrganizationalStructureOrganizationalStructureidentifiesresponsibilitiesforeachjobpositionandtherelationshipamongthosepositionsHowdoweunderstandorganizationalstructure?1.Howdoesorganizationalstructureworkbasically?(positionsandtheirrelationshipwithinorganizationalchart)2.Howtoensurethatitworkswell?(principlesandapproaches)3.Howtodesignanadaptiveorganizationalstructure?(Shapesandsizes)HowdoesOrganizationalStructureWork?ResponsibilityAuthorityaccountabilityDivisionofworkChainofCommandOrganizationChart(lineposition)(staffposition)FurtherExplanationonOrganizationChartChainofCommandidentifiesthejobpositiontowhicheachtypeofemployeemustreport(i.e.:whoreportstowhom)DivisionofWorkthedegreetowhichorganizationaltasksaresubdividedintoindividualjobs(i.e.:jobtitleanddescription)Accountability–thefactthatpeoplewithauthorityandresponsibilityaresubjecttoreportingandjustifyingtaskoutcomestothoseabovetheminthechainofcommandAuthority–theformalandlegitimaterightofamanagertomakedecision,issueorders,andallocateresourcestoachieveorganizationalgoalsResponsibility–thedutytoperformthetaskoractivityanemployeehasbeenassignedPrinciplestoFollow(classicalpointsofview)DivisionofWorkPositionsaresetaccordingtoneedsofbusinessChainofCommandAccountabilityUnityofcommandprinciple;ScalarprincipleCorrespondenceofbothauthorityandresponsibilityDivisionofworkaccordingtoneedsofpeopleorbusiness?Themoredivisionofwork,thebetter?DivisionofWorkChainofCommandAccountabilityTowhomeachemployeeisheldaccountablenormally?Whatwouldhappenifauthorityandresponsibilityarenotcorresponding?e.g.:authorityorresponsibilityHowtoEnsureAccountability1.BoardofDirectors:asetofexecutiveswhoareresponsibleformonitoringtheactivitiesofthefirm’spresidentandotherhigh-levelmanagersQuestionstothinkabout:a.Whyshouldtherebebothinsideandboardmembers?b.Aretherestillanyproblems?c.Whataresuggestedtosolvetheproblems?HowtoEnsureAccountability(cont.)2.InternalAuditor:responsibleforensuringthatalldepartmentsfollowthefirm’sguidelinesandproceduresQuestionstothinkabout:a.Somebodyfrominsidecompanyoroutside?b.Anythingthatitwoulddospecifically?3.InternalControlProcess:asystemthatgeneratestimelyandaccuratereportingoffinancialinformationandestablishescontrolsoverthatinformation,mostlyforshareholdersFlatstructureTallstructureShapeofOrganizationalStructureOrganizationalHeightSpanofControlFurtherExplanationonShapeofOrganizationalStructureOrganizationalHeightthenumberofhierarchicallevelsSpanofControlthenumberofemployeesmanagedbyeachmanagerFactorsaffectShapeofOrganizationalStructureAnythingaffectshierarchicallevelandthespanofcontrol?Less/widerLess/widerLess/widerLess/widerCentralizationandDecentralizationDecentralizationAuthorityisspreadamongseveraldivisionsormanagersCentralizationMostauthorityisheldbythehigh-levelmanagersAutonomyAdvantagesandDisadvantagesofCentralization1.Unityofcommand2.Efficiencyofdecisionexecution(althoughdecisionismadethroughalongprocess)1.Qualityofdecisionmightbedegraded2.Lackofflexibilityandadaptability3.Higheroperatingcosts4.ReduceemployeemoraleAdvantagesandDisadvantagesofDecentralization1.Reducesoperatingexpenses2.Shortendecision-makingprocess3.Improvemoraleofemployees1.Forcesomemanagerstomakemajordecisionseventhoughtheylacktheexperience2.MiddleandsupervisorymanagersareassignedanexcessiveamountofresponsibilitiesRead‘Downsizing’part(p255)byyourselvesAndseehowitaffectsorganizationalstructure?FactorsaffectApplicationofCentralizationandDecentralizationAnythingaffectstheapplicationofcentralizationanddecentralization?Whenthereischangeanduncertainty?Whenfirm’sstrategiesrequire?Whenintimesofcrisisorriskofcompanyfailure?Whenthereischangeanduncertainty?CancentralizationordecentralizationhelpUPScopewithrapidchangeanduncertaintyoccurredfollowingtheSep11,2001intheUS?UPStrucks,whichcarry10%ofthecountry’sGDPonanygivenday,wereabletokeeprunningontimeinNewYork,thankslargelytoadecentralizedmanagementsystemthatgiveslocalmanagersauthoritytomakekeydecisionsforreactingpromptlytodifferentoccasions.Shouldcentralizationordecentralizationfitthefollowingorganizations’strategies?•Johnson&Johnsongivesalmostcompleteauthoritytoits180operatingcompaniestodevelopandmarkettheirownproducts.•LarryEllisonatOracle(ERPsystem)isusingtechnologytounitizethewholeorganization’soperations,cutcosts,andgeteveryonefocused.Whenfirm’sstrategiesrequire?CancentralizationordecentralizationhelpHondafaceuptoitsoperat