2.2. Organizational Structure Summary

• Organizational Structure
  • Way in which the company is organized and the consideration of its internal workings in an attempt to find an efficient operational practice provides accountability (who is answerable for a specific job) and responsibility (who is in charge of whom)
  • Necessary for: stability, consistency, continuity, unity, efficiency, etc.
• Organizational chart
  • Shows different functional departments, chain of command, span of control, and channels of communication ways to structure a business:
    • By function: production process (e.g. editing, printing, sales, etc)By product or activity: organizing according to the different products made By area: geographical or regional state
  • Role of Organizational Chart
    • Visual representation of business – see main line of communication
    shows promotion prospectsShows immediate superior for clear communication shows employees their role in the business
    • Shows who to pass info to give a problem
• Span of control
  • Refers to the number of people who are directly accountable to a manager affects whether an organization is wide/flat or narrow/tall factors:
    • Manager’s experience, competence, traits nature of management styles (amount of control needed)Skills and dynamics of subordinates (better team, less people)Nature of work type of production method used
    Wide/flat organizations – a wide span of control
    • Direct communication between different levels (fast and accurate)Cost Control (less managers needed)Delegation is more important longer decision makingEliminate feeling of alienation of workers from senior management
  • Narrow/tall organizations – the narrow span of control
    • Easier to control the smaller amount of subordinates may be more productive/efficient (team cohesiveness and specialization)Fast communication within team more costly (more managers needed)
    • More motivation for employees – many promotion opportunities
• Delegation
  • Extent a superior passes work down the hierarchy to subordinates can motivate and develop employees while saving time for managers may lead to confusion and inadequacy (in case of failure)This includes accountability but the responsibility still stays with higher authority
  • Delegation Checklist (SMARTER)
    • Specific – tasks clearly defined measurable – quantifiable results agree – on amount of power and freedomRealistic – depends on the ability to carry out the task time Bound – task completionEthical – tasks fairly delegated
    • Recorded – documented
• Levels of hierarchy
  • Organizational structure based on rank shows clear lines of communication to establish departments or teams (motivation and sense of belonging)
  • BUT
    • Rivalries may occur rigid in terms of scope and authority response to change may be slower
    • Departmentalization
• Delayering/downsizing
  • Process of removing levels in the hierarchy/reducing managerial levelsAchieves flatter structure for more flexibility advantages reduce costs improve speed of communication encourages delegation
  • Disadvantages
    • Can cause job insecurity, demotion, redundancy overstretching of employees
    • Costs to train employees
• Chain of command
  • The way authority and responsibility are passed up and down the organization
  • Formal line of authority
• Bureaucracy
  • Set of detailed methods and routines to carry out a specific activity involves clear division of roles for a hierarchical system in the organization that follows several principles: Prioritization of continuity (less risk)Rules and regulations formal hierarchyAccountabilityAdvantagesAuthority and levels of responsibility are obvious standardizations
    • of processes to ensure efficiency turns employees into specialists rather than generalistsLoyalty to department
  • Disadvantages
    • May stifle creativityRivalries between departments may ensueLess job satisfaction; high labor turnover slow decision-making process salaries for the different layers of management increases costs
    • Red tape
• Centralization and decentralization
  • Centralized structures
    • Executive board handles major decision making of the companyMajority of decision making by a minority (senior mgmt.)Advantages
      • Rapid decision-making on single projects better control over all company activity better sense of direction suited for smaller businesses decisions are more consistent
      Cons
      • Slow decision making on multiple projects stress for senior staffInflexibleDemotivatingExclusion of other people’s ideas that may be better
    Decentralized structures
    • Some decision making is delegatedFreer communication process all employees get to have a pitch in the decisionsAdvantagesInput from employeesSpeedier decision making improved
      • Morale Accountability Teamwork
      Cons
      • No control greater chance of mistakesReliance on communicationRedundancyLower standards of work (no governing body)Inconsistency between company goals (regional managers)
  • Relevant factors
    • Size of organization scale
    of the importance of decision level of risk corporate culture management attitude and competencies
    • ICT
• Handy’s Shamrock Organization
  • People – important resource
    • Have to be satisfied through job enrichment and flexible practices
  • 3 main groups of staff
    • Core staff (full time)
      • Managers, and technicians must be well compensated and have job security E-commerce and teleworking have reduced core staff – which implies downsizing
      Peripheral workers (part-time, contractual)
      • Employed only when required less job security and morale but offer more flexibility
    • Outsourced workers (subcontracting)
      • Paid to do specialized tasks
• Communication
  • Transfer of information from one party to another effectiveness depends on
    • Clarity of the message medium used (ie. e-mail, telephone, letter, face-to-face)Ability of the receiver to decode the message
    Cultural differences may affect communication
    • e.g. preference for oral communication, use of body language, directness of language usedInformal/unofficial communication channels may also emerge
  • Technology and innovation also affect communication
    • ICT (information and communication technology)

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