C H A P T E R
17 Organizational Structure and Design
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The Decentralization of CocaCoca-Cola Coca-Cola decentralized its organizational structure by cutting half of the staff at its Atlanta headquarters and moving the regional chieftains closer to their local markets. In India, decision making has been moved further down to different areas of that diverse country. McShane/ Von Glinow 2/e
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Division of Labor Subdivision of work into separate jobs assigned to different people Potentially increases work efficiency Necessary as company grows and work becomes more complex
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Forms of Work Coordination Informal communication Sharing information High media-richness Important in teams
Formal hierarchy
Direct supervision Common in larger firms Problems -- costly, slow, less popular with young staff
Standardization
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Formal instructions Clear goals/outputs Training/skills
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Elements of Organizational Structure
DepartmentDepartmentalization
Span of Control
Organizational Structure Elements Formalization
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Centralization
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Span of Control Number of people directly reporting to the next level Assumes coordination through direct supervision Wider span of control possible when: with other coordinating methods subordinates’ tasks are similar tasks are routine
Flatter structures require wider span (if same # of people in the firm) McShane/ Von Glinow 2/e
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Span of Control at Ducks Unlimited
Ducks Unlimited/Darin Langhorst
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Ducks Unlimited Canada recently flattened its organizational structure by removing layers of management. The environmental conservation group wanted the flatter structure to empower employees, and let them make decisions quickly without having to go up the hierarchy.
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Forces for (De)centralization Centralization • Organizational crises • Management desire for control • Increase consistency, reduce costs • Complexity -- size, diversity • Desire for empowerment
Decentralization McShane/ Von Glinow 2/e
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Mechanistic vs. Organic Structures Mechanistic
Organic
• High formalization
• Low formalization
• Narrow span of control
• Wide span of control
• High centralization
• Low centralization
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Effects of Departmentalization Establishes work teams and supervision structure Creates common resources, measures of performance, etc Encourages informal communication among people and subunits
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Functional Organizational Structure Organizes employees around skills or other resources (marketing, production)
President
Finance
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Production
Marketing
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Divisionalized Structure Organizes employees around geographic areas, products, or clients
President
Enterprise Systems
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Laserjet Solutions
Consumer Products
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Project--Based Matrix Structure Project Employees are temporarily assigned to a specific project team and have a permanent functional unit President Engineering Manager
Marketing Manager
Software Manager
Project A Manager Project B Manager Project C Manager McShane/ Von Glinow 2/e
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Team Structure at Jabil Circuits Jabil Circuits relies on a teambased organizational structure at its manufacturing operations. Each production team is responsible for a specific customer group. Team members have a high degree of autonomy and are cross-trained.
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Courtesy of Jabil Circuits
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Features of TeamTeam-Based Structures Self-directed work teams Teams organized around work processes Very flat span of control Very little formalization Usually found within divisionalized structure Courtesy of Jabil Circuits
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Network Organizational Structure Product Development Firm (France)
Marketing Firm (U.K.)
Core Firm (U.S.A.) Customer Service Firm (Canada)
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Production Firm (China) Accounting Firm (U.S.A.)
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Types of Organizational Technology High Analyzability
Low Analyzability
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Assembly Line
Engineering Projects
Skilled Trades
Scientific Research
Low Variety
High Variety
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Org. Environment & Structure Dynamic • High rate of change • Use organic structure
Complex • Many elements (such as stakeholders) • Decentralize
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Stable • Steady conditions, predictable change • Use mechanistic structure
Simple • Few environmental elements • Less need to decentralize
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Org. Environment & Structure (con’t) Diverse • Variety of products, clients, locations • Divisional form aligned with the diversity
Hostile • Competition and resource scarcity • Use organic structure for responsiveness
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Integrated • Single product, client, location • Don’t need divisional form
Munificent • Plenty of resources and product demand • Less need for organic structure
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C H A P T E R
17 Organizational Structure and Design
McShane/ Von Glinow 2/e
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.
