Organizational Structure and Change

Organizing

  • A manager allocates resources like people, equipment, and money to achieve company objectives.
  • Successful managers assign activities identified in the planning process to individuals, departments, or teams, ensuring everyone has the resources needed.

Level of Management

  • A typical organization has several layers of management.

Top Managers

  • Responsible for the health and performance of the organization.
  • Set objectives or performance targets to direct activities for fulfilling the company's mission.
  • Represent the company in dealings with other businesses and government agencies and promote it to the public.
  • Job titles include CEO, CFO, COO, president, and vice president.

Middle Managers

  • Report to top management and oversee first-line managers.
  • Develop and implement activities, allocating resources to achieve objectives set by top management.
  • Common job titles include operations manager, division manager, plant manager, and branch manager.

First-Line Managers

  • Supervise employees and coordinate activities to ensure consistency with plans from top and middle management.
  • It’s at this level that most people acquire their first managerial experience
  • Job titles include manager, group leader, office manager, foreman, and supervisor.

Organizational Structure

  • Building an organizational structure involves:
    • Job specialization (dividing tasks into jobs).
    • Departmentalization (grouping jobs into units).
  • An organizational structure outlines roles, reporting positions, and departmentalization within an organization.
  • The structure should be appropriate for the company at a specific point in time.

Specialization

  • Organizing activities into related tasks handled by individuals or groups.
  • Involves:
    1. Identifying activities needed to achieve organizational goals.
    2. Breaking down activities into tasks for individuals or groups.
  • Advantages:
    • Efficiency.
    • Jobs are easier to learn.
    • Roles are clearer.
  • Disadvantages:
    • Boredom, leading to job dissatisfaction.
    • Decreased performance, increased absenteeism, and turnover.

Departmentalization

  • Grouping specialized jobs into meaningful units (divisions, departments, groups).
  • Traditional groupings result in different organizational structures; the focus is on functional and divisional organizations.

Functional Organizations

  • Group people with comparable skills performing similar tasks.
  • Typical for small to medium-size companies.
  • People are Grouped by business functions: accountants, finance, marketing and sales, human resources, production, and research and development.

Divisional Organizations

  • Large companies find it difficult to operate as single units under a functional structure.
  • Large companies are structured as divisional organizations.
  • Each division functions autonomously with functional expertise (production, marketing, accounting, finance, human resources).
  • Divisions can be formed according to products, customers, processes, or geography.
Product Division
  • A company is structured according to its product lines.
  • Example: General Motors (Buick, Cadillac, Chevrolet, and GMC).
  • Each division has its own R&D, manufacturing, and marketing teams.
  • Downside: Higher costs due to duplication of corporate support services.
Customer Division
  • Enables companies to better serve various categories of customers.
  • Example: Johnson & Johnson (consumer, pharmaceuticals, professional).
Process Division
  • Goods move through several steps during production.
  • Example: Bowater Thunder Bay (tree cutting, chemical processing, finishing).
Geographical Division
  • Enables companies operating in several locations to be responsive to local customers.
  • Example: Adidas, organized by regions.

Organizational Chart

  • Visual representation of a company's structure.

Chain of Command

  • Vertical lines in the organization chart show authority relationships among people at different levels.
  • Indicates who reports to whom.
  • Unity of command: each person reports to one supervisor.
  • Matrix structure: employees from various functional areas form teams for specific projects.

Span of Control

  • The number of layers between the top managerial position and the lowest level.
  • New organizations are often flat (few layers).
  • As a company grows, it becomes taller (more layers), slowing down communication and decision-making.
  • Companies are restructuring to become flatter.
  • Span of control measures the number of people reporting to a manager.

Delegate Authority

  • Managers entrust work to subordinates.
  • Many managers are reluctant to delegate, overburdening themselves and denying subordinates opportunities to develop skills.

Responsibility and Authority

  • As the organization grows, owners need to assign responsibility for tasks to others.
  • Grant subordinates the authority (power to make decisions) and resources needed to complete tasks.
  • Hold subordinates accountable for their performance.