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Chapter

Organizational Structure, design and Communication

McGraw-Hill/Irwin
2008 The McGraw-Hill Companies, Inc. All rights reserved

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Organization Design
Design refers to a plan for the construction of any object or system. Organization design refers to the construction or change of a structure within which the work of the organization takes place. Organization design refers to managerial decisions that determine the structure and processes which in turn control the activities in an organization.

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Organization Design
These processes include authority and responsibility relationships, communication networks, planning and controlling mechanisms. Organization design begins with the formulation of a strategy The strategy is derived from clear, concise statements of vision, mission and from the organizations basic philosophy.

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Organization structure

Defines the formal relationships among people and specifies both their authorities and responsibilities. An organization is the structural framework for carrying out the functions of planning, decision-making, controlling, directing, communication, motivation, etc.

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The three levels of management

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..
Organization

structure determines who works together

It

is the way managers design their firms to achieve their organizations mission and goals

Organizational

communication flows through its structure, which affects:

behavior

human

relations performance

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The transition from an economy based on materials to an economy based on flows of information has created considerable challenges for organizational structure, and communication.

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Principles of Organization (1 of 3)
Division

of Labor and Departmentalization

of labor, or work specialization refers to the degree to which tasks are subdivided into separate jobs Departmentalization grouping of related activities into units
Division

Chain
line

of Command

of authority from the top to the bottom of the organization, which is shown in an organization chart

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Principles of Organization (2 of 3)
Span

of Management

refers

to number of employees reporting to a manager

Centralized
With

and Decentralized Authority

centralized authority, top managers make important decisions With decentralized authority, middle and first-line managers make important decisions where the action is

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Principles of Organization (3 of 3)
Coordination
With

the division of labor and departmentalization comes the need to coordinate the work of all departments

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Questions and Answers for Designing Organizational Structure:

Questions
How should we subdivide work? Who should departments and individuals report to? How many individuals should report to each manager? At what level should decisions be made? How do we get everyone to work together as a team?

Answers
Division of Labor and Departmentalization Chain of Command Span of Management Centralization vs. Decentralization Coordination

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Formal Organization Structure

President

Vertical downward communication

Vice President Production

Vice President Finance

Vice President Marketing

Vertical upward communication

Manager A

Manager B

Manager C

Manager D

Manager E

Manager F

Manager G

Manager H

Manager I

Exhibit 6.2

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Informal Organization Structure

President
Horizontal communication networks

Vice President Production

Vice President Finance

Vice President Marketing

Manager A

Manager B

Manager C

Manager D

Manager E

Manager F

Manager G

Manager H

Exhibit 6.2

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Common Types of Departmentalization (1 of 4)

Functional

Product

Customer

Divisional

Territory

Matrix

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Common Types of Departmentalization (2 of 4)

Functional
involves

Departmentalization

organizing departments around essential input activities, such as:

production and operations finance and accounting marketing and sales human resources

Product

(Service) Departmentalization

involves

organizing departments around goods and services provided

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Common Types of Departmentalization (3 of 4)

Customer
involves

Departmentalization

organizing departments around the needs of different types of customers with unique needs calling for different sales staffs and products

Divisional
the

Departmentalization (M-Form)

firm develops independent lines of business that operate as separate companies, all contributing to the corporation profitability

Territory

(Geographic) Departmentalization

involves

organizing departments in each area in which the enterprise does business

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Common Types of Departmentalization (4 of 4)

Matrix

Departmentalization

combines

the functional and product departmental structures

large companies have more than one form of departmentalization

Combination
many

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Matrix organisation2

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Contemporary Organization Design

Learning Organizations

Team Organizations and Reengineering

Virtual Organizations

Boundaryless Organizations

E-Organizations

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American and Japanese Organization Structures

Division

of labor tends to be a bit less specialized in Japan Both countries use the same types of departmentalization American organizations tend to be quicker to hire, lay off, and to change jobs than the Japanese

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Organizational Communication
communication the compounded interpersonal communication process across an organization Communication flows in an organization are:
Organizational
Vertical Horizontal

Grapevine

(multidirectional)

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Vertical and Horizontal Communication

Vertical Communication The flow of information both up and down the chain of command Formal communication Recognized as official Status and power are not equal among participants in vertical communication Horizontal Communication The flow of information between colleagues and peers Informal communication Does not follow the chain of command Not recognized as official

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Grapevine Communication
the informal vehicle through which messages flow throughout the organization When the grapevine allows employees to know about a management decision almost before it is made, management must be doing something right.
Grapevine

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Communication Networks
networks sets of employees who have stable contact through which information is generated and transmitted Two major types of communication networks: 1. within organizations 2. within departments and small groups
Communication

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Message Transmission Channels

Oral Communication

Written Communication

Nonverbal Communication

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Oral Communication Media

Face-to-Face

Telephone

Meetings

Presentations

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Written Communication (1 of 2)
With

increased use of e-mail, managers substitute face-to-face communication with email Communication Objective Guidelines
Memos Letters Reports Bulletin Posters Computers/e-mail Fax

board notices

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Written Communication (2 of 2)
Writing

skills

Grammar rules for use of the eight parts of speech To simplify grammar, we use subjects, predicates, modifiers, and connectives

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Nonverbal Communication

Facial Expressions

Vocal Qualities

Gestures

Posture

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Emotions (1 of 2)
Emotional

labor requires the expression of desired emotions during interpersonal relations

Universal emotions: happiness surprise fear sadness anger disgust

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Emotions (2 of 2)
Understanding
Feelings

Feelings

are subjective they tell you peoples attitudes and needs Feelings are usually disguised as factual statements Feelings are neither right nor wrong but behavior is
Gender

Differences Global Differences

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Dealing with Emotional Employees

Calming

the emotional person Use reflecting responses

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Criticism

Getting Criticism

Giving Criticism

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Guidelines for Giving Effective Criticism

Give

more praise than criticism Criticize immediately Criticism should be performance oriented Give specific and accurate criticism Open on a positive note and close by repeating what action is needed

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Summary
Organization structure is essential to achieve the organizational goals. The organization structure basically shows the relationships between different jobs the concept of organization design and structure hierarchy, division of work, unity of command, authority & responsibility, span of control, centralization & decentralization& departmentation.

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