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7: Designing Organizational Structures

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    Learning Objectives

    After reading this chapter, you should be able to answer these questions:

    1. What are the traditional forms of organizational structure?
    2. What contemporary organizational structures are companies using?
    3. Why are companies using team-based organizational structures?
    4. What tools do companies use to establish relationships within their organizations?
    5. How can the degree of centralization/decentralization be altered to make an organization more successful?
    6. How do mechanistic and organic organizations differ?
    7. How does the informal organization affect the performance of the company?
    8. What trends are influencing the way businesses organize?

    • 7.0: Introduction
      This page examines various organizational structures, including traditional, contemporary, and team-based models, and their effects on business success. It underscores the significance of strategic communication and leadership in large organizations, particularly American Airlines, while stressing the need for flexibility and responsiveness to customer demands.
    • 7.1: Building Organizational Structures
      This page discusses traditional organizational structures, focusing on management's organizing function, including division of labor and departmentalization. It covers various forms such as functional, product, process, and geographic departmentalization, exemplified by Panera Bread's clean food philosophy and Procter & Gamble's four departmental pillars.
    • 7.2: Contemporary Structures
      This page discusses the growing trend of companies adopting contemporary organizational structures, specifically matrix and committee frameworks, to optimize employee skills. The matrix structure enhances teamwork and efficiency but can create role confusion. The committee structure allows for coordinated tasks but can slow decision-making and reduce accountability. Both structures emphasize improving organizational effectiveness in response to changing business requirements.
    • 7.3: Using Teams to Enhance Motivation and Performance
      This page highlights the growing trend of team-based organizational structures aimed at boosting motivation and performance. Emphasizing group behavior and various team types, it outlines how cohesiveness, norms, and individual traits impact dynamics. Key elements of high-performance teams include collaboration, clearly defined goals, effective communication with constructive feedback, and strong leadership for managing workloads and adapting to change.
    • 7.4: Authority—Establishing Organizational Relationships
      This page discusses how companies create management hierarchies that define reporting structures, typically involving top, middle, and supervisory management. It highlights the importance of a clear chain of command while noting some companies, like The Morning Star Company, adopt self-management approaches. The text also addresses spans of control, which impact efficiency and employee empowerment, and explores the trade-offs between narrow and wide spans for management effectiveness.
    • 7.5: Degree of Centralization
      This page discusses the impact of centralization and decentralization on organizational success. Centralization allows for tight control and efficiency but may hinder development and responsiveness at lower levels. In contrast, decentralization promotes quicker decision-making and innovation but can lead to skill gaps and communication problems. Factors affecting this decision include organizational size, changing environments, and employee willingness to share authority.
    • 7.6: Organizational Design Considerations
      This page explores the distinctions between mechanistic and organic organizations, highlighting their structural differences in job specialization, hierarchy, and decision-making. It notes that the choice of organization type is influenced by company size, strategy, and environmental factors, using examples from companies like Google and Disney.
    • 7.7: The Informal Organization
      This page discusses the informal organization, highlighting its role in fostering relationships and communication among employees outside the formal structure. It enhances social cohesion, aids in new employee integration, and can transmit information more effectively than formal channels. Managers can utilize these informal networks to inform decision-making and boost organizational efficiency.
    • 7.8: Trends in Organizational Structure
      This page discusses how businesses are adapting to trends like reengineering, virtual corporations, virtual teams, and outsourcing to enhance performance and respond to technological advancements. Reengineering focuses on process efficiency, while virtual corporations utilize technology for collaboration without traditional structures. Virtual teams facilitate global remote collaboration, and outsourcing now includes innovative roles beyond cost-saving.

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