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Five Organisational Structures

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Dr. Greg Waddell
Dr. Greg Waddell

Excellent leaders know how to apply structural principles to their particular situation and find a best structural fit. So, this lecture will help you achieve course objective number three: "Articulate various principles related to identifying organizational behavior." After completing the video, you should be able to identify the principle that will affect structural choices and this in turn will affect the behavior of your organization.

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Organizational Structure LE 303 Organizational Behavior Lecture 6 Photo by Kevin Dooley. Available to http://www.flickr.com/photos/12836528@N00/22017 91390
Definition
Definition “The placement of power and authority in an organization.” - Galbraith, J. R., 2002, Designing Organizations
Definition “The manner in which the parts of an organization are related to one another.” - Richard Daft
Definition A series of channels through which informationflows. - Nadler & Tushman (1997)
Related Questions • How does information flow throughout the organization? • Who reports to whom? • Who has authorization to make decisions and at what levels? • For each organizational function (or region or product line), who is responsible for making sure objectives are achieved?
Principles
Control Coordination
9 Concerns of Organization coordination control autonomy Keidel, Robert W. Seeing Organizational Patterns: A New Theory & Language of Organizational Design. San Francisco: Berrett-Koehler, 1995. ISBN: 1-881052-65-6
10 Concerns of Organization coordination control autonomy
(the individual) 11 Concerns of Organization coordination (the team) control autonomy (the organization)
The Goal 12 Indirect Influence coordination control autonomy
13 Indirect Influence coordination control autonomy The Goal
14 Indirect Influence coordination control autonomy The Goal
Structural Options
Five Organizational Structures Functional Products Matrix Geographical Market
Functional Structure • People grouped by function (marketing, sales, R&D, support, etc.) • Small, single product line • Undifferentiated market • Expertise within the function • Long product development and life cycles
CEO Research & Development Manufacturing Sales Accounting & Finance Functional Structure www.macuniversity.edu
Product Structure • People grouped by product • Product focus • Healthy team competition • Flexibility • Rapid decision-making • Common with retail companies Advantage: product focus, flexibility Disadvantage: Duplication of effort
CEO Bolts Division Product Structure Nuts Division Manufacturing Sales Manufacturing Sales www.macuniversity.edu
Market Structure • People grouped by market segments (E.g. Teens, Adults, Elderly) • Each product or service is unique for one segment • Customer focus • Rapid customer service and product cycles • minimum efficient scale in functions
CEO Individual Customers Market Structure Corporate Customers Customer Service Customer Service Sales Sales www.macuniversity.edu
Geographical Structure • People grouped by geographic location. • Low value items with high transport cost • Closeness to customer for delivery or support • Perception of the organization as local • Geographical market segments needed
Geographic Structure CEO West East Customer Service Customer Service Sales Sales www.macuniversity.edu
Matrix Structure • An alternative to the functional structure • Organization organized by both Function and Product • Heavy use of Autonomous Work Teams (ATWs) • Potential for new processes and radical change to processes • Reduced working capital (lower inventory and faster collection of invoices) • Can cause confusion when horizontal managers are not aligned with vertical managers.
CEO Matrix Structure Research Manufacturing www.macuniversity.edu Engineering Product A Product B Product C
Images of Structure
The Architecture Metaphor 28
29 Organic Structure
The Human Body “A company is a living being. It is an entity or persona, in and of itself, separate from the individuals within it. As a living persona, the company is goal-oriented, conscious of its own identity and open to the outside world.” -- Aire De Geus
Can you think of other images for how an organization might be structured?
Thank You! www.macuniversity.edu

More Related Content

Five Organisational Structures

  • 1. Organizational Structure LE 303 Organizational Behavior Lecture 6 Photo by Kevin Dooley. Available to http://www.flickr.com/photos/12836528@N00/22017 91390
  • 3. Definition “The placement of power and authority in an organization.” - Galbraith, J. R., 2002, Designing Organizations
  • 4. Definition “The manner in which the parts of an organization are related to one another.” - Richard Daft
  • 5. Definition A series of channels through which informationflows. - Nadler & Tushman (1997)
  • 6. Related Questions • How does information flow throughout the organization? • Who reports to whom? • Who has authorization to make decisions and at what levels? • For each organizational function (or region or product line), who is responsible for making sure objectives are achieved?
  • 9. 9 Concerns of Organization coordination control autonomy Keidel, Robert W. Seeing Organizational Patterns: A New Theory & Language of Organizational Design. San Francisco: Berrett-Koehler, 1995. ISBN: 1-881052-65-6
  • 10. 10 Concerns of Organization coordination control autonomy
  • 11. (the individual) 11 Concerns of Organization coordination (the team) control autonomy (the organization)
  • 12. The Goal 12 Indirect Influence coordination control autonomy
  • 13. 13 Indirect Influence coordination control autonomy The Goal
  • 14. 14 Indirect Influence coordination control autonomy The Goal
  • 16. Five Organizational Structures Functional Products Matrix Geographical Market
  • 17. Functional Structure • People grouped by function (marketing, sales, R&D, support, etc.) • Small, single product line • Undifferentiated market • Expertise within the function • Long product development and life cycles
  • 18. CEO Research & Development Manufacturing Sales Accounting & Finance Functional Structure www.macuniversity.edu
  • 19. Product Structure • People grouped by product • Product focus • Healthy team competition • Flexibility • Rapid decision-making • Common with retail companies Advantage: product focus, flexibility Disadvantage: Duplication of effort
  • 20. CEO Bolts Division Product Structure Nuts Division Manufacturing Sales Manufacturing Sales www.macuniversity.edu
  • 21. Market Structure • People grouped by market segments (E.g. Teens, Adults, Elderly) • Each product or service is unique for one segment • Customer focus • Rapid customer service and product cycles • minimum efficient scale in functions
  • 22. CEO Individual Customers Market Structure Corporate Customers Customer Service Customer Service Sales Sales www.macuniversity.edu
  • 23. Geographical Structure • People grouped by geographic location. • Low value items with high transport cost • Closeness to customer for delivery or support • Perception of the organization as local • Geographical market segments needed
  • 24. Geographic Structure CEO West East Customer Service Customer Service Sales Sales www.macuniversity.edu
  • 25. Matrix Structure • An alternative to the functional structure • Organization organized by both Function and Product • Heavy use of Autonomous Work Teams (ATWs) • Potential for new processes and radical change to processes • Reduced working capital (lower inventory and faster collection of invoices) • Can cause confusion when horizontal managers are not aligned with vertical managers.
  • 26. CEO Matrix Structure Research Manufacturing www.macuniversity.edu Engineering Product A Product B Product C
  • 30. The Human Body “A company is a living being. It is an entity or persona, in and of itself, separate from the individuals within it. As a living persona, the company is goal-oriented, conscious of its own identity and open to the outside world.” -- Aire De Geus
  • 31. Can you think of other images for how an organization might be structured?