Chapter 7 Presentation

Designing
Organizational
Structures
Group 7
Introduction
Gemilang Bagus F – B100224613

M Hasnan Ash S – B100224551
Agenda
○ Building Organizational Structures
○ Contemporary Structures
○ Using Teams to Enchance Motivation and Performance
○ Authority – Establishing Organizational Relationship
○ Degree of Centralization
○ Organizational Design Considerations
○ The Informal Organization
○ Trends in Organizational Structure
01
Building
Organizational
Structures
What are traditional forms of organizational
structures?
The key functions that managers perform include planning, organizing, leading, and controlling.
This module focuses specifically on the organizing function. Organizing involves coordinating and allocating a
firm’s resources so that the firm can carry out its plans and achieve its goals. This organizing, or structuring,
process is accomplished by:
01 Division of Labor 02 Departementalization
Determining work activities
Grouping jobs and employees
and dividing up tasks
03 Delegation
Assigning authority and
responsibilities
Types of
Departementalization
1. Functional departmentalization, which is based on the
primary functions performed within an organizational unit.
2. Product departmentalization, which is based on the goods
or services produced or sold by theorganizational unit.
3. Process departmentalization, which is based on the
production process used by the organizational unit.
4.Customer departmentalization, which is based on the
primary type of customer served by the organizational
unit.
5. Geographic departmentalization, which is based on the
geographic segmentation of organizational units.
02
Contemporary
Structures
What contemporary organizational
structures are companies using?
There is 2 Contemporary Structures that are companies using,
they are Matrix Structure and Committee Structure
Matrix Structure
The matrix structure (also called the

project management approach) is
sometimes used in conjunction with the
traditional line-and-staff structure in an
organization. Essentially, this structure
combines two different
forms of departmentalization, functional
and product, that have complementary
strengths and weaknesses.
The matrix structure brings together
people from different functional areas of
the organization (such as
manufacturing, finance, and marketing)
to work on a special project.
Committee
Structure
In committee structure, authority
and responsibility are held by a
group rather than an individual.
Committees are typically part of a
larger line-and-staff organization.
Often the committee’s role is only
advisory, but in some situations the
committee has the power to make
and implement decisions.
Committees can make the
coordination of tasks in the
organization much easier
03
Using Teams to
Enchance Motivation
and Performance
Understanding
Group Behavior
Every organization contains
groups, social units of two or more
people who share the same goals
and cooperate to achieve those
goals. Understanding some
fundamental concepts related to
group behavior and group
processes provides a good
foundation for understanding
concepts about work teams.
Work Group versus Work Team
Work Group Work Team

Work groups share resources Work teams require not only
and coordinate efforts to help coordination but also collaboration,
members better perform their the pooling of knowledge, skills,
individual duties and abilities, and resources in a collective
responsibilities effort to attain a common goal.
Type of Teams
Problem Solving Team Self-managed work team Cross functional team
are typically made up of Manage themselves without any is a group of people with
employees from the same formal supervision, taking different functional expertise
department or area of responsibility for setting goals, working toward a common
expertise and from the same planning and scheduling work goal.
level of the organizational activities, selecting team
hierarchy. members, and evaluating team
performance.
Building High-Performance Teams
A great team must possess certain characteristics, so selecting the

appropriate employees for the team is vital. Employees who are more
willing to work together to accomplish a common goal should be
selected. Next, high-performing teams need to practice good
communication. Team members need to communicate messages and
give appropriate feedback that seeks to correct any
misunderstandings. Lastly, great teams have great leaders. Skilled
team leaders divide work so that tasks are not repeated, help
members set and track goals, monitor their team’s performance,
communicate openly, and remain flexible to adapt to changing goals
or management demands.
04
Authority—Establishing
Organizational
Relationships
Managerial
Hierarchy
(also called the management
pyramid) is defined by the levels of
management within an
organization. Generally, the
management structure has three
levels: top, middle, and supervisory
management. In a managerial
hierarchy, each organizational unit is
controlled and supervised by a
manager n a higher unit.
Span of Control
(sometimes called span of management) is the number of employees the manager directly supervises. It can
be as narrow as two or three employees or as wide as 50 or more. There is 2 type of span of control, Narrow
and Wide, both of them have their own advantages and disadvantages
05
Degree of
Centralization
The optimal of centralization is determined by the following five factors:
1. Nature of the task. The more complex the task, the narrower the span
of control.
2. Location of the workers. The more locations, the narrower the span of
control.
3. Ability of the manager to delegate responsibility. The greater the ability to
delegate, the wider the span of control.
4. Amount of interaction and feedback between the workers and the manager.
The more feedback and interaction required, the narrower the span of
control.
5. Level of skill and motivation of the workers. The higher the skill level and
motivation, the wider the span of control.
06
Organizational
Design
Considerations
Mechanistic Structures versus Organic Structures
A mechanistic organization is characterized by a relatively high degree of

job specialization, rigid departmentalization, many layers of management
(particularly middle management), narrow spans of control, centralized
decision-making, and a long chain of command. While, an organic
organization is characterized by a relatively low degree of job
specialization, loose departmentalization, few levels of management, wide
spans of control, decentralized decision-making, and a
short chain of command.
Structural Characteristic between Mechanistic and Organic
07
The Informal
Organization
What is Informal Organization?
Informal Oganization mean The network of connections and channels
of communication based on the informal relationships of individuals
inside the organization.
Functions of Informal
Organization
First, it provides a source of friendships and social contact for organization members. Second, the
interpersonal relationships and informal groups help employees feel better-informed about and
connected with what is going on in their firm, this giving them some sense of control over their
work environment. Third, the informal organization can provide status and recognition that the
formal organization cannot or will not provide employees. Fourth, the network of
relationships can aid the socialization of new employees by informally passing along rules,
responsibilities,
basic objectives, and job expectations.
08
Trends in Organizational
Structure
Reengineering Organizational Structure
Periodically, all businesses must reevaluate the way they do business. This includes
assessing the effectiveness of the organizational structure. The purpose of reengineering
is to identify and abandon the outdated rules and fundamental assumptions that guide
current business operations. Every company has many formal and informal rules, based
on assumptions about technology, people, and organizational goals, that no longer hold.
Thus, the goal of reengineering is to redesign business processes to achieve
improvements in cost control, product quality, customer service, and speed.
The Virtual Corporation
which is a network of independent companies (suppliers, customers, even competitors)

linked by information technology to share skills, costs, and access to one another’s
markets. This network structure allows companies to come together quickly to exploit
rapidly changing opportunities. The key attributes of a virtual corporation are:
● Technology. Information technology helps geographically distant companies form alliances
and work together.
● Opportunism. Alliances are less permanent, less formal, and more opportunistic than in
traditional partnerships.
● Excellence. Each partner brings its core competencies to the alliance, so it is possible to create
an organization with higher quality in every functional area and increase competitive
advantage.
● Trust. The network structure makes companies more reliant on each other and forces them to
strengthen relationships with partners.
● No borders. This structure expands the traditional boundaries of an organization.
Virtual Teams
Technology is also enabling corporations to create virtual work teams. Geography is no

longer a limitation when employees are considered for a work team. Virtual teams
mean reduced travel time and costs, reduced relocation expenses, and utilization of
specialized talent regardless of an employee’s location.
Outsourcing
Outsourcing is when a company hires another company to do some of its work, such as making
products or providing services. To be successful in outsourcing efforts,
managers must do the following:
• Identify a specific business problem.
• Consider all possible solutions.
• Decide whether outsourcing the work is the appropriate answer to the problem.
• Develop a strategic outsourcing partnership with vendors and a solid framework that promotes
seamless
collaboration and communication.
• Engage with outsourcing partners on a regular basis to instill trust between the two entities.
• Remain flexible when it comes to working with outsourcing providers in terms of accommodating
requests or adjusting needs when necessary in an effort to build a long-term strategic partnership
beneficial to both parties
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Designing

Gemilang Bagus F – B100224613

The matrix structure (also called the

Work Group Work Team

Problem Solving Team Self-managed work team Cross functional team

A great team must possess certain characteristics, so selecting the

A mechanistic organization is characterized by a relatively high degree of

which is a network of independent companies (suppliers, customers, even competitors)

Technology is also enabling corporations to create virtual work teams. Geography is no

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