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DESIGNING ORGANIZATION STRUCTURE - Coggle Diagram
DESIGNING ORGANIZATION
STRUCTURE
7.2 DEPARTMENTALIZATION
3 MATRIX**
Definition:
Combines functional and divisional structures simultaneously.
Key Feature:
Dual lines of authority where employees report to two supervisors (two bosses).
Strengths
Deep interdisciplinary cooperation
Highly flexible and adaptable to changing environments.
More efficient use of resources than a single hierarchy.
Weaknesses
Frustration and confusion from dual chain of command.
High conflict between the two sides of the matrix.
Meeting-heavy (more discussion than action).
Variant:
Global Matrix Structure (combines product/service lines with geographic regions).
2 DIVISIONAL APPROACH
Basis
: Products, geography, customers, outputs
Weaknesses
Duplication of resources across divisions
Less technical depth and specialization
Poor coordination across divisions
Strengths
Fast response to unstable environments
Strong focus on customer needs
Excellent coordination within divisions
1 VERTICAL FUNCTIONAL APPROACH
Basis:
Skills, expertise, resource use
Strengths
Efficient use of resources (economies of scale)
In-depth skill specialization
Strong top management control
Weaknesses
Poor communication across departments
Slow response to external changes
Decisions delayed at the top
4 Team Approach
Definition:
Uses cross-functional and permanent teams to delegate authority and push decision-making down the chain
Strengths
Reduced barriers among departments.
Quicker decisions and shorter response time.
Better morale and employee enthusiasm from involvement.
Weaknesses
Dual loyalties and internal conflict.
Significant time and resources spent on meetings.
Risks unplanned decentralization.
5. Virtual Network Approach
Definition:
Extends organizational boundaries by subcontracting functions (e.g., design, manufacturing, accounting) to other companies around a company core.
Strengths
Can draw on worldwide expertise
Drastically reduced overhead costs.
Highly flexible and responsive.
Weaknesses
Severe lack of control due to weak boundaries.
Greater demands on managers to coordinate.
Weaker employee loyalty.
7.1 ORGANIZING THE VERTICAL STRUCTURE
2 Chain of Command
Definition
An unbroken line of authority linking all employees in an organization and showing who reports to whom.
Key Components
Authority
The formal and legitimate right to make decisions and issue orders.
Vested in organizational positions, not people
Must be accepted by subordinates.
Flows downward through the vertical hierarchy
Responsibility:
The duty to perform the assigned task or activity.
Delegation:
The process managers use to transfer authority and responsibility downward to others.
Two Underlying Principles
Unity of Command
Each employee is held accountable to only one supervisor.
Eliminates conflicting priorities, dual demands, and confusion.
The Scalar Principle
Refers to a clearly defined, unbroken line of authority in the organization that includes all employees from top to bottom.
1 Division of Labor (Work Specialization)
Definition:
The degree to which organizational tasks are subdivided into individual jobs.
Advantages
Makes efficient use of employee skills.
Increases employee skills through repetition
Less job downtime (stopping production) increases productivity
Specialized training is more efficient
Allows use of specialized equipment
Can create greater economies and efficiencies – but not always
3 Span of Management
Definition
Span of Management (Span of Control):
The number of employees who report directly to a single supervisor.
Core Role:
Determines the shape of the organizational hierarchy (tall vs. flat).
Two Structural Types
Narrow Span
Manager oversees fewer subordinates.
Allows close, hands-on supervision.
Result (Tall Structure):
Many management layers, distinct hierarchy, and formalized communication processes
Wide Span
Manager oversees a large number of subordinates.
Requires less supervisor involvement and greater employee autonomy.
Result (Flat Structure):
Fewer layers, streamlined/faster communication, and increased autonomy
Conditions for a Wide Span (Diagnostic Checklist)
Work is stable, routine, and rules/procedures are clearly defined.
Subordinates perform similar types of work.
The entire team is located in a single place.
Employees are highly trained and require little direction.
Support systems and personnel are readily available to the manager.
The manager's personal preference favors a large span.
Organizational structure is
defined
as:
Tasks:
The set of formal tasks assigned to individuals and departments.
Reporting:
Formal reporting relationships, including lines of authority, decision responsibility, number of levels, and span of control.
Coordination
: The design of systems to ensure effective coordination of employees across departments.