OB lecture 2 organizational structure functional structure

Organizational structures: Simple Structure Team Structure Functional Structure Matrix Structure Divisional Structure (Federal Decentralization) Simulated Decentralization Other Structure – SystemNetwork and 7. Issues in Organization structure 7.1 Formal and Informal 7.2 Centralized and Decentralized 7.3 Tall and flat 7.4. Span of control

Lecture Unit Organizations and Behaviour Organizational Structure Functional Structure Why Study Organizational Structure • Good organizational structure leads to efficiency, and less conflicts • Bad organization leads to inefficiency and conflicts Conflicts There are types of conflicts ! Personal Due to personality Structural Due to organizational structure An Example of Structural Conflict Private School CEO Recruiter Lecturers How to solve this problem ? We apply OB ! Organizational Structures Simple Structure Team Structure Functional Structure Matrix Structure Divisional Structure (Federal Decentralization) Simulated Decentralization Other Structure – System/Network Others Topics we will cover Issues in Organization structure 7.1 Formal and Informal 7.2 Centralized and Decentralized 7.3 Tall and flat 7.4 Span of control Simple Structure Simple structure is no structure Doing everything, help each other Most businesses start in this structure ‘family’ like But it cannot grow! Team Structure Humans have used team for hundreds of thousands of years In hunting ! What differential team structure from simple structure are roles Functional Structure Functional structure organizes employees around specific skills or resources Organizations usually have some forms of functional structure at some level CEO Chevrolet Finance Purchasing Human Resources Production Example of a Functional Structure Sales and Marketing Henri Fayol French Mining Engineer And later director of a mine His book "Administration Industrielle et Générale", 1915 The Theoretical Basis of Functional Structure Adam Smith The Wealth of Nations, 1776 Productivity gain through Division of Labour ‘Pins’ manufacturing… 10 persons, 10,000 pins The Wealth of Nations, Adam Smith, 1776 It contains major ideas I.Laissez – fair - free market , free trade Adam Smith II Division of Labour Division of Labour The Wealth of Nations, 1776 “The greatest important in the productive powers of labor, and the greatest part of skills, dexterity and judgment with which is any where directed or applied, seem to have been the effect of division of labour Mine of Henri Fayol Directeur General digging Conveying Sorting Storage Sell Simple enough for functional structure to work well A Possible Structure of a automotive company Information Technology Purchasing Incoming Inspection CEO Human Resource s Assembly Assembly Assembly Assembly Quality Control Sales Functional Structure A manufacturing factory is usually organized by function Purchasing Incoming Inspection Process Process Out going inspection Storage Delivery Finance Human Resources Others Functional Structure Functional structure is used in - a school - an university - a hospital Function = Department e.g Marketing Department is a function It performs the function of marketing Advantages of Functional Structure Clarity everyone has a ‘home’ Least Psychological Demands Functional structure makes the least psychological demands on people They are highly secure in their work and their relationship It functions - if the tasks are simple and routine Disadvantages of Functional Structure Poor Decision Making It is difficult for anyone, up to and including the top functional people, to understand the task of the whole People not know what other function is doing They think their Department is the most important As soon as its approaches a degree of size or complexity ‘friction’ build up And if this happens, it requires a lot of coordination: meetings, committees, trouble shooters… (Symptoms of dysfunctioning) ‘Silos’ 2.0 Slow Communication Slow in communication Disadvantages of Functional Structure Poor Management Development Functional structure also does poorly in developing, preparing, and testing men Functional structure tends to make a man unfit for management - emphasis is on functional skills rather than on results and performance Poor Management Development My personal experience: When a person has been doing the same function for a long time, he/she becomes very rigid, narrow minded, and stubborn He/she is very nervous if he/she is asked to a job outside their functions The problem becomes more profound with old age Function and Dysfunction Functional structure functions if the tasks are simple, routine and repetitive, or the organization is too big Functional structure dysfunctions if the Tasks are complex, non-routine, or Changing, or the organization is too big How to overcome the limitations We will discuss in the next lecture 1.add a team structure 2.add a divisional structure ... to organizational structure An Example of Structural Conflict Private School CEO Recruiter Lecturers How to solve this problem ? We apply OB ! Organizational Structures Simple Structure Team Structure. .. Example of a Functional Structure Sales and Marketing Functional Structure Human beings have used functional structure for thousands of years But modern discussion of Functional structure is... structure are roles Functional Structure Functional structure organizes employees around specific skills or resources Organizations usually have some forms of functional structure at some level