Organizational Structures môn Principle of Management | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

Organizing is the process of arranging people and other resources such as materials to work
together to accomplish a goal. The purpose is to create a division of labor and then coordinate results.
The way where various parts of an organization are arranged is called the organization
structure. A good structure is the one that helps manager to allocate tasks through a division of
labor and providing the coordination of performance. I. Takeaway 1 1. Formal Structures
Organization chart: identifies positions and job titles as well as the lines of authority and
communication between them. It shows the formal structure, or how the organization is intended to function.
 Division of work—Positions and titles show work responsibilities.
 Supervisory relationships—Lines show who reports to whom.
 Communication channels—Lines show formal communication flows.
 Major subunits—Positions reporting to a common manager are shown.
 Levels of management—Vertical layers of management are shown. 2. Informal Structures
Informal structure: made up of the unofÏcial, but often critical, working relationships, shows
how work really gets done, in contrast to the formal arrangements shown in the organization
chart. This information can be used to update the organization chart to better reflect the way things actually work. II.
Takeaway 2 - Traditional Organization Structures
The basic principle of organizing is performance can be improved when tasks are divided and
people are allowed to become experts in specific jobs.
Departmental Groups people with and jobs into work units or formal teams 1. Functional Structures
People with similar skills and performing similar tasks are grouped together into formal work
units. Members share technical expertise, interests, and responsibilities. This structure is used in any kind of business
Advantages of Functional structures Economies of scale
Task assignments consistent with expertise and training
High-quality technical problem solving
In-depth training and skill development
Clear career paths within functions
Disadvantages of Functional structures
Potential disadvantages of functional structures: Sense of DifÏculties in Functional cooperation Narrow view of Excessive pinpointing chimneys and common performance upward referral responsibilities problem purpose break objectives of decisions down 2. Divisional Structures
Divisional structure groups together people who work on the same product or process, serve
similar customers, or are located in the same area or geographical region. Divisional structures
are common in complex organizations with diverse operations that extend across many
products, territories, customers, and work processes
Advantages of Divisional structures
More flexibility in responding to environmental changes Improved coordination
Clear points of responsibility
Expertise focused on specific customers, products, and regions
Greater ease in restructuring
Disadvantages of Divisional structures
Potential disadvantages of divisional structures: Emphasis on Duplication of Competition and divisional goals at resources and poor coordination expense of efforts across across divisions organizational divisions goals 3. Matrix Structures
The matrix structure combines the functional and divisional structures. It is an attempt to gain
the advantages and minimize the disadvantages of each. This is accomplished by creating
permanent teams that cut across functions to support specific products, projects, or programs.
Matrix structures are also found in multinational corporations, where they offer the flexibility to
deal with regional differences while still handling multiple product, program, or project needs.
Advantages of Matrix structures
Better cooperation across functions Improved decision making
Increased flexibility in restructuring Better customer service
Better performance accountability
Improved strategic management
Disadvantages of Matrix structures
Potential disadvantages of matrix structures: Two-boss Two-boss system can Increased costs system is Team meetings Team may create task due to adding susceptible to are time develop confusion and team leaders to power consuming “groupitis ” conflict in work structure struggles priorities
III.Takeaway 3 - Horizontal Organization Structures 1. Team Structures
Team structures extensively use permanent and temporary teams to solve problems, complete
special projects, and accomplish day-to-day tasks. Often use cross-functional teams composed
of members from different functional departments. Project teams are convened for a specific
task or project and disbanded once completed Advantages of Team structures:
Eliminates difÏculties with communication and decision making
Eliminates barriers between operating departments Improved morale
Greater sense of involvement and identification
Increased enthusiasm for work
Improved quality and speed of decision making
Disadvantages of Team structures:
Potential disadvantages of team structures: Effective use of time depends on quality of Conflicting loyalties
Excessive time spent in interpersonal relations, among members meetings group dynamics, and team management 2. Network Structures
Network structure consist of a core of full-time employees surrounded by “networks” of
outside contractors and partners that supply services. Because the central core is relatively
small and the surrounding networks can be expanded or shrunk as needed, the network
structure helps lower costs and improve flexibility in dealing with changing environments.
Instead of doing everything for itself with full-time employees, the network organization
employs a minimum staff and contracts out as much work as possible. This is done through
strategic alliances, which are agreements with other firms to pursue business activities of
mutual interest. Some are outsourcing strategic alliances in which they contract to purchase
important services from another organization. Others may be supplier strategic alliances that
link businesses in preferred relationships that guarantee a smooth and timely flow of quality supplies among the partners.
Advantages of Network structures:
Firms can operate with fewer full-time employees and less complex internal systems
Reduced overhead costs and increased operating efÏciency
Permits operations across great distances
Disadvantages of Network structures:
Potential disadvantages of network structures: Control and coordination Potential loss of Potential lack of Excessively problems may control over loyalty among aggressive arise from outsourced
infrequently used outsourcing can be network activities contractors dangerous complexity 3. Boundaryless Structures
Boundaryless structure eliminates internal boundaries among subsystems and external
boundaries with the external environment. The boundaryless structure is a combination of the
team and network structures, with the added feature of “temporariness.” Key requirements:
Spontaneous teamwork and communication replace formal lines of authority
Meetings and information sharing happen continuously
Little hierarchy but lots of empowerment and technology utilization Impermanence is accepted
The virtual organization calls an alliance into action to meet specific operating needs and
objectives; when the work is complete, the alliance rests until next called into action.
IV.Takeaway 4 - Organizational Designs
Organizational design is the process of choosing and implementing structures to accomplish
the organization’s mission and objectives. Because every organization faces its own set of
unique problems and opportunities, no one design applies in all circumstances.
The best design at any moment is the one that achieves a good match between structure and
situational contingencies—including task, technology, environment, and people. 1. Bureaucratic design
A classic bureaucracy is a form of organization based on logic, order, and the legitimate use of
formal authority. It is a vertical structure, and its distinguishing features include a clear-cut
division of labor, strict hierarchy of authority, formal rules and procedures. Bureaucracies were
supposed to be orderly, fair, and highly efÏ . cient
Contingency perspective in Organizational Design, management theory asks two contingency questions.
When is a bureaucratic form a good choice for an organization?
When it isn’t, what alternatives are available?
2. Mechanistic vs. Organic Designs
Organizations with more mechanistic designs are vertical structures that typically operate with
centralized authority, many rules and procedures, a precise division of labor, narrow spans of
control, and formal means of coordination.
Mechanistic designs work best for organizations doing routine tasks in stable environments.
When organizations operate in dynamic and often uncertain environments, their effectiveness
depends on being able to change with the times. This requires the more organic designs,
horizontal structures with decentralized authority, fewer rules and procedures, less precise
division of labor, wider spans of control, and more personal means of coordination
Perform well in environments that demand flexibility in dealing with changing conditions.
3. Trends in Organizational Designs
Less Chain of command: “simple” and “streamlined” in order to “allow employees to
innovate and make quick decisions”
Wider spans of control run with flat structures that have fewer levels of management.
More Delegation and Empowerment: when delegating, managers should give
employees sufÏcient authorities and equally responsibilities
Step 1—The manager assigns responsibility by carefully explaining the work or
duties someone else is expected to do. This responsibility is an expectation for the
other person to perform assigned tasks.
Step 2—The manager grants authority to act. Along with the assigned task, the
right to take necessary actions ( for example, to spend money, direct the work of
others, or use resources) is given to the other person.
Step 3—The manager creates accountability. By accepting an assignment, the
person takes on a direct obligation to the manager to complete the job as agreed.
Decentralization with Centralization
High speed computer networks and advanced information systems allow managers at higher
levels to easily stay informed about a wide range of day-to-day performance matters throughout an organization.
Because they have information so readily available, they can allow more
decentralization in decision making.
Reduced Use of Staff: what is best for any organization will be a cost-effective staff
component that satisfies needs for specialized technical assistance to line operations.