2.2 Organizational Structure

1. 2.2 Organizational Structure Chapter 11

2. Why are organizational structures changing? • Employees are better qualified and more knowledgeable • Multinational organizations can take local factors into account • Communication is quicker and faster • Today’s organizations need leaders and team efforts

3. What is an organizational structure? • The internal, formal framework of a business that shows the way in which management is organized and how authority is passed through the organization.

4. Formal Structure • Indicates who has OVERALL responsibility of decision-making • Relationships between people working for an organization • How authority is passed down (chain of command) • The number of subordinates reporting to managers (span of control) • Channels of communication • Identify workers’ supervisors or managers

5. Advantages • Power starts at the top and works down or maybe authority maybe passed down • Divisions can be based on departments, geographic regions, or product category • The levels of promotion are clear for employees • The role of each employee is clear. • Clear chain of command.

6. Disadvantages • Top to bottom communication is typical and not usually efficient • Horizontal communication is usually limited creating tunnel vision • Is often inflexible and leads to resistance of change – managers defend their “turf” and position in the hierarchy

7. Tall Organizations • Communication tends to be slow • Span of Control is narrow • Sense of remoteness at lower levels

8. Flat Organizations • Few hierarchical levels • Wider span of control

9. Factors of Structure • Size of business • Style of leadership • Reducing overhead costs leads to flattening of organizational structure • Corporate objectives – expanding to new markets • New technologies can make current employee types obsolete