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

Why Study Organizational

Structure

• Good organizational structure leads

to efficiency, and less conflicts

• Bad organization leads to inefficiency and conflicts

An Example of Structural

Conflict

Private School CEO

Recruiter Lecturers

How to solve this problem ?

We apply OB !

Others Topics we will cover

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

Simple Structure

Simple structure is no structure

Doing everything, help each other

Most businesses start in this structure

‘family’ like

But it cannot grow!

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

Purchasing Marketing Sales and

Human Resources Finance

CEO Chevrolet

Production

Example of a Functional Structure

Functional Structure

Human beings have used functional

structure for thousands of years.

But modern discussion of Functional structure is by Henri Fayol,

a French mining engineer, and later director of a mine.

Henri Fayol

His book

"Administration Industrielle et Générale",

1915

French Mining Engineer

And later director of a mine

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

I.Laissez – fair - free

market , free trade

II Division of Labour

Division of LabourThe 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

Storage Sorting

Conveying

Simple enough for functional structure to

work well

A Possible Structure of a automotive company

CEO

Quality Control Assembly

Incoming Inspection

Assembly

1 Assembly

s

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

1 Clarity

everyone has a ‘home’.

2 Least Psychological Demands

Functional structure makes the least

psychological demands on people They are highly secure in their work and their

relationship.

3 It functions

- if the tasks are simple and routine.

Disadvantages of

Functional Structure

1 Poor Decision Making

It is difficult for anyone, up to and including the top functional people, to understand the task of the whole.

People do 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

3 0 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 do 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