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Organizational Organizational Structure Structure

andandCommunicationCommunication

Presented by:Dr. Akhlas AhmedPreston University

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Introduction Introduction

Organization structure determines who works togetherIt is the way managers design their firms to

achieve their organization’s mission and goalsOrganizational communication flows

through its structure, which affects:behaviorhuman relationsperformance

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The transition from an economy based on materials to an economy based on flows of

information has created considerable challenges for organizational structure, and

communication.

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Principles of Organization Principles of Organization (1 of 3)(1 of 3)

Division of Labor and DepartmentalizationDivision of labor, or work specialization – refers to

the degree to which tasks are subdivided into separate jobs

Departmentalization – grouping of related activities into units

Chain of Commandline of authority from the top to the bottom of the

organization, which is shown in an organization chart

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Principles of Organization Principles of Organization (2 of 3)(2 of 3)

Span of Managementrefers to number of employees reporting to a

managerCentralized and Decentralized Authority

With centralized authority, top managers make important decisions

With decentralized authority, middle and first-line managers make important decisions where the action is

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Principles of Organization Principles of Organization (3 of 3)(3 of 3)

CoordinationWith the division of labor and departmentalization

comes the need to coordinate the work of all departments

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Questions and Answers for Questions and Answers for Designing Organizational Structure:Designing Organizational Structure:

Questions Answers

How should we subdivide work? Division of Labor and Departmentalization

Who should departments and individuals report to?

Chain of Command

How many individuals should report to each manager?

Span of Management

At what level should decisions be made?

Centralization vs. Decentralization

How do we get everyone to work together as a team?

Coordination

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Formal Organization Structure Formal Organization Structure

PresidentPresident

Vice PresidentProduction

Vice PresidentFinance

Vice PresidentMarketing

ManagerA

ManagerB

ManagerC

ManagerD

ManagerE

ManagerF

ManagerG

ManagerH

ManagerI

Vertical downward communication

Vertical upward communication

Exhibit 6.2

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Informal Organization Structure Informal Organization Structure

PresidentPresident

Vice PresidentProduction

Vice PresidentProduction

Vice PresidentFinance

Vice PresidentFinance

Vice PresidentMarketing

Vice PresidentMarketing

ManagerA

ManagerA

ManagerB

ManagerB

ManagerC

ManagerC

ManagerD

ManagerD

ManagerE

ManagerE

ManagerF

ManagerF

ManagerG

ManagerG

ManagerH

ManagerH

Horizontal communication

networks

Exhibit 6.2

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Common Types Common Types of Departmentalizationof Departmentalization (1 of 4) (1 of 4)

Divisional Territory Matrix

Product Customer

Functional

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Common Types of Common Types of Departmentalization Departmentalization (2 of 4) (2 of 4)

Functional Departmentalizationinvolves organizing departments around essential

input activities, such as:production and operationsfinance and accountingmarketing and saleshuman resources

Product (Service) Departmentalizationinvolves organizing departments around goods

and services provided

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Common Types of Common Types of Departmentalization Departmentalization (3 of 4) (3 of 4)

Customer Departmentalizationinvolves organizing departments around the

needs of different types of customers with unique needs calling for different sales staffs and products

Divisional Departmentalization (M-Form)the firm develops independent lines of business

that operate as separate companies, all contributing to the corporation profitability

Territory (Geographic) Departmentalizationinvolves organizing departments in each area in

which the enterprise does business

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Common Types of Common Types of Departmentalization Departmentalization (4 of 4) (4 of 4)

Matrix Departmentalizationcombines the functional and product

departmental structuresCombination

many large companies have more than one form of departmentalization

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American and Japanese Organization American and Japanese Organization Structures Structures

Division of labor tends to be a bit less specialized in Japan

Both countries use the same types of departmentalization

American organizations tend to be quicker to hire, lay off, and to change jobs than the Japanese

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