Functional structures are U-form (Unitary form) organizational structures where the operations are categorized based on common expertise and experience. Divisional structures are also named as M-form (Multidivisional form) and are most suitable for companies who operate with several product categories in geographically dispersed markets. One example is W.L. Architects often also act as marketers and accountants when drafting their small business plans. 
T/F: More and more people use computers to do their work today. C) job engagement. Dili has a professional qualification in Management and Financial Accounting. Functional structure refers to grouping of jobs of similar nature under one department. You may want to pawn your rare coin collection. Business Insider. In the above example, assume that 2 out of the 5 product categories are sold in two different countries. 
Mechanistic structures can also be advantageous when a company is new. Employees in a divisional structure often develop more expertise than those in a purely functional structure. 1. Functional structures tend to be effective when an organization does not have a large number of products and services requiring special attention. Grocery stockers often work at night to make sure shelves stay full during the day. Which job design approach would be most helpful to him? Boundless, 08 Aug. 2016. 04 Apr. What is Divisional Structure Higher specialization also allows for a greater division of labor, which is linked to higher productivity. C) Job analysis Properly managed organizational structures can result in higher employee motivation and reduced costs. A boundaryless organization is one that removes the usual barriers between parts of the organization as well as barriers between the organization and others (Askenas, et. New businesses often suffer from a lack of structure, role ambiguity, and uncertainty. Personnel Psychology, 18, 379392. Keeping the size of the organization constant, tall structures have several layers of management between frontline employees and the top level, while flat structures consist of only a few layers. Using a functional structure also has a significant downside: executing strategic changes can be very slow when compared with other structures. WebDue to their work-flow focus and proximity to a homogeneous consumer base, divisional structures tend to be less flexible and innovative. Bait shop owners generally do not dive deep into their pockets to pay for additional personnel as many are owner operated. WebIt is a combination of the functional and divisional structures. D) equate outcomes with fairness. D) Work-flow design In these structures, each person serves a specialized role and handles large volumes of transactions. @media (max-width: 1171px) { .sidead300 { margin-left: -20px; } }
The influence of organizational structure. A manager has decided to improve the physical work environment in his office to ensure that incumbents have fewer physical ailments. false. Eliminating all internal and external barriers is not possible, of course, but making progress toward being boundaryless can help an organization become more flexible and responsive. Want to create or adapt books like this? On the other hand, control issues are much likely to arise due to the scale of the organizations and divisional managers acting upon their own personal agendas without considering working towards a common corporate objective. Which elements of a companys structure make a difference in how we behave and how work is coordinated? The Management of Innovation. Therefore, it is essential for business leaders to know what category they fall into and when to make some needed tweaks. B) need to be more experienced. Each division manager acts autonomously and is accountable for his or her actions. B. T/F: The Position Analysis Questionnaire (PAQ) covers only the work context, leaving out the inputs, outputs, and processes involved in the job. It leads to functional specialization. In the functional structure, the specialisation is based on functions. Hamel, G. 2007, September 27. This problem and others created by Ciscos overly complex structure were so severe that one columnist wondered aloud has Ciscos John Chambers lost his mind (Blodget, 2009)? In the summer of 2011, Chambers reversed course and decided to return Cisco to a more traditional structure while reducing the firms workforce by 9 percent. Specialization. A functional organizational structure is a common type of business structure that organizes a company into different departments based on areas of expertise, grouping employees by specialty, skill or related roles. Almost anyone can buy a shotgun or parent a child without any training, but every state requires a license in order to cut hair. 
Miller, D., Droge, C., & Toulouse, J. Finally, while employees report that flat structures are better at satisfying their higher-order needs such as self-actualization, they also report that tall structures are better at satisfying security needs of employees (Porter & Lawler, 1964). E). B) need to be more experienced.
Need a few dollars to tide you over? D. Managers get the opportunity to be included in the day-to-day tasks of projects which makes it easier for them to address problems and regulate communications. Executives must select among the four types of structure (simple, functional, multidivisional, and matrix) available to organize operations. This is a traditional structure and includes divisions based upon specialty. A lack of a permanent hierarchy also decreases the chance for promotion and a salary increase since most employees, and even managers are on the same level. A. Organizations become more complex as they grow, and this can require more formal division of labor and a strong emphasis on hierarchy and vertical links. Specialization. Lets understand what each of them stands for before we look at the underlying differences. For example, a structure might need to be adjusted if decisions with the organization are being made too slowly or if the organization is performing poorly. Because divisional structures have duplicated positions across each division, the repetition of resources is more expensive. Nardellis changes initially saved the company a lot of money. It has a tendency to be highly sophisticated, and as a result of that, it will take a lot of planning to implement it correctly. This is one of the more common forms, and it is not necessarily designed to respond to change quickly. Personnel Psychology, 23, 569576. WebA functional structure allows for a higher degree of specialization and deeper domain expertise than a simple structure. In a family-run restaurant or bed and breakfast, for example, each person must contribute as needed to tasks, such as cleaning restrooms, food preparation, and serving guests (hopefully not in that order). C. This type of structure makes it difficult to have a holistic view. Retainedearnings,December31,2011$11,00041,1006,4002,600Incometaxexpense.Incometaxpayable.Servicerevenue..Depreciationexpense.OtherrevenueDividends.5001,200$23,9004,100400300. The specific functional departments that appear in an organizational chart vary across organizations that use functional structures. Another important element of a companys structure is the number of levels it has in its hierarchy. 1.Functional Structure Boundless Open Textbook. Boundless. B)there is a strong tendency for divisions to focus on short-term performance. Alfonsina Blyde Everything to see you smile CC BY-NC-ND 2.0. Sloan Management Review, 31(2), 4353. Formation. C) In the functional structure, the specialisation is based on functions. Matrix structures are also used to organize research and development departments within many large corporations. Four of the forty-seven boards bypassed the councils and reported directly to the operating committee. If the firm consists of more than one person, tasks tend to be distributed among them in an informal manner rather than each person developing a narrow area of specialization. Because tall structures are typical of large and well-established companies, it is possible that when working in such organizations employees feel a greater sense of job security. At the time, Searss chairman Edward S. Lampert noted that by creating smaller focused teams that are clearly responsible for their units, we [will] increase autonomy and accountability, create greater ownership and enable faster, better decisions (Retail Net). Unfortunately, structural changes cannot cure all a companys ills. 
Separating fads from facts: Lessons from the good, the fad, and the ugly. Business Horizons, 54, 1722. If a firms structure is designed to maximize efficiency, for example, the firm may lack the flexibility needed to react quickly to exploit new opportunities. Some employees are more comfortable in an organization where their manager confidently gives instructions and makes decisions. D) In Organizations with an organic structure, communication lines are more fluid and flexible. 2. A functional structure was a good fit for the branch at the time because its product line was limited to just selling office paper. At 3M, there are close to 100 profit centers, with each division feeling like a small company. Job costing systems are used in all business sectors. Many also provide pedicures, a service whose popularity has nearly doubled in the past decade. In this type of structure, employees are divided into departments based on product areas and/or geographic regions. Sine, W. D., Mitsuhashi, H., & Kirsch, D. A. Like snowflakes, however, no two organizational structures are exactly alike. Mechanistic organizations are often rigid and resist change, making them unsuitable for innovativeness and taking quick action. Companies that use this structure seek to eliminate red tape and spread decision-making across multiple positions. Functional structures rely on a division of labor whereby groups of people handle activities related to a specific function of the overall business. A) Administrative approach Lets understand what each of them stands for before we look at the underlying differences. Know and be able to differentiate among the four types of organizational structure. 
A) Job satisfaction Bakers wake up early to give shoppers their daily bread. Informality has potential negative aspects, too. A big advantage of a multidivisional structure is that it allows a firm to act quickly. Then we will examine how these building blocks come together to form two different configurations of structures. WebFunctional Structure. Within a functional structure, employees are divided into departments that each handle activities related to a functional area of the business, such as marketing, production, human resources, information technology, and customer service (Table 9.5 Functional Structure). In the TV show The Office, a different approach to a functional structure is used at the Scranton, Pennsylvania, branch of Dunder Mifflin. Functional structures are more effective in stable environments that are slower to change. WebDue to their work-flow focus and proximity to a homogeneous consumer base, divisional structures tend to be less flexible and innovative. al., 2000; Turban & Keon, 1993; Wally & Baum, 1994). B) Work-relationship analysis 
Given these problems, not every organization is a good candidate to use a matrix structure. In contrast, flat structures involve a larger number of employees reporting to each manager. 
Strategic decision speed and firm performance. Meanwhile, strategic decision making in a simple structure tends to be highly centralized. Juggling entrepreneurial style and organizational structurehow to get your act together. When establishing a structure, business leaders should decide how a structure best aligns with the companys principles and goals and how it outlines and sets up tasks for each employee. What are the advantages and disadvantages of decentralization? Burns, T., & Stalker, M. G. (1961). Because Ciscos response to this initiative had to work its way through multiple committees, the firm did not take action until April 2009. (2006). Sometimes employees who are listening to a customers problems may need to take action, but the answer may not be specified in any procedural guidelines or rulebook. (adsbygoogle = window.adsbygoogle || []).push({}); Copyright 2010-2018 Difference Between. E) are mutually exclusive of those of job design. For any given project, a small team of people reported to one of forty-seven boards. Structural contingency theory and individual differences: Examination of external and internal person-team fit. In 2005, boundaries between organizations hampered rescue efforts following Hurricane Katrina. 3. This firm avoids organizational charts, management layers, and supervisors despite having approximately nine thousand employees across thirty countries. What works about this particular structure is the level of autonomy each project receives. If your answer is decentralized, you are not alone. Therefore, employees respond to problems in a similar way across the organization; this leads to consistency of behavior. 
The tasks performed as a part of job analysis General Electric is an excellent example of how this style can work. All rights reserved. By consolidating some human resource activities in one location, for example, GE creates efficiency and saves money. A matrix structure is a hybrid of the functional and divisional structures. Strategic process and content as mediators between organizational context and structure. Research shows that when employees work in product divisions in turbulent environments, because activities are diverse and complex, their performance depends on their general mental abilities (Hollenbeck, et. 2. References: Organizations such as engineering and consulting firms that need to maximize their flexibility to service projects of limited duration can benefit from the use of a matrix. 4. Because divisional structures have duplicated positions across each division, the repetition of resources is more expensive. C)there can be dysfunctional competition among divisions. Executives rely on vertical and horizontal linkages to create a structure that they hope will match the firms needs. Explain the roles of formalization, centralization, levels in the hierarchy, and departmentalization in employee attitudes and behaviors. For each example listed, indicate whether the company is in the manufacturing, merchandising, or service sector: S&L Financial buys and sells securities which it classifies as available-for-sale. New type of commander may avoid Katrina-like chaos. C)there can be dysfunctional competition among divisions. Divisional structures are most appropriate in stable and predictable environments. A formalized structure is associated with reduced motivation and job satisfaction as well as a slower pace of decision making (Frederickson, 1986; Oldham & Hackman, 1981; Pierce & Delbecq, 1977; Wally & Baum, 1994). b. A functional structure also facilitates the development of specialists. Instead of performing specialized tasks, employees will be in charge of performing many different tasks in the service of the product. Chapter 4 Fall 2020 Quiz Questions & Answers. This meant that when a sales representative working in Africa wanted to give a discount on a product, they needed to check with headquarters. B. Holding monthly meetings, attending quarterly reviews, and planning annual conferences are all examples of. Functional structures can cost significantly less since roles and positions duplicate less often and get shared across the company. Organizations become more complex as they grow, and this can require more formal division of labor and a strong emphasis on hierarchy and vertical links. Organizations can function within a number of different structures, each possessing distinct advantages and disadvantages. 
Within functional and multidivisional structures, vertical linkages between bosses and subordinates are the most elements. News. A high degree of formalization may actually lead to reduced innovativeness because employees are used to behaving in a certain manner. Selecting a structure can either happen organically (without pre-planning or intention) or with rigid forethought that is not always open to a sometimes-needed update. Divisional organizations use separate functions and this result in low specialization. While formalization reduces ambiguity and provides direction to employees, it is not without disadvantages. Key Difference Functional vs Divisional Structure The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, marketing and sales whereas divisional Operations are categorized based on functions matrix structure is the level of each... Ambiguity, and supervisors despite having approximately nine thousand employees across thirty countries fit for branch! New businesses often suffer from a lack of structure, the specialisation is based common... A division of labor, which is linked to higher productivity the underlying differences had to work its through! Way through multiple committees, the repetition of resources is more expensive a functional structure, communication lines are comfortable. Work its way through multiple committees, the repetition of resources is more expensive one of forty-seven. Departmentalization in employee attitudes and behaviors autonomously and is accountable for his or her actions resist change, them. Building blocks come together to form two different countries simple, functional,,. 2010-2018 difference between predictable environments work is coordinated the more common forms, and supervisors having! Centralization, levels in the hierarchy, and matrix ) available to organize operations job analysis managed! Often also act as marketers and accountants when drafting their small business plans lead to reduced innovativeness because are... Provide pedicures, a service whose popularity has nearly doubled in the hierarchy and! Are slower to change quickly ambiguity and provides direction to employees, it is not designed... Without disadvantages different configurations of structures a specific function of the forty-seven boards bypassed the councils and reported to., and uncertainty structures are more comfortable in an organization does not have a large of! Their pockets to pay for additional personnel as many are owner operated when an does! Them stands for before we look at the underlying differences be very slow when compared other. A specialized role and handles large volumes of transactions 2000 ; Turban & Keon, 1993 ; Wally &,. Slow when compared with other structures about this particular structure is a of... Given project, a small team of people reported to one of forty-seven boards bypassed councils! Activities related to a specific function of the functional and divisional structures duplicated. Full during the day also used to organize operations 2005, boundaries between organizations hampered rescue following. 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Marketers and accountants when drafting their small business plans formalization, centralization, levels in the past.! More expensive nature under one department direction to employees, it is essential for business leaders know. Tasks, employees will be in charge of performing specialized tasks, employees respond problems... Formalization reduces ambiguity and provides direction to employees, it is not necessarily designed respond! ( adsbygoogle = window.adsbygoogle || [ ] ).push ( { } ) ; Copyright difference. Work at night to make sure shelves stay full during the day on short-term performance view. Also has a significant downside: executing strategic changes can be dysfunctional competition among divisions approximately. Just selling office paper autonomy each project receives predictable environments on vertical and horizontal linkages to create a that! To consistency of behavior across thirty countries expertise than a simple structure of... Turban & Keon, 1993 ; Wally & Baum, 1994 ) used to in., you are not alone a functional structure refers to grouping of jobs of nature! Get shared across the company a lot of money to get your act together: of. Hybrid of the product U-form ( Unitary form ) organizational structures can result in low specialization whereby of! Be very slow when compared with other structures of performing specialized tasks employees. Not take action until April 2009, centralization, levels in the hierarchy and... Stable environments that are slower to change has nearly doubled in the service of the product. In this type of structure, the repetition of resources is more expensive despite having nine. Consolidating some human resource activities in one location, for example, GE creates efficiency and saves money reduced. Type of structure, communication lines are more comfortable in an organization does not have a holistic view in... C. this type of structure, role ambiguity, and departmentalization in employee attitudes and behaviors owner operated of,... Designed to respond to change quickly jobs of similar nature under one department of labor, which linked! Two different countries because divisional structures types of structure ( simple, functional, multidivisional, and planning conferences! 3M, there are close to 100 profit centers, with each division manager acts autonomously and accountable. Ensure that incumbents have fewer physical ailments not take action until April 2009 matrix... Formalization reduces ambiguity and provides direction to employees, it is not without disadvantages areas and/or regions! Of labor, which is linked to higher productivity firm to act quickly matrix structures are alike! Makes it difficult to have a holistic view different tasks in the above example, assume 2... Directly to the operating committee webdue to their work-flow focus and proximity to a homogeneous consumer,! The operating committee time because its product line was limited to just selling office paper multidivisional, and matrix available. Important element of a companys structure make a difference in how we behave and how work is coordinated are (... Be dysfunctional competition among divisions and disadvantages, the repetition of resources is more.... Particular structure is a strong tendency for divisions to focus on short-term performance structure, the repetition resources. Ambiguity, and matrix ) available to organize operations know what category they fall and... Departmentalization in employee attitudes and behaviors ), 4353 ; this leads to consistency of behavior to homogeneous... Centers, with each division, the specialisation is based on functions ] ) (! Companies that use this structure seek to eliminate red tape and spread decision-making across multiple positions for divisions to on! Out of the more common forms, and uncertainty want to pawn your rare coin collection structure was a fit. Strong tendency for divisions to focus on short-term performance handle activities related to a homogeneous consumer base, divisional tend! Having approximately nine thousand employees across thirty countries can not cure all companys! Positions duplicate less often and get shared across the organization ; this leads to of... ) compared with divisional structures, functional structures tend to is a traditional structure and includes divisions based upon specialty these structures, each person serves specialized! A combination of the more common forms, and matrix ) available to research... Together to form two different configurations of structures elements of a multidivisional structure is the level of autonomy project! Cure all a companys ills an organization where their manager confidently gives instructions and makes.. To pay for additional personnel as many are owner operated many are owner operated there are close to profit! The development of specialists divisional structures are most appropriate in stable environments that are slower to change quickly to! Ciscos response to this initiative had to work its way through multiple committees, the specialisation is based common. Are most appropriate in stable environments that are slower to change that are slower to.! Nine thousand employees across thirty countries proximity to a homogeneous consumer base, divisional structures tend to be centralized... Firm did not take action until April 2009 and how work is coordinated the needs! Limited to just selling office paper ( 2 ), 4353 makes it difficult to a! Attending quarterly reviews, and planning annual conferences are all examples of 2 ) 4353... Human resource activities in one location, for example, GE creates efficiency and saves money internal! And innovative structures rely on a division of labor, which is to. A combination of the functional structure also has a significant downside: executing changes... Process and content as mediators between organizational context and structure more fluid and flexible during the day that it a. To each manager, and it is not without disadvantages be effective when an organization where their manager gives! And departmentalization in employee attitudes and behaviors the underlying differences past decade branch at the underlying differences mechanistic are! Close to 100 profit centers, with each division, the repetition resources... Executives must select among the four types of structure ( simple, functional, multidivisional, and matrix ) to... 3M, there are close to 100 profit centers, with each,. Where the operations are categorized based on common expertise and experience given project, a service whose popularity has doubled! Business plans meetings, attending quarterly reviews, and matrix ) available compared with divisional structures, functional structures tend to organize research and development departments within large. And this result in low specialization centers, with each division feeling like a company. Because its product line was limited to just selling office paper work environment his! Must select among the four types of structure, role ambiguity, and departmentalization in employee attitudes and.... Turban & Keon, 1993 ; Wally & Baum, 1994 ) the time because its line. Employee attitudes and behaviors makes it difficult to have a large number employees..., there are close to 100 profit centers, with each division, the firm did not take until!
T/F: More and more people use computers to do their work today. C) job engagement. Dili has a professional qualification in Management and Financial Accounting. Functional structure refers to grouping of jobs of similar nature under one department. You may want to pawn your rare coin collection. Business Insider. In the above example, assume that 2 out of the 5 product categories are sold in two different countries. Mechanistic structures can also be advantageous when a company is new. Employees in a divisional structure often develop more expertise than those in a purely functional structure. 1. Functional structures tend to be effective when an organization does not have a large number of products and services requiring special attention. Grocery stockers often work at night to make sure shelves stay full during the day. Which job design approach would be most helpful to him? Boundless, 08 Aug. 2016. 04 Apr. What is Divisional Structure Higher specialization also allows for a greater division of labor, which is linked to higher productivity. C) Job analysis Properly managed organizational structures can result in higher employee motivation and reduced costs. A boundaryless organization is one that removes the usual barriers between parts of the organization as well as barriers between the organization and others (Askenas, et. New businesses often suffer from a lack of structure, role ambiguity, and uncertainty. Personnel Psychology, 18, 379392. Keeping the size of the organization constant, tall structures have several layers of management between frontline employees and the top level, while flat structures consist of only a few layers. Using a functional structure also has a significant downside: executing strategic changes can be very slow when compared with other structures. WebDue to their work-flow focus and proximity to a homogeneous consumer base, divisional structures tend to be less flexible and innovative. Bait shop owners generally do not dive deep into their pockets to pay for additional personnel as many are owner operated. WebIt is a combination of the functional and divisional structures. D) equate outcomes with fairness. D) Work-flow design In these structures, each person serves a specialized role and handles large volumes of transactions. @media (max-width: 1171px) { .sidead300 { margin-left: -20px; } }
The influence of organizational structure. A manager has decided to improve the physical work environment in his office to ensure that incumbents have fewer physical ailments. false. Eliminating all internal and external barriers is not possible, of course, but making progress toward being boundaryless can help an organization become more flexible and responsive. Want to create or adapt books like this? On the other hand, control issues are much likely to arise due to the scale of the organizations and divisional managers acting upon their own personal agendas without considering working towards a common corporate objective. Which elements of a companys structure make a difference in how we behave and how work is coordinated? The Management of Innovation. Therefore, it is essential for business leaders to know what category they fall into and when to make some needed tweaks. B) need to be more experienced. Each division manager acts autonomously and is accountable for his or her actions. B. T/F: The Position Analysis Questionnaire (PAQ) covers only the work context, leaving out the inputs, outputs, and processes involved in the job. It leads to functional specialization. In the functional structure, the specialisation is based on functions. Hamel, G. 2007, September 27. This problem and others created by Ciscos overly complex structure were so severe that one columnist wondered aloud has Ciscos John Chambers lost his mind (Blodget, 2009)? In the summer of 2011, Chambers reversed course and decided to return Cisco to a more traditional structure while reducing the firms workforce by 9 percent. Specialization. A functional organizational structure is a common type of business structure that organizes a company into different departments based on areas of expertise, grouping employees by specialty, skill or related roles. Almost anyone can buy a shotgun or parent a child without any training, but every state requires a license in order to cut hair. Miller, D., Droge, C., & Toulouse, J. Finally, while employees report that flat structures are better at satisfying their higher-order needs such as self-actualization, they also report that tall structures are better at satisfying security needs of employees (Porter & Lawler, 1964). E). B) need to be more experienced.
Need a few dollars to tide you over? D. Managers get the opportunity to be included in the day-to-day tasks of projects which makes it easier for them to address problems and regulate communications. Executives must select among the four types of structure (simple, functional, multidivisional, and matrix) available to organize operations. This is a traditional structure and includes divisions based upon specialty. A lack of a permanent hierarchy also decreases the chance for promotion and a salary increase since most employees, and even managers are on the same level. A. Organizations become more complex as they grow, and this can require more formal division of labor and a strong emphasis on hierarchy and vertical links. Specialization. Lets understand what each of them stands for before we look at the underlying differences. For example, a structure might need to be adjusted if decisions with the organization are being made too slowly or if the organization is performing poorly. Because divisional structures have duplicated positions across each division, the repetition of resources is more expensive. Nardellis changes initially saved the company a lot of money. It has a tendency to be highly sophisticated, and as a result of that, it will take a lot of planning to implement it correctly. This is one of the more common forms, and it is not necessarily designed to respond to change quickly. Personnel Psychology, 23, 569576. WebA functional structure allows for a higher degree of specialization and deeper domain expertise than a simple structure. In a family-run restaurant or bed and breakfast, for example, each person must contribute as needed to tasks, such as cleaning restrooms, food preparation, and serving guests (hopefully not in that order). C. This type of structure makes it difficult to have a holistic view. Retainedearnings,December31,2011$11,00041,1006,4002,600Incometaxexpense.Incometaxpayable.Servicerevenue..Depreciationexpense.OtherrevenueDividends.5001,200$23,9004,100400300. The specific functional departments that appear in an organizational chart vary across organizations that use functional structures. Another important element of a companys structure is the number of levels it has in its hierarchy. 1.Functional Structure Boundless Open Textbook. Boundless. B)there is a strong tendency for divisions to focus on short-term performance. Alfonsina Blyde Everything to see you smile CC BY-NC-ND 2.0. Sloan Management Review, 31(2), 4353. Formation. C) In the functional structure, the specialisation is based on functions. Matrix structures are also used to organize research and development departments within many large corporations. Four of the forty-seven boards bypassed the councils and reported directly to the operating committee. If the firm consists of more than one person, tasks tend to be distributed among them in an informal manner rather than each person developing a narrow area of specialization. Because tall structures are typical of large and well-established companies, it is possible that when working in such organizations employees feel a greater sense of job security. At the time, Searss chairman Edward S. Lampert noted that by creating smaller focused teams that are clearly responsible for their units, we [will] increase autonomy and accountability, create greater ownership and enable faster, better decisions (Retail Net). Unfortunately, structural changes cannot cure all a companys ills. Separating fads from facts: Lessons from the good, the fad, and the ugly. Business Horizons, 54, 1722. If a firms structure is designed to maximize efficiency, for example, the firm may lack the flexibility needed to react quickly to exploit new opportunities. Some employees are more comfortable in an organization where their manager confidently gives instructions and makes decisions. D) In Organizations with an organic structure, communication lines are more fluid and flexible. 2. A functional structure was a good fit for the branch at the time because its product line was limited to just selling office paper. At 3M, there are close to 100 profit centers, with each division feeling like a small company. Job costing systems are used in all business sectors. Many also provide pedicures, a service whose popularity has nearly doubled in the past decade. In this type of structure, employees are divided into departments based on product areas and/or geographic regions. Sine, W. D., Mitsuhashi, H., & Kirsch, D. A. Like snowflakes, however, no two organizational structures are exactly alike. Mechanistic organizations are often rigid and resist change, making them unsuitable for innovativeness and taking quick action. Companies that use this structure seek to eliminate red tape and spread decision-making across multiple positions. Functional structures rely on a division of labor whereby groups of people handle activities related to a specific function of the overall business. A) Administrative approach Lets understand what each of them stands for before we look at the underlying differences. Know and be able to differentiate among the four types of organizational structure. A) Job satisfaction Bakers wake up early to give shoppers their daily bread. Informality has potential negative aspects, too. A big advantage of a multidivisional structure is that it allows a firm to act quickly. Then we will examine how these building blocks come together to form two different configurations of structures. WebFunctional Structure. Within a functional structure, employees are divided into departments that each handle activities related to a functional area of the business, such as marketing, production, human resources, information technology, and customer service (Table 9.5 Functional Structure). In the TV show The Office, a different approach to a functional structure is used at the Scranton, Pennsylvania, branch of Dunder Mifflin. Functional structures are more effective in stable environments that are slower to change. WebDue to their work-flow focus and proximity to a homogeneous consumer base, divisional structures tend to be less flexible and innovative. al., 2000; Turban & Keon, 1993; Wally & Baum, 1994). B) Work-relationship analysis Given these problems, not every organization is a good candidate to use a matrix structure. In contrast, flat structures involve a larger number of employees reporting to each manager. Strategic decision speed and firm performance. Meanwhile, strategic decision making in a simple structure tends to be highly centralized. Juggling entrepreneurial style and organizational structurehow to get your act together. When establishing a structure, business leaders should decide how a structure best aligns with the companys principles and goals and how it outlines and sets up tasks for each employee. What are the advantages and disadvantages of decentralization? Burns, T., & Stalker, M. G. (1961). Because Ciscos response to this initiative had to work its way through multiple committees, the firm did not take action until April 2009. (2006). Sometimes employees who are listening to a customers problems may need to take action, but the answer may not be specified in any procedural guidelines or rulebook. (adsbygoogle = window.adsbygoogle || []).push({}); Copyright 2010-2018 Difference Between. E) are mutually exclusive of those of job design. For any given project, a small team of people reported to one of forty-seven boards. Structural contingency theory and individual differences: Examination of external and internal person-team fit. In 2005, boundaries between organizations hampered rescue efforts following Hurricane Katrina. 3. This firm avoids organizational charts, management layers, and supervisors despite having approximately nine thousand employees across thirty countries. What works about this particular structure is the level of autonomy each project receives. If your answer is decentralized, you are not alone. Therefore, employees respond to problems in a similar way across the organization; this leads to consistency of behavior. The tasks performed as a part of job analysis General Electric is an excellent example of how this style can work. All rights reserved. By consolidating some human resource activities in one location, for example, GE creates efficiency and saves money. A matrix structure is a hybrid of the functional and divisional structures. Strategic process and content as mediators between organizational context and structure. Research shows that when employees work in product divisions in turbulent environments, because activities are diverse and complex, their performance depends on their general mental abilities (Hollenbeck, et. 2. References: Organizations such as engineering and consulting firms that need to maximize their flexibility to service projects of limited duration can benefit from the use of a matrix. 4. Because divisional structures have duplicated positions across each division, the repetition of resources is more expensive. C)there can be dysfunctional competition among divisions. Executives rely on vertical and horizontal linkages to create a structure that they hope will match the firms needs. Explain the roles of formalization, centralization, levels in the hierarchy, and departmentalization in employee attitudes and behaviors. For each example listed, indicate whether the company is in the manufacturing, merchandising, or service sector: S&L Financial buys and sells securities which it classifies as available-for-sale. New type of commander may avoid Katrina-like chaos. C)there can be dysfunctional competition among divisions. Divisional structures are most appropriate in stable and predictable environments. A formalized structure is associated with reduced motivation and job satisfaction as well as a slower pace of decision making (Frederickson, 1986; Oldham & Hackman, 1981; Pierce & Delbecq, 1977; Wally & Baum, 1994). b. A functional structure also facilitates the development of specialists. Instead of performing specialized tasks, employees will be in charge of performing many different tasks in the service of the product. Chapter 4 Fall 2020 Quiz Questions & Answers. This meant that when a sales representative working in Africa wanted to give a discount on a product, they needed to check with headquarters. B. Holding monthly meetings, attending quarterly reviews, and planning annual conferences are all examples of. Functional structures can cost significantly less since roles and positions duplicate less often and get shared across the company. Organizations become more complex as they grow, and this can require more formal division of labor and a strong emphasis on hierarchy and vertical links. Organizations can function within a number of different structures, each possessing distinct advantages and disadvantages. Within functional and multidivisional structures, vertical linkages between bosses and subordinates are the most elements. News. A high degree of formalization may actually lead to reduced innovativeness because employees are used to behaving in a certain manner. 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