Choosing Organizational StructureAgendaProcess vs. StructureStructure AlternativesSlide 5Slide 6Slide 7Three Real World CasesThe core principles of quality managementOutsourcing (subcontracting)Insurance Agency ExampleSlide 12Slide 13Slide 14Furniture distributor exampleSlide 16Matrix organization teamworkMusic R&D firmSlide 19Slide 20Quality, teamwork, outsourcingHorizontal OrganizationModel for selecting structureSlide 24Application – what do do with this Knowledge of Org Design?If you could start from scratch, how would you organize your “firm?”Choosing Organizational StructureCoty KellerSt. Joseph’s College01/14/19Organizational Stucture - MGT 670 - Coty Keller2AgendaProcess vs. StructureAlternative structures–Functional Hierarchy–Matrix–Organic network3 Real world local casesModel for choiceApplications01/14/19Organizational Stucture - MGT 670 - Coty Keller3Process vs. StructureProcess–How the product or service gets to customer–Dynamic–Flow chart picture–More contemporary – a key to total quality and re-engineeringStructure–Relationships, authority, and lines of communication–Static–Org chart picture–Traditional view of organization01/14/19Organizational Stucture - MGT 670 - Coty Keller4Structure AlternativesManyLet’s look at three commonly used structures1. Hierarchy2. Matrix3. Loosely coupled organic networkRelated processes01/14/19Organizational Stucture - MGT 670 - Coty Keller501/14/19Organizational Stucture - MGT 670 - Coty Keller601/14/19Organizational Stucture - MGT 670 - Coty Keller701/14/19Organizational Stucture - MGT 670 - Coty Keller8Three Real World CasesInsurance agencyFurniture distributorMusic R&DStructureProcessQuality TeamsOutsourcing01/14/19Organizational Stucture - MGT 670 - Coty Keller9The core principlesof quality management1. Focus on customers and process2. Participation and teamwork by everyone in the organization3. Continuous improvement and learning4. Management by fact5. Leadership and Strategic planning01/14/19Organizational Stucture - MGT 670 - Coty Keller10Outsourcing (subcontracting) Special case of cooperative orientationThe “make or buy” decisionAffects the number of activities under direct control of firm in its internal supply chain: hence impacts––control––flexibilityThink carefully before outsourcing one’s core business activities Social responsibility issues too01/14/19Organizational Stucture - MGT 670 - Coty Keller11Insurance Agency ExampleStable environmentEmployees have skills and knowledge limited to their areasTight communications and chain of commandNext three slides show hierarchical organization and details of processes01/14/19Organizational Stucture - MGT 670 - Coty Keller1201/14/19Organizational Stucture - MGT 670 - Coty Keller1301/14/19Organizational Stucture - MGT 670 - Coty Keller1401/14/19Organizational Stucture - MGT 670 - Coty Keller15Furniture distributor exampleDynamic environmentExperienced employees with ability to flex to differing circumstancesMatrix organization Each job is handled by a team made up of people from each departmentMatrix itself shows flow (process)01/14/19Organizational Stucture - MGT 670 - Coty Keller16Matrix Org – Nickerson Corporation Functional Departments Sales Estimating Installation Admin Svc FinanceUpstate NY City Long Island New Jersey Job # 123401/14/19Organizational Stucture - MGT 670 - Coty Keller17Matrix organization teamworkProject team concept. The company is organized by functional departments. People in those departments all perform similar duties that are essential to the company’s success. The managers of the departments are responsible for guiding and supporting their people. However, the overriding organizational principle is that of the project team. Each job the company undertakes for a customer is conceived of as a project with a life of its own. For a project to be successful, people from each department must participate effectively. Coordination of the resources of the various departments is the most challenging task of the company’s management team.01/14/19Organizational Stucture - MGT 670 - Coty Keller18Music R&D firmUncertain environment – surprises every daySmall number of core employees manage large network of subcontractorsNext two slides show structure and process01/14/19Organizational Stucture - MGT 670 - Coty Keller1901/14/19Organizational Stucture - MGT 670 - Coty Keller2001/14/19Organizational Stucture - MGT 670 - Coty Keller21Quality, teamwork, outsourcing Insurance Agency HierarchyFurniture Distributor MatrixMusic R&D Loosely coupled organic networkParticipation in decisionsPerhaps Must Must for strategic partners Teamwork Perhaps Must Not built inOutsourcing Perhaps Perhaps EssentialProcess orientation Possible but not normally intuitive because of cultureNeeds emphasis to be successfulCore controls process01/14/19Organizational Stucture - MGT 670 - Coty Keller22Horizontal OrganizationTraditional organizations and loosely coupled networks can show these elements:–Organize around process–Flatten the organizational hierarchy–Teams manage the organization–Customers drive performance–Management rewards team performance–Teams maintain supplier and customer contact–Training programs for all employees01/14/19Organizational Stucture - MGT 670 - Coty Keller23Model for selecting structurePurpose of modelDeterminants–Environment–PeopleCautions Remember that process supercedes structure01/14/19Organizational Stucture - MGT 670 - Coty Keller24HierarchyMatrix Organization Loosely Coupled Organic NetworkBureaucracy >Sr. Executive Group>X dept teamsMaturity and capability of employees Environment: Stable Complex & uncertainModel for choice of Organizational StructureHorizontal Organization01/14/19Organizational Stucture - MGT 670 - Coty Keller25Application – what do do with this Knowledge of Org Design?Assess current structure–Appropriate? –Adapt to strengths or weaknesses–Suggest or lead change Focus on process01/14/19Organizational Stucture - MGT 670 - Coty Keller26If you could start from scratch, how would you organize your “firm?”EnvironmentCapabilities and empowerment of work forceTeamworkOutsourcingStructure and