Lecture 2 OB - Organizational Structure - Functional Structure

8/6/2019 Lecture 2 OB - Organizational Structure - Functional Structure

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Organizational Structure

1. Functional Structure

Lecture 2Unit 3 Organizations and Behaviour


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Why Study Organizational Structure

Good organizational structure leads to

efficiency, and less conflicts

Bad organization leads to inefficiency and

conflicts


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Conflicts

Personal

Structural

There are 2 types of conflicts !

Due to personality

Due to organizational structure


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Organizational Structures

1. Simple Structure

2. Team Structure

3. Functional Structure4. Matrix Structure

5. Divisional Structure (FederalDecentralization)

6. Simulated Decentralization

6. Other Structure System/Network


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Others Topics we will cover

7. Issues in Organization structure

7.1 Formal and Informal

7.2 Centralized and Decentralized7.3 Tall and flat

7.4. Span of control


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Simple Structure

Simple structure is no structure

Doing everything, help each other

Most businesses start in this structure

family like

But it cannot grow!


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Team Structure

Humans have used team for hundreds of

thousands of years.

In hunting !

What differential team structure fromsimple structure are roles.


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Functional Structure

Functional structure organizes employees

around specific skills or resources

Organizations usually have some forms of

functional structure at some level


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Purchasing Sales and Marketing

Human ResourcesFinance

CEO

Chevrolet

Production

Example of a Functional Structure


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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.


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Henri Fayol

His book

"Administration Industrielle et Gnrale",

1915

French Mining Engineer

And later director of a mine


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The Theoretical Basis

of Functional StructureAdam Smith

The WealthofNations, 1776

Productivity gain through

Divisionof Labour

Pins manufacturing.

10 persons, 10,000 pins..


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I. Laissez fair - free

market , free trade

II. Division ofLabourAdam Smith

The Wealth of Nations, Adam Smith, 1776

It contains 2 major ideas


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Division of Labour

The Wealth of Nations, 1776

The greatest important in the productivepowers of labor, and the greatest part of

skills, dexterity and judgment with which is

any where directed or applied, seem to havebeen the effect ofdivisionoflabour


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Mine of Henri Fayol

Directeur

General

StorageSortingConveyingdigging Sell

Simple enough for functional structure to work

well


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A Possible Structure of a

automotive companyCEO

Quality

ControlAssembly

Incoming

InspectionPurchasing Sales

Assembly 1

Assembly 2

Assembly 3

Information

TechnologyHuman

Resources


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Amanufacturing factory is usually organized by

function

Purchasing

Incoming InspectionProcess 1

Process 2

Out going inspection

Storage

DeliveryFinance

Human Resources


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Others Functional Structure

Functional structure is used in

- a school

- an university- a hospital


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Function = Department

e.g.

Marketing Department is a function.It performs the function of marketing


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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.


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Disadvantages of

Functional Structure1. Poor Decision MakingIt is difficult for anyone, up to and including the top functionalpeople, to understand the task of the whole.

People do not know what other function is doing. They think theirDepartment is the most important

As soon as its approaches a degree of size or complexity frictionbuild up.

And if this happens, it requires a lot of coordination: meetings,committees, trouble shooters (Symptoms ofdysfunctioning)

Silos2.0 Slow CommunicationSlow in communication


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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.


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Poor Management

DevelopmentMy 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.


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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, orChanging, or the organization is too big


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How to overcome the limitations

We will discuss in the next lecture

1. add a team structure

2. add a divisional structure

Documents

Lecture 2 OB - Organizational Structure - Functional Structure