OB lecture 2 organizational structure functional structure

Lecture 2
Unit 3 Organizations and Behaviour

Organizational Structure
1. Functional Structure


Why Study Organizational
Structure
• Good organizational structure leads
to efficiency, and less conflicts

• Bad organization leads to inefficiency
and conflicts


Conflicts
There are 2 types of conflicts !

Personal
Due to personality

Structural
Due to organizational structure


An Example of Structural
Conflict
Private
School
CEO

Recruiter

Lecturers

How to solve this problem ?
We apply OB !


Organizational Structures
1.
2.
3.
4.
5.

Simple Structure
Team Structure
Functional Structure
Matrix Structure
Divisional Structure (Federal
Decentralization)
6. Simulated Decentralization
6. Other Structure – System/Network


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!


Team Structure
Humans have used team for hundreds
of
thousands of years.
In hunting !
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

CEO
Chevrolet

Finance

Purchasing

Human Resources

Production

Example of a Functional Structure

Sales and
Marketing


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
French Mining Engineer
And later director of a mine
His book

"Administration Industrielle et Générale",

1915


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..


The Wealth of Nations, Adam Smith,
1776
It contains 2 major ideas
I.Laissez – fair - free
market , free trade
Adam Smith

II. Division of Labour


Division of Labour
The 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

digging

Conveying

Sorting

Storage

Sell

Simple enough for functional structure to
work well


A Possible Structure of a
automotive company
Information
Technology

Purchasing

Incoming

Inspection

CEO

Human
Resource
s

Assembly
Assembly
1
Assembly
2
Assembly
3

Quality
Control

Sales


Functional Structure
A manufacturing factory is usually organized by
function
Purchasing
Incoming Inspection
Process 1
Process 2
Out going inspection

Storage
Delivery
Finance
Human Resources


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