Excellent leaders know how to apply structural principles to their particular situation and find a best structural fit. So, this lecture will help you achieve course objective number three: "Articulate various principles related to identifying organizational behavior." After completing the video, you should be able to identify the principle that will affect structural choices and this in turn will affect the behavior of your organization.

1. Organizational
Structure
LE 303
Organizational Behavior
Lecture 6
Photo by Kevin Dooley. Available to
http://www.flickr.com/photos/12836528@N00/22017
91390

2. Definition

3. Definition
“The placement of power
and authority
in an organization.”
- Galbraith, J. R., 2002, Designing Organizations

4. Definition
“The manner in which
the parts of an organization
are related to one another.”
- Richard Daft

5. Definition
A series of channels through which
informationflows.
- Nadler & Tushman (1997)

6. Related Questions
• How does information flow throughout the organization?
• Who reports to whom?
• Who has authorization to make decisions and at what
levels?
• For each organizational function (or region or product line),
who is responsible for making sure objectives are achieved?

7. Principles

8. Control
Coordination

9. 9
Concerns of Organization
coordination
control autonomy
Keidel, Robert W. Seeing Organizational Patterns: A New Theory & Language of Organizational
Design. San Francisco: Berrett-Koehler, 1995. ISBN: 1-881052-65-6

10. 10
Concerns of Organization
coordination
control autonomy

11. (the individual)
11
Concerns of Organization
coordination
(the team)
control autonomy
(the organization)

12. The Goal
12
Indirect Influence
coordination
control autonomy

13. 13
Indirect Influence
coordination
control autonomy
The Goal

14. 14
Indirect Influence
coordination
control autonomy
The Goal

15. Structural Options

16. Five Organizational Structures
Functional
Products
Matrix
Geographical Market

17. Functional Structure
• People grouped by function (marketing,
sales, R&D, support, etc.)
• Small, single product line
• Undifferentiated market
• Expertise within the function
• Long product development and life cycles

18. CEO
Research &
Development
Manufacturing Sales
Accounting
& Finance
Functional Structure
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19. Product Structure
• People grouped by product
• Product focus
• Healthy team competition
• Flexibility
• Rapid decision-making
• Common with retail
companies
Advantage: product focus,
flexibility
Disadvantage: Duplication
of effort

20. CEO
Bolts
Division
Product Structure
Nuts
Division
Manufacturing Sales Manufacturing Sales
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21. Market Structure
• People grouped by market segments (E.g.
Teens, Adults, Elderly)
• Each product or service is unique for one
segment
• Customer focus
• Rapid customer service and product cycles
• minimum efficient scale in functions

22. CEO
Individual
Customers
Market Structure
Corporate
Customers
Customer
Service
Customer
Service
Sales Sales
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23. Geographical Structure
• People grouped by geographic location.
• Low value items with high transport cost
• Closeness to customer for delivery or support
• Perception of the organization as local
• Geographical market segments needed

24. Geographic Structure
CEO
West East
Customer
Service
Customer
Service
Sales Sales
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25. Matrix Structure
• An alternative to the functional structure
• Organization organized by both Function and
Product
• Heavy use of Autonomous Work Teams (ATWs)
• Potential for new processes and radical change
to processes
• Reduced working capital (lower inventory and
faster collection of invoices)
• Can cause confusion when horizontal managers
are not aligned with vertical managers.

26. CEO
Matrix Structure
Research Manufacturing
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Engineering
Product A
Product B
Product C

27. Images of Structure

28. The Architecture Metaphor
28

29. 29
Organic Structure

30. The Human Body
“A company is a living
being. It is an entity or
persona, in and of itself,
separate from
the individuals within it.
As a living persona, the
company is goal-oriented,
conscious of its own
identity and open to the
outside world.”
-- Aire De Geus

31. Can you think of other images
for how an organization might
be structured?

32. Thank You!
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