Discussion: Formal Reporting Relationships

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Discussion: Formal Reporting Relationships

Discussion: Formal Reporting Relationships

Formal Reporting Relationships and Organizational Structures Organizational structure is the design element that ensures that decision rights are correctly allocated. The structure of reporting relationships typically reflects the flow of communication and decision making throughout the orga- nization. Traditional organizational structures are hierarchical, flat, or matrix. The networked structure is a newer organizational form. A comparison of these four types of organizational structures may be found in Figure 3.4.

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Hierarchical Organizational Structure As business organizations entered the 20th century, their growth prompted a need for systems for processing and storing information. A new class of worker—the clerical worker—flourished. From 1870 to 1920 alone, the number of U.S. clerical workers mushroomed from 74,200 to more than a quarter of a million.4

FIGURE 3.4 Comparison of organizational structures.

Hierarchical Flat Matrix Networked

Description Bureaucratic form with defined levels of management

Decision making pushed down to the lowest level in the organization

Workers assigned to multiple supervisors in an effort to promote integration

Formal and informal communication networks that connect all parts of the company

Characteristics Division of labor, specialization, unity of command, formalization

Informal roles, planning, and control; often small and young organizations

Dual reporting relationships based on function and purpose

Known for flexibility and adaptability

Type of Environment Best Supported

Stable, certain Dynamic uncertain Dynamic uncertain Dynamic uncertain

Basis of Structuring Primarily function Very loose Function and purpose (i.e., location, product, customer)


Power Structure Centralized Decentralized Distributed (matrix managers)

Distributed (network)

3 Andrew McAfee and Erik Brynjolfsson, “Investing in the IT That Makes a Competitive Difference, https://cb.hbsp.harvard.edu/cbmp/product/R0807J‐ PDF‐ENG (accessed August 20, 2015); James Surowiecki, The Wisdom of Crowds (New York: Anchor Books, 2005). 4 Frances Cairncross, The Company of the Future (London: Profile Books, 2002).

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Organizational Strategy and Information Systems

Factories and offices structured themselves using the model that Max Weber observed when studying the Catholic Church and the German army.

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