Traditional Organizational Structure

2) In the type of structure known as traditional organizational structure, also called a hierarchial structure, a managerial pyramid shows the hierarchy of decision making and authority from the strategic management to operational management and nonmanagement employees. The strategic level, including the president of the company and vice presidents, has a higher degree of decision authority, more impact on corporate goals, and more unique and one-of-a-kind problems to solve (see Figure 2.3). In most cases, major department heads report to a president or top-level manager. The major departments are usually divided according to function and can include marketing, production, information systems, finance and accounting, research and development, and so on (see Figure 2.4). The positions or departments that are directly associated with making, packing, or shipping goods are called line positions. A production supervisor who reports to a vice president of production is an example of a line position. Other positions may not be directly involved with the formal chain of command but may assist a department or area. These are staff positions, such as a legal counsel reporting to the president.

3) Today, the trend is to reduce the number of management levels, or layers, in the traditional organizational structure. A structure with a reduced number of management layers, often called a flat organizational structure, empowers employees at lower levels to make decisions and solve problems without needing permission from midlevel managers. Em¬powerment gives employees and their managers more responsibility and authority to make decisions, take certain actions, and in general have more control over their jobs. For example, an empowered salesclerk would be able to respond to certain customer requests or problems without needing permission from a supervisor. On a factory floor, empowerment can mean that an assembly-line worker has the ability to stop the production line to correct a problem or defect before the product is passed to the next station.

4) Information systems can be a key element in empowering employees. Often, information systems make empowerment possible by providing information directly to employees at lower levels of the hierarchy. The employees may also be empowered to develop or use their own personal information systems, such as a simple forecasting model or spreadsheet. Office De¬pot, for example, developed a new computer system to empower 60,000 employees in about 1,000 stores. The system used an existing database and a powerful reporting system to give employees better information and increased decision-making capabilities.5