Lec 9 Org Structure

FOUNDATION OF
ORGANIZATION
STRUCTURE
What is Organizational Structure?
This is how jobs are formally divided, grouped, and
coordinated.
Key Elements:
- Work Specialization
- Departmentalization
- Chain of Command
- Span of Control
- Centralization and decentralization
- Formalization
WORK SPECIALIZATION
The degree to which tasks in the organization are
subdivided into separate jobs.
• Division of Labor:
• Makes efficient use of employee skills
• Increases employee skills through repetition
• Less between-job downtime increases productivity
• Specialized training is more efficient
• Allows use of specialized equipment
DEPARTMENTALIZATION
The basis by which jobs are grouped together.
•Grouping Activities by:
• Function
• Product
• Geography
• Process
• Customer
1. AUTHORITY
The rights inherent in a managerial position to give
orders and to expect the orders to be obeyed.
2. CHAIN OF COMMAND
The unbroken line of authority that extends from the
top of the organization to the lowest level and clarifies
who reports to whom.
3. UNITY OF COMMAND
A subordinate should have only one superior to whom
s/he is directly responsible.
SPAN OF CONTROL
The number of subordinates a manager can
efficiently and effectively direct.
• Concept:
• Wilder spans of management increases organizational efficiency.
• Narrow Span Drawbacks:
• Expense of additional layers of management
• Increased complexity of vertical communication
• Encouragement of overly tight supervision and discouragement of
employee autonomy.
CENTRALIZATION
- The degree to which decision making is
concentrated at a single point in the
organization
DECENTRALIZATION
- The degree to which decision making is
spread throughout the organization
FORMALIZATION
- The degree to which jobs within the
organization are standardized.
COMMON ORGANIZATION DESIGN
SIMPLE STRUCTURE
• A structure characterized
by a low degree of
departmentalization, wide
spans of control, authority
centralized in a single
person, and little - Low departmentalization
formalization. - Wide spans of control
- Authority centralized in a single perso
- Little formalization
BUREAUCRACY
- A structure of highly operating routine tasks
achieved through specialization, very formalized
rules and regulations, tasks that are grouped into
functional departments, centralized authority,
narrow spans of control, and decision making that
follows the chain of command.
BUREAUCRACY
STRENGTHS WEAKNESSES
- Functional economies of • Subunit conflicts with
scale organizational goals
- Minimum duplication of • Obsessive concerns with
personnel and equipment rules and regulations
- Enhanced communication • Lack of employee discretion
- Centralized decision making to deal with problems
MATRIX STRUCTURE
A structure that creates dual
lines of authority and
combines functional and
product departmentalization.
Key Elements:
+ Gains the advantages of functional and
product departmentalization while
avoiding their weaknesses
+ Facilitates coordination of complex and
interdependent activities
- Breakdowns unity-of-command concept
NEW DESIGN OPTIONS
TEAM STRUCTURE
The use of teams as the central device to
coordinate work activities.
Characteristics:
- Breaks down departmental barriers
- Decentralizes decision making to the team level
- Requires employees to be generalists as well as
specialists
- Creates a “flexible bureaucracy”
NEW DESIGN OPTIONS
VIRTUAL ORGANIZATION
- A small, core organization that outsources its major business
functions. Highly centralized with little or no departmentalization.
Advantage:
Provides maximum flexibility while
concentrating on what the organization
does best.
Disadvantage:
Reduced control over key parts of the
business.
NEW DESIGN OPTIONS
VIRTUAL ORGANIZATION
Highly centralized
No departmentalization
Allow them to contract
Manufacturing, distribution, marketing that to be
done or more cheaply
The managers in virtual structures spend their time
coordinating and controlling external relations.
NEW DESIGN OPTIONS
BOUNDARYLESS ORGANIZATION
- An organization that seeks to eliminate the chain
of command, have limitless spans of control,
and replace departments with empowered
teams.
T-FORM CONCEPTS:
- Eliminate vertical (hierarchal) and horizontal
(departmental) internal boundaries.
- Breakdown external barriers to customers and
suppliers.
Importance of Organizational Structure
• Impacts effectiveness and efficiency
• Reduces redundant actions
• Promotes teamwork
• Improves communication
• Contributes to success or failure
Purpose of Organizing
• Divides work to be done in specific jobs and
department
• Assigns tasks and responsibilities associated with
individual jobs
• Coordinates diverse organizational tasks
• Establishes relationships between individuals,
groups, and departments
• Establish formal lines of authority
• Allocates organizational resources
• Cluster jobs into units
Effects of Org Structure on Behavior
• Divides work to be done in specific jobs and
department
• Assigns tasks and responsibilities associated with
individual jobs
• Coordinates diverse organizational tasks
• Establishes relationships between individuals,
groups, and departments
• Establish formal lines of authority
• Allocates organizational resources
• Cluster jobs into units
ORGANIZATIONAL DESIGNS AND
EMPLOYEE BEHAVIOR
RESEARCH FINDINGS:
• Work specialization contributes to higher employee
productivity, but it reduces job satisfaction
• The benefits of specialization have decreased rapidly as
employees seek more intrinsically rewarding jobs
• The effect of span of control on employee performance
is contingent upon individual differences and abilities,
task structures, and other organizational factors
• Participative decision making in decentralized
organizations is positively related to job satisfaction.

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