Organizational Behavior

Robbins & Judge

Chapter 16:
Foundations of Organization
Structure

1
 Summary of Lecture 29
- Emotions and Moods

- Sources of Emotions and Moods

- External constraints on Emotions

- Impact of emotional labor on employees

- Affective Events Theory

- Emotional Intelligence

- OB Issues and Emotions

- OB Issues and Moods

2
Robbins
Robbins and
and Judge
Judge (2008):
(2008): Organizational
Organizational Behavior,
Behavior, Pearson,
Pearson, Prentice
Prentice Hall
Hall
 Learning Objectives
- Organizational Structure

- Characteristics of Bureaucracy

- Describe Matrix Organization

- Why managers want to create boundary-less organizations

- List the factors that favor different organizational structure

- Explain behavioral implications of different organizational

structures

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 What Is Organizational Structure?
- How job tasks are formally divided, grouped, and
coordinated
To what degree are activities subdivided into
Work specialization separate jobs?
On what basis will jobs be grouped together?
Departmentalization
To whom do individuals and groups report?
Chain of command
How many individuals can a manager efficiently
Span of control and effectively direct?
Where does decision making authority lie?
Centralization and
decentralization
To what degree will there be rules and
Formalization regulations to direct employees and managers?

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Work Specialization
Henry Ford earned fortune by building automobile on assembly
lines

Every workers was assigned a specific and repetitive task

Breaking jobs into small and standardized tasks he was able to

produce a car in 10 seconds

Employees having limited skills

Productivity increases in short run if employees perform

repetitive tasks

Employee attain highest level of expertise

The concept gained popularity as division of labor and work

specialization
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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Work Specialization
Each individual perform specific activity of job in which he
specializes

Less time require for changing tasks

It is easier for organization to train and attract worker to do

specific and repetitive tasks

Work specialization increases efficiency by introduction of

innovative machinery

Later on it was found that repetitive tasks result into boredom,

fatigue, stress, low level of productivity and increased
absenteeism

Still this approach is in practice and offer economies in several

jobs. For example McDonald, Car Manufacturer 6
Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Work Specialization
Work specialization offer benefits but later on it reaches to
point of diminishing

It is believed that job enlargement offer greater efficiencies

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Departmentalization
After division of jobs through work specialization it is needed to
group these jobs together so common and dependent tasks
can be coordinated

Departmentalization is used to group jobs

Group activities is often based on functions performed

Manufacturing Organization might group jobs in departments

like engineering, finance, production, purchase, and HR
(personnel administration)

Departmentalization by functions is every where and in every

organization

Jobs can also be departmentalized by the type of product the

organization produces (FMCG often use this) 8
Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Departmentalization
Departmentalization by geography or territory (region)

In Process departmentalization jobs are grouped into

departments specializes in specific phase in the production

For example: Aluminum tubing plant can be departmentalized

in casting, press, tubing finishing and inspecting.

Process formula is also applicable in service sector. NADRA,

LICENCE Office

Customer based departmentalization

Microsoft uses this type of grouping to reach to particular

customers having distinct set of needs. Large corporations,
small business, home users
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Large corporations may use all type of departmentalization
Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Chain of Command
The chain of command can be describes as unbroken line of
authority from top management to lower staff in which every
body is clear to whom report and seek directions

Authority: Refers to the right inherit in management position

to give orders and expect orders to be obeyed

Each manager in organization is given authority to perform his

job responsibility

Unity of Command: It means individual should have only one

superior to whom that person report and responsible

The concept of chain of command is diminishing in

organizational design with the development in technology and
information tools

The concept of empowering employees also contradict chain

of command design. Team work and Self management team
and concept of multiple bosses eliminating this10concept
Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Span of Control
How many employees can each manager efficiently and
effectively direct?

Span of control determines number of managers and level of

management in the organization

Wider span means more employees under control/supervision.

In other fewer managers are needed to run the organization

At the same time wider span means ineffective or less

supervision and control

Narrow span result into more close supervision

At the same time disadvantage with narrow span of control is

i) Salary budget increases ii) Vertical communication becomes
more complex and iii) discourage employee autonomy
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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Span of Control
In recent years, wider span of control is gaining acceptance
because of certain reasons given as follows

Reduce cost, increase flexibility, speed up decision making,

and empower employees

Organizations are investing on training of employees to

decrease likelihood of ineffectiveness inherit in wider span of
control design

Because trained employees can perform their work with

efficiency and can handle problems at their own or can consult
colleagues

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Centralization and
Decentralization
In past organizations were more centralized, however in recent
years decentralization is more common

Centralization means degree to which decision making power

is concentrated at single point

It includes concept of formal authority

If employees is consulted or given authority to make decision,

the organization is more decentralized

Decentralization offer certain benefits

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Formalization
Formalization means degree to which jobs in the organization
are standardized

In case of formalization, job incumbent has very little discretion

on his work. What, when and how it is to be done

In formalized job clear cut organizational rules and policies that

determine job behavior and tasks. Standard operating
procedures means clear guidelines what and how to perform
job tasks means little deviation from standardized work
behavior

Degree of formalization varies from job to job and form

organization to organization. In some professions and jobs
formalization works whereas in some professions less
formalization is more effective way
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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Organizational Design
The Bureaucracy

Disadvantages:

Interdepartmental conflicts

Strict rules and regulation at time does not answer the situation

Innovative and flexibility benefits are not there

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Organizational Design
The Matrix Organization

Combine two forms of departmentalization: functional and

product

Employees in the matrix have two bosses their functional

department manager and product manager

Example: University: Academic departments like

Marketing, Finance, Economics are functional
departmentalization and over which specific programs
(product that is BS, MS, PhD) is overlaid on the function

Teacher of Marketing department teaching course at

undergraduate level. He may report to Head of Marketing
department and In-charge undergraduate program
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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Organizational Design
The Matrix Organization

Advantages:
Organizational goals gain value and priority

Better communication and more flexibility as organization grow and things

get complex

Efficient allocation of specialist

Disadvantages
Power struggle

Conflict when it is not clear to whom what to report

Reporting to more than one boss creates role ambiguity and role conflict

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Organizational Design
The Simple Structure
In simple structure low degree of formalization and
departmentalization, wide span of control, centralized
authority, one man decides things and two or three vertical
levels

Also called simple structure

Example: Retail Store, Small private firms. Owner also

Manager

Suitable for small business but when business grow it can be

ineffective because it is near to impossible to make all
decisions in the organization by one man. Assimilate and
interpret all information. Control all employees
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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 New Organizational Designs

Team Structure

When organizations use teams to organization work activities it

is said to be horizontal organization or team structure

Organizations use cross functional and self managed teams

Advantages
Decentralization
Break departmental barriers
Employees are generalist and specialist as well
Better decision making and problem solution

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 New Organizational Designs

The Virtual Organization

Why to own when you can rent?

Also called network or modular organization

Different companies having specialties in specific area come

together to accomplish project

When large organization use the virtual structure they

frequently outsource manufacturing

Advantages
Not lasting organization to maintain, project completed team dismantle
Wide variety of skills and expertise are used at work.
Example: Mega construction, P&G outsource its IT operations

Disadvantage: Issue of management control on business activities

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 The Virtual Organization

Independent research
and Advertising agency
development firm

Executive
group

Commissioned sales
Factories in South Korea
representative

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 New Organizational Designs

The Boundaryless Organization

The boundaryless organization seek to eliminate chain of
command, little span of control, and empowered teams instead
of departments, removing vertical hierarchies

Internal barriers across department can be reduced by transfer

posting of employees in different department and using cross
functional teams

External boundaries are eliminated by forming joint venture

and strategic alliances

Information technology is encouraging and facilitating to realize

the concept of boundary less organization

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 New Organizational Designs

We can categorized discussed designs into two extremes

1 Mechanistic Model

- High specialization
- Rigid departmentalization
- Clear chain of command
- Narrow span of control
- Centralization
- High formalization

2 Organic Model
- Cross functional teams
- Cross hierarchical teams
- Free flow of information
- Wide span of control
- Decentralization
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- Low formalization
Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Organizational Designs

The question arises why different organizations follow different

structures?
What are the forces that influence organizational design?

Strategy
Strategy Structural Options

Innovation Organic: Loose structure, low

specialization, low formalization,
decentralized
Cost minimization Mechanistic: tight control,,
extensive, work specialization,
high formalization, high
centralization
Imitation Mechanistic and Organic: Mix of
loose with tight properties, tight
controls over current activities,
and looser controls for new
undertaking 24
Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Organizational Designs

Organization Size

Technology
means how input s are transferred into out (Process:
routine activities non routing activities)

Environment
Stable and Dynamic environment
Simple and Complex

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 OB and Organizational Designs

Work specialization
- Higher employee productivity at the cost reduced job satisfaction
- Consider Individual differences

Span of Control
- Wider span of control may result into employee satisfaction and higher
performance
- Consider Individual differences
- How employees and managers feel

Centralization and Decentralization

To maximize employees satisfaction and productivity consider
- Individual differences
- Work task
- National Culture
- Individuals work for organization where they find themselves fit

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Managerial Implications
Internal structure contribute in explaining and predicting individual
behavior

Structure limits and control what employee do?

How employee perceive organizational structure it is more predictive

of their behavior

Structure should be matched with strategy

Also consider other factors such as size, technology and environment

before deciding structure

Whatever structure you choose employee and management should

know what is objective and make it more clear that every body
understand prevalent structure in the organization

Make easier to change the structure according to needs and situation

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Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall
 Discussion Questions

Discussion Question 1: What is purpose of organization

design?

Discussion Question 2: In your opinion which

organizational structure is best?

Discussion Question 3: If organization is pursuing

innovative strategy which structure best fits?

Discussion Question 4: What is influence of organizational

structure on work performance?

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 Summary
- Organizational Structure

- Characteristics of Bureaucracy

- Describe Matrix Organization

- Why managers want to create boundary-less organizations

- List the factors that favor different organizational structure

- Explain behavioral implications of different organizational

structures

29
Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall