robbins_ob14_ppt_15

Kelli J. SchutteWilliam Jewell College

Robbins & Judge

Organizational Behavior14th Edition

Foundations of Organization Structure

Foundations of Organization Structure

15-1 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Chapter Learning ObjectivesChapter Learning Objectives

After studying this chapter, you should be able to:– Identify the six elements of an organization’s structure.

– Identify the characteristics of a bureaucracy.

– Describe a matrix organization.

– Identify the characteristics of a virtual organization.

– Show why managers want to create boundaryless organizations.

– Demonstrate how organizational structures differ, and contrast mechanistic and organic structural models.

– Analyze the behavioral implications of different organizational designs.

– Show how globalization affects organizational structure.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 15-2

What Is Organizational Structure?What Is Organizational Structure?

Organizational Structure

– How job tasks are formally divided, grouped, and coordinated

– Key Elements:

1. Work specialization

2. Departmentalization

3. Chain of command

4. Span of control

5. Centralization and decentralization

6. Formalization


1. Work Specialization1. 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

Can create greater economies and efficiencies – but not always…


E X H I B I T 15-1E X H I B I T 15-1

Work Specialization Economies and DiseconomiesWork Specialization Economies and Diseconomies

Specialization can reach a point of diminishing returns Then job enlargement gives greater efficiencies than

does specialization


E X H I B I T 15-2E X H I B I T 15-2

2. Departmentalization2. Departmentalization

The basis by which jobs are grouped together

Grouping Activities by:

– Function

– Product

– Geography

– Process

– Customer


3. Chain of Command3. Chain of Command

Authority– The rights inherent in a managerial position to give orders

and to expect the orders to be obeyed

Chain of Command– The unbroken line of authority that extends from the top of

the organization to the lowest echelon and clarifies who reports to whom

Unity of Command– A subordinate should have only one superior to whom he or

she is directly responsible


4. Span of Control4. Span of Control

The number of subordinates a manager can efficiently and effectively direct

– Wider spans of management increase 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


Contrasting Spans of ControlContrasting Spans of Control


E X H I B I T 15-3E X H I B I T 15-3

5. Centralization and Decentralization5. Centralization and Decentralization

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.


6. Formalization6. Formalization

The degree to which jobs within the organization are standardized.– High formalization

• Minimum worker discretion in how to get the job done

• Many rules and procedures to follow

– Low formalization• Job behaviors are nonprogrammed

• Employees have maximum discretion


Common Organization Designs: Simple StructureCommon Organization Designs: Simple Structure

Simple Structure– A structure characterized by a low degree of

departmentalization, wide spans of control, authority centralized in a single person, and little formalization


E X H I B I T 15-4E X H I B I T 15-4

Common Organizational Designs: BureaucracyCommon Organizational Designs: Bureaucracy

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


An Assessment of BureaucraciesAn Assessment of Bureaucracies

Strengths

– Functional economies of scale

– Minimum duplication of personnel and equipment

– Enhanced communication

– Centralized decision making

Weaknesses

– Subunit conflicts with organizational goals

– Obsessive concern with rules and regulations

– Lack of employee discretion to deal with problems


Common Organizational Designs: MatrixCommon Organizational Designs: Matrix

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

– Breaks down unity-of-command concept


E X H I B I T 15-5E X H I B I T 15-5

New Design Options: Virtual OrganizationNew Design Options: Virtual Organization

– A small, core organization that outsources its major business functions

– Highly centralized with little or no departmentalization

• Provides maximum flexibility while concentrating on what the organization does best

• Reduced control over key parts of the business


E X H I B I T 15-6E X H I B I T 15-6

New Design Options: Boundaryless OrganizationNew 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 (hierarchical) and horizontal (departmental)

internal boundaries

• Breakdown external barriers to customers and suppliers


Two Extreme Models of Organizational DesignTwo Extreme Models of Organizational Design


E X H I B I T 15-7E X H I B I T 15-7

Four Reasons Structures DifferFour Reasons Structures Differ

1. Strategy– Innovation Strategy

• A strategy that emphasizes the introduction of major new products and services

• Organic structure best

– Cost-minimization Strategy• A strategy that emphasizes tight cost controls, avoidance of

unnecessary innovation or marketing expenses, and price cutting

• Mechanistic model best

– Imitation Strategy• A strategy that seeks to move into new products or new

markets only after their viability has already been proven• Mixture of the two types of structure


E X H I B I T 15-8E X H I B I T 15-8

Why Structures DifferWhy Structures Differ

2. Organizational Size– As organizations grow, they become more mechanistic,

more specialized, with more rules and regulations

3. Technology– How an organization transfers its inputs into outputs

• The more routine the activities, the more mechanistic the structure with greater formalization

• Custom activities need an organic structure

4. Environment– Institutions or forces outside the organization that

potentially affect the organization’s performance

– Three key dimensions: capacity, volatility, and complexity


Three-Dimensional Environment ModelThree-Dimensional Environment Model

Capacity– The degree to which an environment can support growth

Volatility– The degree of instability in the environment

Complexity– The degree of heterogeneity and concentration among

environmental elements


Complexity

Volatility

Capacity

E X H I B I T 15-9E X H I B I T 15-9

Organizational Designs and Employee BehaviorOrganizational Designs and Employee Behavior

Impossible to generalize due to individual differences in the employees

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.

People seek and stay at organizations that match their needs.


Global ImplicationsGlobal Implications

Culture and Organizational Structure– Many countries follow the U.S. model

– U.S. management may be too individualistic

Culture and Employee Structure Preferences– Cultures with high-power distance may prefer mechanistic

structures

Culture and the Boundaryless Organization– May be a solution to regional differences in global firms

– Breaks down cultural barriers, especially in strategic alliances

– Telecommuting also blurs organizational boundaries


Summary and Managerial ImplicationsSummary and Managerial Implications

Structure impacts both the attitudes and behaviors of the people within it

Impact of Technology– Makes it easier to change structure to fit employee and

organizational needs


Associated with

E X H I B I T 15-10E X H I B I T 15-10

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any

means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the

United States of America.

Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall


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