Structure 10

8/12/2019 Structure 10

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ninth edition

STEPHEN P. ROBBINS

PowerPoint Presentation by Charlie CookThe University of West Alabama

MARY COULTER

2007 Prentice Hall, Inc.All rights reserved.

Organizational

Structure and Design

Chapter

10


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2007 Prentice Hall, Inc. All rights reserved. 10 2

L E A R N I N G O U T L I N E

Defining Organizational Structure Discuss the traditional view of work specialization,

chain of command, and span of control.

Describe each of the five forms of departmentalization. Explain cross-functional teams.

Differentiate, authority, responsibility, and unity ofcommand.

Tell what factors influence the amount of centralizationand decentralization.

Explain how formalization is used in organizationaldesign.


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SEQUENCE

Organizational Design Decisions Contrast mechanistic and organic organizations.

Explain the relationship between strategy and

structure. Tell how organizational size affects organizational

design.

Discuss Woodwards findings on the relationship of

technology and structure. Explain how environmental uncertainty affects

organizational design.


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L E A R N I N G O U T L I N E

Common Organizational Designs Contrast the three traditional

organizational designs.

Explain team, matrix, and projectstructures.

Describe the design of virtual and networkorganizations.

Discuss the organizational designchallenges facing managers today.


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Purposes of Organizing

Divides work to be done into specific jobs anddepartments.

Assigns tasks and responsibilities associated withindividual jobs.

Coordinates diverse organizational tasks. Clusters jobs into units.

Establishes relationships among individuals,groups, and departments.

Establishes formal lines of authority.

Allocates and deploys organizational resources.


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Defining Organizational Structure

Organizational StructureThe formal arrangement of jobs within an organization.

Organizational Design

A process involving decisions about six key elements:Work specialization

Departmentalization

Chain of commandSpan of control

Centralization and decentralization

Formalization


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Organizational Structure

Work SpecializationThe degree to which tasks inthe organization are dividedinto separate jobs with eachstep completed by a differentperson.Overspecialization can resultin human diseconomies from

boredom, fatigue, stress, poorquality, increasedabsenteeism, and higherturnover.


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Departmentalization by Type

FunctionalGrouping jobs byfunctions performed

ProductGrouping jobs by productline

GeographicalGrouping jobs on thebasis of territory orgeography

ProcessGrouping jobson the basis ofproduct orcustomer flow

CustomerGrouping jobsby type of

customer andneeds


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Functional DepartmentalizationGrouping jobs by functions performed

Advantages

Efficiencies from putting together similar specialties and peoplewith common skills, knowledge, and orientations

Coordination within functional area

In-depth specialization

Disadvantages

Poor communication across functional areas

Limited view of organizational goals


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Product DepartmentalizationGrouping jobs by product line

+ Allows specialization in particular products and services+ Managers can become experts in their industry+ Closer to customers

Duplication of functions Limited view of organizational goals


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Geographical DepartmentalizationGrouping jobs on the basis of territory or geography

Advantages

More effective and efficient handling of specificregional issues that arise

Serve needs of unique geographic markets better

Disadvantages

Duplication of functions

Can feel isolated from other organizational areas


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Process DepartmentalizationGrouping jobs on the basis of product or customer flow

+ More efficient flow of work activities

Can only be used with certain types ofproducts


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Customer DepartmentalizationGrouping jobs by type of customer and needs

+ Customers needs and problems can bemet by specialists

- Duplication of functions

- Limited view of organizational goals


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Organization Structure

Chain ofCommand

The continuous line

of authority thatextends from upper

levels of anorganization to thelowest levels of the

organization andclarifies who reports

to who.


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AuthorityThe rights inherent in a managerial position to tell

people what to do and to expect them to do it.

ResponsibilityThe obligation or expectation to perform.

Unity of CommandThe concept that a person should have one boss

and should report only to that person.


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Span of ControlThe number of employees who can beeffectively and efficiently supervised by amanager.

Width of span is affected by:Skills and abilities of the manager

Employee characteristics

Characteristics of the work being done

Similarity of tasksComplexity of tasks

Physical proximity of subordinates

Standardization of tasks


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Contrasting Spans of Control


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CentralizationThe degree to which decision-making is concentratedat a single point in the organizations.

Organizations in which top managers make all the decisionsand lower-level employees simply carry out those orders.

DecentralizationOrganizations in which decision-making is pusheddown to the managers who are closest to the action.

Employee EmpowermentIncreasing the decision-making authority (power) ofemployees.


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Factors that Influence the Amount ofCentralization

More CentralizationEnvironment is stable.

Lower-level managers are not as capable or experienced atmaking decisions as upper-level managers.Lower-level managers do not want to have a say in decisions.

Decisions are relatively minor.

Organization is facing a crisis or the risk of company failure.

Company is large.

Effective implementation of company strategies depends onmanagers retaining say over what happens.


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Factors that Influence the Amount of Centralization

More DecentralizationEnvironment is complex, uncertain.

Lower-level managers are capable and experienced atmaking decisions.

Lower-level managers want a voice in decisions.Decisions are significant.

Corporate culture is open to allowing managers to have asay in what happens.

Company is geographically dispersed.Effective implementation of company strategies depends onmanagers having involvement and flexibility to makedecisions.


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FormalizationThe degree to which jobs within theorganization are standardized andthe extent to which employee

behavior is guided by rules andprocedures.

Highly formalized jobs offer littlediscretion over what is to be done.

Low formalization means fewerconstraints on how employees do theirwork.


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Organizational Design Decisions

Mechanistic Organization A rigid and tightly controlledstructure

High specialization

Rigid departmentalizationNarrow spans of control

High formalization

Limited information network(downward)

Low decision participation

Organic OrganizationHighly flexible andadaptable structure

Non-standardized jobs

Fluid team-based structureLittle direct supervision

Minimal formal rules

Open communicationnetwork

Empowered employees


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Factors Effecting Structural Decisions

Overall strategy of the organizationOrganizational structure follows strategy.

Size of the organizationFirms change from organic to mechanistic organizations

as they grow in size.Technology use by the organization

Firms adapt their structure to the technology they use.

Degree of environmental uncertaintyDynamic environments require organic structures;mechanistic structures need stable environments.


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Strategy and Structure

Achievement of strategic goals is facilitated bychanges in organizational structure thataccommodate and support change.

Size and Structure As an organization grows larger, its structuretends to change from organic to mechanisticwith increased specialization,departmentalization, centralization, and rulesand regulations.


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Technology and StructureOrganizations adapt their structures to theirtechnology.

Woodwards classification of firms based on thecomplexity of the technology employed:

Unit production of single units or small batches

Mass production of large batches of output

Process production in continuous process of outputs

Routine technology = mechanistic organizationsNon-routine technology = organic organizations


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Woodwards Findings on Technology,Structure, and Effectiveness


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Environmental Uncertainty and Structure

Mechanistic organizational structures tend to be mosteffective in stable and simple environments.

The flexibility of organic organizational structures isbetter suited for dynamic and complex environments.


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Common Organizational Designs

Traditional DesignsSimple structure

Low departmentalization, wide spans of control, centralizedauthority, little formalization

Functional structureDepartmentalization by function Operations, finance, human resources, and product

research and development

Divisional structure

Composed of separate business units or divisions with limitedautonomy under the coordination and control the parentcorporation.


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Strengths and Weaknesses of TraditionalOrganizational Designs


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Organizational Designs (contd)

Contemporary Organizational DesignsTeam structures

The entire organization is made up of work groups or self-managed teams of empowered employees.

Matrix and project structuresSpecialists from different functional departments are assignedto work on projects led by project managers.

Matrix and project participants have two managers.

In project structures, employees work continuously onprojects; moving on to another project as each project iscompleted.


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Example of a Project Team


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An Example of a Matrix Organization


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Contemporary Organizational Designs (contd) Boundaryless Organization

An flexible and unstructured organizational design that isintended to break down external barriers between theorganization and its customers and suppliers.

Removes internal (horizontal) boundaries:

Eliminates the chain of command

Has limitless spans of control

Uses empowered teams rather than departments

Eliminates external boundaries:

Uses virtual, network, and modular organizationalstructures to get closer to stakeholders.


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Removing External Boundaries

Virtual OrganizationAn organization that consists of a small core of full-timeemployees and that temporarily hires specialists to work onopportunities that arise.

Network OrganizationA small core organization that outsources its majorbusiness functions (e.g., manufacturing) in order toconcentrate what it does best.

Modular OrganizationA manufacturing organization that uses outside suppliers toprovide product components for its final assemblyoperations.


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The Learning Organization An organization that has developed the capacity tocontinuously learn, adapt, and change through thepractice of knowledge management by employees.

Characteristics of a learning organization: An open team-based organization design that empowersemployees

Extensive and open information sharing

Leadership that provides a shared vision of the organizations

future, support and encouragement A strong culture of shared values, trust, openness, and asense of community.


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Todays Organizational DesignChallenges

Keeping Employees ConnectedWidely dispersed and mobile employees

Building a Learning Organization Managing Global Structural Issues

Cultural implications of design elements


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Terms to Know organizing

organizational structure organizational design work specialization departmentalization functional departmentalization product departmentalization geographical

departmentalization process departmentalization

customer departmentalization cross-functional teams chain of command authority

responsibility

unity of command span of control centralization decentralization employee empowerment formalization mechanistic organization organic organization unit production

mass production process production simple structure functional structure


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Contingency Factors

Strategy Frameworks:Innovation

Pursuing competitive advantage through meaningful andunique innovations favors an organic structuring.

Cost minimizationFocusing on tightly controlling costs requires a mechanisticstructure for the organization.

ImitationMinimizing risks and maximizing profitability by copyingmarket leaders requires both organic and mechanisticelements in the organizations structure.


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Contemporary Organizational Designs

Team Structure What it is: A structure in which the entire organization is made up of

work groups or teams.

Advantages: Employees are more involved and empowered. Reducedbarriers among functional areas.

Disadvantages: No clear chain of command. Pressure on teams to perform.

Matrix-Project Structure

What it is: A structure that assigns specialists from different functionalareas to work on projects but who return to their areas whenthe project is completed. Project is a structure in whichemployees continuously work on projects. As one project iscompleted, employees move on to the next project.

Advantages: Fluid and flexible design that can respond to environmentalchanges. Faster decision making.

Disadvantages: Complexity of assigning people to projects. Task andpersonality conflicts.


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Contemporary Organizational Designs

Boundaryless

Structure What it is: A structure that is not defined by or limited to

artificial horizontal, vertical, or external boundaries;includes virtual and network types of organizations.

Advantages: Highly flexible and responsive. Draws on talentwherever its found..

Disadvantages: Lack of control. Communication difficulties..

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