Chapter No. 10 Basic Organizational Design Topic 10.1Designing Organizational StructurePurposes of organizing Divides work to be done into specific jobs and departments. Assigns tasks and responsibilities associated with individual jobs. Coordinates diverse organizational tasks. Clusters jobs into units. Establishes relationship among individuals, groups and departments. Establishes formal lines of authority. Allocates and deploys organizational resources.Organizing Arranging and structuring work to accomplish the organization’s goals.Organizational structure The formal arrangement of jobs within and organization.Organizational chart The visual representation of an organization’s structure.Organizational design Creating or changing an organization’s structure.Work specialization Dividing work activities into separate job tasks.Departmentalization The basis by which jobs are grouped together is called departmentalization. E.g. a College has many departments in it like financial aid department or department of student services.
The five commons forms of departmentalization 1. Functional departmentalization Groups jobs according to function. e. g. Plant manager 2. Geographical departmentalization Groups jobs according to geographical region. e.g. Vice president for sales 3. Product departmentalization Groups jobs by product line. e. g. Bombardier, Ltd. 4. Process departmentalization Groups’ jobs on the basis of product and customer flow. e. g. plant superintendent 5. Customer departmentalization Groups jobs on the basis of specific and unique customer we have common needs. e. g. director of salesCross-functional team A work team composed of individuals from various functional specialties.Chain of commands The line of authority extending from upper organizational levels to the lowest levels, which clarifies who reports the whom.Authority The rights inherent in a managerial position to tell people what to do and to expect them to do it.Acceptance theory of authority The view that authority comes from the willingness of subordinates to accept it.Line authority Authority that entities a manager to direct the work of an employee.Staff authority Position with some authority that have been created to support, assist and advise those holding line authority.
Responsibility The obligation or expectation to perform any assigned duties.Unity of command The management principle that each person should report to only one manager.Span of control The number of employees a manager can efficiently and effectively manage. Topic no 10.2Contrast mechanistic and organic structuresMechanistic versus organic organizationMechanistic High specialization Rigid departmentalization Clear chain of command Narrow spans of control Centralization High formalizationOrganic Cross-functional teams Cross-hierarchical teams Free flow of information Wide spans of control Decentralization Low formalizationCentralization The degree to which decision making is concentrated at upper level of the organization.
Decentralization The degree to which lower-level employees provide input or actually make decisions.Employee empowerment Giving employees more authority (power) to make decisions.Formalization How standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures. Topic 10.3Contingency factors affecting structural choiceMechanistic organization An organizational design that’s rigid and tightly controlledOrganic organization An organizational design that’s highly adaptive and flexible Topic 10.4Traditional organizational designsUnit production The production of items in units or small batches.Mass production The production of items in large batchesProcess production The production of items in continuous processesSimple structure An organizational design with low departmentalization, wide spans of control, centralized authority, and little formalization.
Functional structure An organizational design that groups together similar or related occupational specialties.Divisional structure An organizational structure made up of separate , semiautonomous units or divisionsSimple structure Strengths: fast; flexible; inexpensive to maintain; clear accountability. Weaknesses: not appropriate as organization grows; reliance on one person is risky.Functional structure Strengths: cost-saving advantages from specialization (economies of scale, minimal duplication of people and equipment); employees are grouped with others who have similar tasks. Weaknesses: pursuit of functional goals can cause managers to lose sight of what’s best for the overcall organization; functional specialists become insulated and have little understanding of what other units are doing.Divisional structure Strengths: focuses on result-division managers are responsible for what happens to their products and services. Weaknesses: duplication of activities and resources increase costs and reduces efficiency.