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Lecture no. 2 org.structure
The document discusses organizational structure and its key elements. It defines organizational structure as the way that an organization arranges people and jobs. The key elements that determine structure are work specialization, departmentalization, chain of command, span of control, centralization/decentralization, and formalization. Structure is also influenced by factors like strategy, technology, environment, and organization size. Common structures include functional, divisional, matrix, flat versus tall hierarchies, and mechanistic versus organic designs. Structure impacts employee behavior - specialization increases productivity but reduces satisfaction while decentralization increases satisfaction.
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Lecture no. 2 org.structure
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- 2. What Is OrganizationalStructure? Key Elements (WDC-SC/DF) : • Work specialization • Departmentalization • Chain of command • Span of control • Centralization and decentralization • Formalization
- 3. What Determines Organizational Structure? ÀTo what degree are tasks subdivided into separate jobs? Á On what basis will jobs be grouped together? Â To whom do individuals and groups report? Ã How many individuals can a manager efficiently and effectively direct? Ä Where does decision-making authority lie? Å To what degree will there be rules and regulations to direct employees and managers?
- 4. Key Design Questionsand Answers for Designing the Proper Organization Structure
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- 6. Common Organization Designs ASimple Structure: Jack Gold’s Men’s Store
- 7. Organizational Chart ofa Manufacturing Firm Board member Board member Board member Board member Chief Executive Officer Legal counsel President Industrial Products Director- Human Resources Consumer Products Director- Human Resources Western Region Industrial Products Sales Manager Eastern Region Industrial Products Sales Manager Western Region Consumer Products Sales Manager Eastern Region Consumer Products Sales Manager etc. etc. etc. etc. etc. etc. etc. etc. etc. etc. Industrial Products Director- Production Consumer Products Director- Production Industrial Products Director- R&D Consumer Products Director- R&D V.P Research and Development V.P Sales/ Marketing V.P Human Resources V.P Production Industrial Products Director- Sales Consumer Products Director- Sales
- 8. Tall versus FlatOrganizations Chief Executive Chief Executive TallhierarchyFlathierarchy Relatively wide span of control Relatively narrow span of control Tall Organization Flat Organization
- 9. A Product Organization Pro- duction Acctg.SalesR&D Pro- duction Acctg.Sales R&D Pro- duction AcctgSales R&D Product Group 2 Product Group 1 Product Group 3 President Chief Executive Officer
- 10. A Horizontal Organization Teamresponsible for core process (e.g., generating and fulfilling orders) Team responsible for core process (e.g., product development) Team responsible for core process (e.g., flow of materials) Adviser Adviser Adviser Overall Manager Objective: Reduced cycle time Objective: More new products Objective: Enhanced product quality
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- 12. The Bureaucracy 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
- 13. Decentralization: Benefits WhenLow and When High Low Decentralization (High Centralization) Eliminates the additional responsibility not desired by people performing routine jobs Permits crucial decisions to be made by individuals who have the “big picture” High Decentralization (Low Centralization) Can eliminate levels of management, making a leaner organization Promotes greater opportunities for decisions to be made be people closest to problems Table 12-1
- 14. The Matrix Structure Cross-Functional Coordination Clear Accountability Allocation ofSpecialists Dual Chain of Command
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- 16. Mechanistic vs. OrganicDesigns Dimension Stability Specialization Formal rules Authority Mechanistic Change unlikely Many specialists Rigid rules Centralized in a few top people Organic Change likely Many generalists Considerable flexibility Decentralized, diffused throughout the organization Structure Table 12-2
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- 19. Organization Structure: ItsDeterminants and Outcomes
- 20. New Design Options Concepts: Providesmaximum flexibility while concentrating on what the organization does best. Disadvantage is reduced control over key parts of the business.
- 21. What Is OrganizationalStructure? (cont’d) 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
- 22. Economies and Diseconomiesof Work Specialization E X H I B I T 15-2
- 23. What Is OrganizationalStructure? (cont’d) Grouping Activities By: • Function • Product • Geography • Process • Customer
- 24. What Is OrganizationalStructure? (cont’d) Narrow Span Drawbacks: • Expense of additional layers of management. • Increased complexity of vertical communication. • Encouragement of overly tight supervision and discouragement of employee autonomy. Concept: Wider spans of management increase organizational efficiency.
- 25. Contrasting Spans ofControl E X H I B I T 15-3
- 26. What Is OrganizationalStructure? (cont’d)
- 27. Common Organization Designs(cont’d) Key Elements: + Gains advantages of functional and product departmentalization while avoiding their weaknesses. + Facilitates coordination of complex and interdependent activities. – Breaks down unity-of- command concept.
- 28. New Design Options 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.”
- 29. New Design Options(cont’d) T-form Concepts: Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries. Breakdown external barriers to customers and suppliers.
- 30. Why Do StructuresDiffer?
- 31. Why Do StructuresDiffer?
- 32. Why Do StructuresDiffer? – Strategy
- 33. The Strategy-Structure Relationship EX H I B I T 15-9
- 34. Why Do StructuresDiffer? – Technology Characteristics of routineness (standardized or customized) in activities: • Routine technologies are associated with tall, departmentalized structures and formalization in organizations. • Routine technologies lead to centralization when formalization is low. • Nonroutine technologies are associated with delegated decision authority.
- 35. Why Do StructuresDiffer? – Environment Key Dimensions: • 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.
- 36. What Is OrganizationalStructure? (cont’d)
- 37. The Three DimensionalModel of the Environment E X H I B I T 15-10 Complexity Volatility Capacity
- 38. Organizational Designs andEmployee 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.