CINDHY DWI ATRIANI

Group 3 MGT 1

Gladys Pratiwi Febryani sitanggang Thieu Quang trung aka beanTran ngoc phu aka bob

ORGANIZATIONAL STRUCTURE & DESIGN

Chapter

9

ORGANIZATION STRUCTURE

DEFINING ORGANIZATIONAL STRUCTURE

Organizing the process of creating an organization’s structure

Organizational structure the proper arrangement of jobs within an

organization

Organizational design the developing of an organization’s structure

SIX KEY ELEMENTS OF AN ORGANIZATION

work specialization

departmentalization

chain of command

span of control

centralization and

decentralization

formalization

WORK SPECIALIZATION

the dividing work activities in an organization into separate job tasks

increased productivity

it could create human diseconomies

DEPARTMENTALIZATION

the basis by which job are grouped together

functional groups jobs by functions performed

product groups jobs by product line

DEPARTMENTALIZATION

geographical

groups jobs on the basis of territory or geography

process groups jobs on the basis of product or

customer flow

customer

groups jobs on the basis of specific customer

FUNCTIONAL DEPARTMENTALIZA

TION

PRODUCT DEPARTMENTALI

ZATION

GEOGRAPHICAL DEPARTMENTALIZA

TION

PROCESS DEPARTMENTALIZ

ATION

CUSTOMER DEPARTMENTALIZA

TION

CHAIN OF COMMAND

the continues line of authority that move from upper to the lowest level of an organization and clarifies who report to whom

authority

the right inherent in a managerial position to tell people

what to do and to expect them to do it

CHAIN OF COMMAND

responsibility

the obligation to perform any assigned duties

unity of command a person should only report to only one manager

number of employees that a manager can efficiently and effectively manage

determines the number of levels and managers in an organization

the wider the span, the more efficient the organization

SPAN OF CONTROL

appropriate span influenced by:

the skills and abilities of employees

the complexity of tasks performed

availability of standardized procedures

SPAN OF CONTROL

SPAN OF CONTROL

CENTRALIZATION & DECENTRALIZATION

Centralization

the degree to which decision making is concentrated at a single point in the organization

Decentralization

the degree to which decisions are made by lower level employees

FORMALIZATION

the degree to which jobs within the organization are standardized

extent to which employee behavior is guided by rules and procedures

ORGANIZATION DESIGN DECISIONS

rigidly and tightly controlled

structure tries to minimize the impact of

differing human traits most large organizations have some

mechanistic characteristicsMECHANISTIC ORGANIZATIO

N

highly adaptive and flexible structure

permits organization to change when the need arises

employees are highly trained and empowered to handle

diverse job activities

minimal formal rules and little direct supervision

ORGANIC ORGANIZA

TION

MECHANISTIC AND ORGANIC ORGANIZATION

Mechanistic

Rigid departmentalization

Clear chain of command

Narrow spans of control

Centralization

High formlization

Organic

Cross-hierarchical teams

Free flow information

Wide spans of control

Decentralization

Low information

CONTINGENCY FACTORS

Strategy and Structure

Size and Structure

Technology and Structure

STRATEGY AND STRUCTURE

Structure should facilitate the achievement of goals

Strategy and structure should be closely linked

Strategy focuses on innovation, cost minimization, imitation

Innovation

need the flexibility and free flow of information of the organic structure

Cost minimization seek efficiency, ability, and tight control of

mechanistic structure

Imitation use structural characteristic of both

mechanistic and organic structures

STRATEGY AND STRUCTURE

size affects structure at a decreasing rate

SIZE AND STRUCTURE

TECHNOLOGY AND STRUCTURE

converts inputs into outputs

mechanistic structure supports routine technology

organic structure supports nonroutine technology

unit production

production of items in units or small batches

mass production

large-batch manufacturing

process production

continuous-process production

TECHNOLOGY AND STRUCTURE

WOODWARD’S FINDINGS ON TECHNOLOGY, STRUCTURE,

ANDEFFECTIVENESS

ENVIRONMENTAL UNCERTAINTY AND STRUCTURE

one way to reduce environmental uncertainty is to adjust the organization’s structure

with greater stability, mechanistic structures are more effective

the greater the uncertainty, the greater the need for an organic structure

COMMON ORGANIZATIONAL DESIGN

Simple Structure Functional Structure Divisional Structure

TRADITIONAL ORGANIZATION DESIGN

SIMPLE STRUCTURE

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

as organizations increase in size, the structure tends to become more specialized and formalized

Commonly used by small business

groups similar or related occupational specialties together

FUNCTIONAL STRUCTURE

DIVISIONAL STRUCTURE

composed of separate divisions

Each division has relatively limited autonomy

Parents corporation acts as an external overseer to coordinate and control the divisions

STRENGTHS AND WEAKNESSES OF TRADITIONAL ORGANIZATIONAL DESIGNS

CONTEMPORARY ORGANIZATIONAL DESIGN

Team Structures Matrix and Project Structures The Boundaryless Organization

CONTEMPORARY ORGANIZATIONAL DESIGNS

TEAM STRUCTURES

entire organization is made up of work teams

Employee empowerment is crucial

Teams responsible for all work activity and performance

Complements functional or divisional structures in large organizations

CONTEMPORARY ORGANIZATIONAL DESIGNS

Team Structure

• What it is: A structure in which the entire organization is made up ofwork 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 AND PROJECT STRUCTURES

Matrix

assigns specialists from different functional departments to work on projects led by project managers

Project

employees work continuously on projects

adds vertical dimension to the traditional horizontal functional departments

creates a dual chain of command

employees do not return to a functional department at the conclusion of a project

all work performed by teams comprised of employees with appropriate skills and abilities

tends to be very fluid and flexible

MATRIX AND PROJECT STRUCTURES

Matrix Project

AN EXAMPLE OF A MATRIX ORGANIZATION

CONTEMPORARY ORGANIZATIONAL DESIGNS

Matrix-Project Structure

What it is: A structure that assigns specialists from different functional areas to work on projects but who return to their areas when the 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 environmental changes. Faster decision making.• Disadvantages: Complexity of assigning people to projects. Task and personality conflicts.

THE BOUNDARY LESS ORGANIZATION

design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure

Virtual organization

Network organization

Virtual organization

Consist of a small core of full time employees and hire outside specialist temporarily as needed to work on projects

Network organization

Uses its own employees to do some work activities and networks of outside suppliers to provide other needed product component or work process

THE BOUNDARY LESS ORGANIZATION

CONTEMPORARY ORGANIZATIONAL DESIGNS

Boundaryless Structure

What it is: A structure that is not defined by or limited to artificialhorizontal, vertical, or external boundaries; includes virtualand network types of organizations.• Advantages: Highly flexible and responsive. Draws on talent whereverit’s found..• Disadvantages: Lack of control. Communication difficulties..

TODAY’S ORGANIZATION DESIGN CHALLENGES

Keeping Employees Connected

Building a Learning Organization

Managing Global Structural Issues

TERMS TO KNOW

Organizational structure

Organizational design

Work specialization

Departmentalization

Functional dept

Product dept

Geographical dept

Process dept

Customer dept

Chain of command

Authority

Responsibility

Unity of command

Span of control

Centralization

Decentralization

Formalization

Mechanistic

Organic

Strategy and Structure

Innovation

Cost minimization

Imitation

Size and structure

Technology and structure

Unit production

Mass production

Process production

Simple structure

Functional structure

Divisional structure

Team structure

Matrix and project

Boundary less organization

Virtual organization

Network organization

TERMS TO KNOW