FOUNDATIONS OF

ORGANIZATION STRUCTURE

Prof. : Vivian ChenReporter : Arthur Chung

OUTLINE What is organization structure ? Organization structure six key

elements . Common organizational design . New design option . Why do structure differ ? Organization designs and

employee behavior . Summary .

WHAT IS ORGANIZATIONAL STRUCTURE ?

Work Specialization . Departmentalization . Chain of Command . Span of Control . Centralization and Decentralization . Formalization .

ORGANIZATIONAL STRUCTURE SIX KEY ELEMENTS

Definition : The degree to which tasks in the organization

are subdivided into separate jobs . ( or division of labor )

The essence of work specialization is that rather than entire job being done by one individual , it is broken down into a number of steps , with each step being completed by a separate individual .

In essence , individuals specialize in doing part of an activity rather than the entire activity .

WORK SPECIALIZATION

ECONOMIES AND DISECONOMIES OF WORK SPECIALIZATION

Definition :The Basis by which jobs are grouped

together . Kinds of Departmentalization

Functions .Product of the organization produces .Geography or territory .Particular type of customer the organization

seeks to reach .

DEPARTMENTALIZATION

Definition : The unbroken line of the authority that extends

from the top of the organization to the lowest echelon and clarifies who reports to whom .

Authority The right inherent in a managerial position to give

orders and to expect to the orders to be obeyed . The unity-of-command principle helps preserve

the concept of an unbroken line of authority . Unity-of-command

The idea that a subordinate should have only one superior to whom he pr she is directly responsible .

CHAIN OF COMMAND

Definition :The number of subordinates a manager can

efficiently and effectively direct .

SPAN OF CONTROL

Definition :The degree to which decision making is

concentrated at a single point in the organization . ( The rights inherent in one’s position ) , decentralization is oppositive .

CENTRALIZATION AND DECENTRALIZATION

Definition :The degree to which jobs within the

organization are standardized .

FORMALIZATION

The Simple Structure : A structure characterized by a low degree of

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

The Strength :1. Simplicity .2. Fast .3. Flexible .4. Inexpensive to maintain . 5. Accountability is clearly .

The Weakness :1. It’s difficult to maintain in anything other than

small organizations .

COMMON ORGANIZATIONAL DESIGNS(1)

The Bureaucracy : A structure with highly routine operating tasks achieved through

specialization , very formalization 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 .

The Strength :1. The ability to perform standardized activities in a highly efficient

manner . The Weakness :

1. It is illustrated in the following dialogue among four executives in one company :

1. Ya know , nothing happens in this happens until we produce something .2. Wrong .3. What are you talking about ?4. Nothing happens here until we sell something .

2. It is something we’ve all experienced at one time or another when have to deal with people who work in these organizations : obsessive concern with following rules .

COMMON ORGANIZATIONAL DESIGNS(2)

The Matrix Structure : A structure that creates dual lines of authority and combines

functional and product departmentalization . The Strength :

1. It lies in putting like specialists together , which minimizes the number necessary while following the pooling and sharing of specialized resources across products.

2. It lies in its ability to facilitate coordination when the organization has a multiplicity of the complex and interdependent activities .

3. It facilitates the efficient allocation of specialists . The Weakness :

1. The difficulty of coordinating the tasks of diverse functional specialists so that their activities are completed on time and within budget .

2. Ii lies in the confusion it creates , its propensity to foster power struggles , and the stress it places on individuals .

COMMON ORGANIZATIONAL DESIGNS(3)

Definition:1. The use of teams as the central device to

coordinate work activities .

NEW DESIGN OPTIONS -TEAM STRUCTURE

Sometimes called the network or modular organization .

Definition :A small , core organization that outsources

major business functions . Advantage :

Flexibility .

NEW DESIGN OPTIONS -VIRTUAL STRUCTURE

Definition :An organization that seeks to eliminate the

chain of command , have limitless spans of control , and replace departments with empowered teams .

NEW DESIGN OPTIONS -BOUNDARYLESS STRUCTURE

Mechanistic Model :A structure characterized by extensive

departmentalization , high formalization , a limited information network , and centralization .

Organic Model :A structure that is a flat , uses cross-

hierarchical and cross-functional teams , has low formalization , possesses a comprehensive information network , and relies on participative decision making .

WHAT DO STRUCTURE DIFFER ? (1)

MECHANISTIC MODEL V.S. ORGANIC MODEL

Innovation Strategy :A strategy that emphasizes the introduction

of major new products and services . Cost-Minimization Strategy :

A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses , and price cutting .

Imitation Strategy :A strategy that seeks to move into new

products or new markets only after their viability has already been proven .

WHAT DO STRUCTURE DIFFER ? (2)STRATEGY

WHAT DO STRUCTURE DIFFER ? (2)STRATEGY

There is no considerable evidence to support the idea that an organization’s size affects its structure .

WHAT DO STRUCTURE DIFFER ? (3)ORGANIZATION SIZE

The term of technology refers to how an organization transfer its inputs into outputs .

WHAT DO STRUCTURE DIFFER ? (4)TECHNOLOGY

An organization’s environment is composed of institutions or forces outside the organization that potentially affect the organization’s performance .

Three-Dimensional Model of the Environment Capacity : support growth . Volatility : Dynamic or

stable . Complex : Scarce or

Abundant .

WHAT DO STRUCTURE DIFFER ? (5)ENVIRONMENT

To Maximize employee performance and satisfaction , individual differences , such as experience , personality , and the work task , should be taken into account .

In addition , national culture influences the preference for structure , so it , too , need to be considered .

ORGANIZATIONAL DESIGN AND EMPLOYEE BEHAVIOR

SUMMARY

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