foundations of organizational structure
TRANSCRIPT
Bob StretchSouthwestern College
Robbins & Judge
Organizational Behavior13th Edition
Foundations of Organizational Structure
Foundations of Organizational Structure
16-1© 2009 Prentice-Hall Inc. All rights reserved.
Chapter Learning ObjectivesChapter Learning Objectives
After studying this chapter, you should be able to:– Identify the six elements of an organization’s structure.– Identify the characteristics of a bureaucracy.– Describe a matrix organization.– Identify the characteristics of a virtual organization.
– Show why managers want to create boundaryless organizations.
– Demonstrate how organizational structures differ, and contrast mechanistic and organic structural models.
– Analyze the behavioral implications of different organizational designs.
– Show how globalization affects organizational structure.
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What Is Organizational Structure?What Is Organizational Structure?
Organizational Structure
– How job tasks are formally divided, grouped, and coordinated
– Key Elements:
1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of control
5. Centralization and decentralization
6. Formalization
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1. Work Specialization1. Work Specialization
The degree to which tasks in the organization are subdivided into separate jobs
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
Can create greater economies and efficiencies – but not always…
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E X H I B I T 16-1E X H I B I T 16-1
Work Specialization Economies and DiseconomiesWork Specialization Economies and Diseconomies
Specialization can reach a point of diminishing returns Then job enlargement gives greater efficiencies than
does specialization
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E X H I B I T 16-2E X H I B I T 16-2
2. Departmentalization2. Departmentalization
The basis by which jobs are grouped together
Grouping Activities by:
– Function
– Product
– Geography
– Process
– Customer
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3. Chain of Command3. Chain of Command
Authority– The rights inherent in a managerial position to give orders
and to expect the orders to be obeyed
Chain of Command– The unbroken line of authority that extends from the top of
the organization to the lowest echelon and clarifies who reports to whom
Unity of Command– A subordinate should have only one superior to whom he or
she is directly responsible
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4. Span of Control4. Span of Control
The number of subordinates a manager can efficiently and effectively direct
– Wider spans of management increase organizational efficiency
– Narrow span drawbacks:• Expense of additional layers of
management
• Increased complexity of vertical communication
• Encouragement of overly tight supervision and discouragement of employee autonomy
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Contrasting Spans of ControlContrasting Spans of Control
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E X H I B I T 16-3E X H I B I T 16-3
5. Centralization and Decentralization5. Centralization and Decentralization
Centralization– The degree to which decision making is concentrated at a
single point in the organization.
Decentralization– The degree to which decision making is spread throughout
the organization.
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6. Formalization6. Formalization
The degree to which jobs within the organization are standardized.– High formalization
• Minimum worker discretion in how to get the job done
• Many rules and procedures to follow
– Low formalization• Job behaviors are nonprogrammed
• Employees have maximum discretion
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Common Organization Designs: Simple StructureCommon Organization Designs: Simple Structure
Simple Structure– A structure characterized by a low degree of
departmentalization, wide spans of control, authority centralized in a single person, and little formalization
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E X H I B I T 16-4E X H I B I T 16-4
Common Organizational Designs: BureaucracyCommon Organizational Designs: Bureaucracy
Bureaucracy
– A structure of highly operating routine tasks achieved through specialization, very formalized 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
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An Assessment of BureaucraciesAn Assessment of Bureaucracies
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
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Common Organizational Designs: MatrixCommon Organizational Designs: Matrix
Matrix Structure
– A structure that creates dual lines of authority and combines functional and product departmentalization
Key Elements– Gains the advantages of functional and product
departmentalization while avoiding their weaknesses– Facilitates coordination of complex and interdependent
activities
– Breaks down unity-of-command concept
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E X H I B I T 16-5E X H I B I T 16-5
New Design Options: Virtual OrganizationNew Design Options: Virtual Organization
– A small, core organization that outsources its major business functions
– Highly centralized with little or no departmentalization
• Provides maximum flexibility while concentrating on what the organization does best
• Reduced control over key parts of the business
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E X H I B I T 16-6E X H I B I T 16-6
New Design Options: Boundaryless OrganizationNew Design Options: Boundaryless Organization
– An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams
– T-form Concepts• Eliminate vertical (hierarchical) and horizontal (departmental)
internal boundaries
• Breakdown external barriers to customers and suppliers
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Two Extreme Models of Organizational DesignTwo Extreme Models of Organizational Design
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E X H I B I T 16-7E X H I B I T 16-7
Four Reasons Structures DifferFour Reasons Structures Differ
1. Strategy– Innovation Strategy
• A strategy that emphasizes the introduction of major new products and services
• Organic structure best– Cost-minimization Strategy
• A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting
• Mechanistic model best– Imitation Strategy
• A strategy that seeks to move into new products or new markets only after their viability has already been proven
• Mixture of the two types of structure
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E X H I B I T 16-8E X H I B I T 16-8
Why Structures DifferWhy Structures Differ
2. Organizational Size– As organizations grow, they become more mechanistic,
more specialized, with more rules and regulations
2. Technology– How an organization transfers its inputs into outputs
• The more routine the activities, the more mechanistic the structure with greater formalization
• Custom activities need an organic structure
2. Environment– Institutions or forces outside the organization that
potentially affect the organization’s performance
– Three key dimensions: capacity, volatility, and complexity
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Three-Dimensional Environment ModelThree-Dimensional Environment Model
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
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Complexity
Volatility
Capacity
E X H I B I T 16-9E X H I B I T 16-9
Organizational Designs and Employee BehaviorOrganizational Designs and Employee Behavior
Impossible to generalize due to individual differences in the employees
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.
People seek and stay at organizations that match their needs.
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Global ImplicationsGlobal Implications
Culture and Organizational Structure– Many countries follow the U.S. model– U.S. management may be too individualistic
Culture and Employee Structure Preferences– Cultures with high-power distance may prefer mechanistic
structures
Culture and the Boundaryless Organization– May be a solution to regional differences in global firms– Breaks down cultural barriers, especially in strategic alliances– Telecommuting also blurs organizational boundaries
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Summary and Managerial ImplicationsSummary and Managerial Implications
Structure impacts both the attitudes and behaviors of the people within it
Impact of Technology– Makes it easier to change structure to fit employee and
organizational needs
16-24© 2009 Prentice-Hall Inc. All rights reserved.
Associated with
E X H I B I T 16-10E X H I B I T 16-10
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