The Organizational System

Organizational StructureOrganizational Designs

What is Structure?

The degree of complexity, formalization and centralization in the organization.

Complexity is the degree of vertical, horizontal and spatial differentiation in an organization

Formalization is the degree to which jobs within the organization are standardized.

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

Classical View of Structure

Division of Labour – Specialization; breaking jobs down into simple and repetitions tasks

Unity of Command – a subordinate should have only one superior to whom he or she is directly responsible.

Responsibility - an obligation to perform Line Authority – authority to direct the work of a

subordinate

Classical View of Structure……

Chain of Command – the superior-subordinate authority chain that extends from the top of the organization to the lowest echelon

Staff Authority – positions that support, assist and advise line managers

Span of Control – the number of subordinates a manger can efficiently and effectively divert

Departmentation: grouping of activities on some common basis

Plant Manager

Manger Engineering

Manager Accounts

Manger Manufacturing

MangerPersonal

ManagerPurchase

Departmentation by Function

President

VP (Fuels)VP

(Lubricants & Waxes)VP

(chemicals)

Marketing

Planning

Supply & distribution

Manufacturing

Departmentalization by Product

Manager

Loans FEX SA TDR

Departmentalization by Customer

VP (Sales)

Sales ManagerWestern Region

Sales ManagerSouthern Region

Sales ManagerNorthern Region

Sales ManagerEastern Region

Departmentalization by Geography

Departmentalization by Process

Plant Manager

Cast DepartmentManager

Press Department

Manager

Tube Department

Manager

Finishing Department

Manager

Inspection, packing

& Shipping

Dept Manager

The coming of the New Organization

Rapid and unexpected changeIncreasing diversityChange in managerial behaviourAdoption to computer technology

The Mechanistic Structure

The Mechanistic Structure……

High horizontal differentiationRigid hierarchical relationshipsFixed dutiesHigh formalization Formalized communication channelsCentralized decision authority

The Organic Structure

The Organic Structure…..

Low horizontal differentiationCollaboration (both horizontal and vertical)Adaptable dutiesLow formalizationInformal communicationDecentralized decision authority

Why do Structures Differ? Strategy

Strategy Structural Option

Innovation Organic: loose structures; low division of labour, low formalization, decentralized.

Cost minimization

Mechanistic: tight control; extensive division of labour, high formalization, high centralization.

Initiation Mechanistic and Organic: mix of loose and tight properties; tight controls for current activities, loose controls for newer undertakings.

Why do Structures Differ?.....

Size Increase in the number of employees results in

• High complexity• High formalization• decentralization

Why do Structures Differ?.... Technology

Unit Production

Mass Production

Process Production

Structural characteristics

Low vertical differentiation

Low horizontal differentiation

Low formalization

Moderate vertical differentiation

High horizontal differentiation

High formalization

High vertical differentiation

Low horizontal differentiation

Low formalization

Most effective structure

Organic Mechanistic Organic

Technology…

Non routine

Routine

Craft

Engineering

1 2

3 4

Well-defined

Ill-defined

Task variability

Few Exceptions Many Exceptions

Problem Analyzabilit

y

Technology…

A B C D Input Output

A. Long-linked Technology

Client A Client BTransformational

Process

B. Mediating Technology

Resources A B C D

Transformational Process

Feedback

Output

C. Intensive Technology

Why do Structures Differ?.....

Environment

Abundant

Scarce

Complex simple

Stable

Dynamic

Three Dimensional Model of the Environment

Why do Structures Differ?...

Power control An organization structure is the result of power

struggle by internal constituencies who are seeking to further their interests

Mintzberg`s five design configurations

The operating core: Employees who perform the basic work related to the production of products and services

The strategic apex: Top level managers who are charged with the overall responsibility of the organization

The middle level: Managers who connect the operating core to the strategic apex

The technosturcture: Analysts who have the responsibility for effecting certain forms of standardization in the organization

The support staff: People who fill the staff units, who provide indirect services for the organization

Basic Elements

Basic Subunits SubunitExample positions from a manufacturing firm. Strategic Apex: Board of Directors, Chief

Executive Officer Techno structure: Strategic Planning, Personnel

Training, Operations Research, Systems Analysis and Design

Support Staff: Legal Counsel, Public Relations, Payroll, Mailroom Clerks, Cafeteria Workers

Middle Line: VP Operations, VP Marketing, Plant Managers Sales Managers

Operating Core: Purchasing Agents, Machine Operators, Assemblers, Sales Persons, Shippers

The Simple Structure

Low complexityLow formalizationCentralized authority

The Machine Bureaucracy

High in complexity, formalization and centralization

Key part is technostructure

The Professional Bureaucracy

High in complexity, formalizationLow centralization

The Divisional Structure

A set of autonomous units coordinated by central headquarters

The Adhocracy

A structure characterized as low in complexity, formalization centralization

The Matrix Structure Under

graduate

Master’s

Ph.D. Research

Executive programs

Community service programs

Accounting

Administrative Studies

Economics

Finance

Marketing

Academic departments

Programs

Matrix Structure for a College of Business Administration