16 Organisational Structure

8/4/2019 16 Organisational Structure

1/24

Foundations of Organisational Structure


2/24

Learning Objectives

After studying this chapter, you should be able to:

Identify the six elements of an organizations 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.


3/24


4/24

1.Work Specialization

The degree to which tasks in the organization aresubdivided 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 notalways


5/24

Work Specialization Economies and Diseconomies

Specialization can reach a point of diminishing returns

Then job enlargement gives greater efficiencies than

does specialization


6/24

2. Departmentalization

The basis by which jobs are grouped together

Grouping Activities by:

Function

Product

Geography

Process

Customer


7/24

3. Chain of Command

Authority The rights inherent in a managerial position to give orders

and to expect the orders to be obeyed

Chain ofCommand

The unbroken line of authority that extends from the top ofthe organization to the lowest echelon and clarifies who

reports to whom

Unity ofCommand

A subordinate should have only one superior to whom he or

she is directly responsible


8/24

4. Span of Control

The number of subordinates a manager can efficiently andeffectively direct

Wider spans of management

increase organizational

efficiencyNarrow span drawbacks:

Expense of additional layers of

management

Increased complexity of vertical

communication

Encouragement of overly tight

supervision and discouragement

of employee autonomy


9/24

Contrasting Spans of Control


10/24

5. 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 throughoutthe organization.


11/24

6. Formalization

The degree to which jobs within the organization arestandardized.

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


12/24

Common 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


13/24

Common Organizational Designs: Bureaucracy

Bureaucracy

A structure of highly operating

routine tasks achieved through

specialization, very formalized

rules and regulations, tasks thatare grouped into functional

departments, centralized

authority, narrow spans of control,

and decision making that follows

the chain of command


14/24

An Assessment of Bureaucracies

Strengths

Functional economies of

scale

Minimum duplication ofpersonnel and equipment

Enhanced communication

Centralized decision

making

Weaknesses

Subunit conflicts with

organizational goals

Obsessive concern withrules and regulations

Lack of employee

discretion to deal with

problems


15/24

Common 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

B

reaks down unity-of-command concept


16/24

New Design Options: Virtual Organization

A small, core organizationthat outsources its major

business functions

Highly centralized withlittle or no

departmentalization Provides maximum

flexibility whileconcentrating on whatthe organization does

best Reduced control over

key parts of the business


17/24

New Design Options: Boundaryless Organization

An organization that seeks to eliminate the chain ofcommand, 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


18/24

Two Extreme Models of Organizational Design


19/24


20/24

Why Structures Differ

2. Organizational Size As organizations grow, they become more mechanistic,

more specialized, with more rules and regulations

3. 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

4. Environment

Institutions or forces outside the organization that

potentially affect the organizations performance

Three key dimensions: capacity, volatility, and complexity


21/24

Three-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

Complexity

Volatility

Capacity


22/24

Organizational Designs and Employee Behavior

Impossible to generalize due to individual differences inthe employees

Research findings

Work specialization contributes to higher employeeproductivity, but it reduces job satisfaction.

The benefits of specialization have decreased rapidly asemployees seek more intrinsically rewarding jobs.

The effect of span of control on employee performance iscontingent upon individual differences and abilities, taskstructures, and other organizational factors.

Participative decision making in decentralized organizationsis positively related to job satisfaction.

People seek and stay at organizations that match theirneeds.


23/24

Global 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 mechanisticstructures

Culture and the Boundaryless Organization

May be a solution to regional differences in global firms

B

reaks down cultural barriers, especially in strategic alliances Telecommuting also blurs organizational boundaries


24/24

Summary and Managerial Implications

Structure impacts both the attitudes and behaviors ofthe people within it

Impact ofTechnology

Makes it easier to change structure to fit employee and

organizational needs

Associated

with

16 Organisational Structure

Documents

Transcript of 16 Organisational Structure