Departmentalization by simple numbers

• Definition: group people who are to perform same duties under the supervision of a manager

Advantages:• useful when it is the

number of people that is critical to finish a task

Disadvantages:• Low specialization• Low efficiency

Departmentalization by time

• Group people based on time

Advantages• Extended services• Suitable when certain

processes can’t be interrupted or certain expensive equipment can be used more than 8 hours a day

Disadvantages:• Lacks supervision

during the night shift• Fatigue• Affects coordination

and communication among different shifts

OrganicOrganic

Collaboration

Adaptable Duties

Few Rules

Informal Communication

Decentralized Decisions

Flatter Structures

MechanisticMechanistic

Rigid Hierarchy

Fixed Duties

Many Rules

Formal Communication

Centralized Decisions

Taller Structures

Organizational FormsOrganizational Forms

Simple structure

• Characteristics: – A low degree of departmentalization– Wide span of control– Centralized authority– Little formalization– A flat structure– Inexpensive to maintain the structure– A clear accountability– Popular in small business owned and managed by same

person– Risky as the organization grows

Bureaucracy

• Characteristics:– High specialized operating task– Formalized rules and regulations– A clearly defined hierarchy– Level of managers are created to coordinate

activities

• Divisional structure– An organization is made up of self-contained units– Characteristics:

• Each division is generally autonomous• Central headquarters provide financial and legal

services to the divisions• Central headquarters coordinate and control various

divisions• Focuses on end results• Headquarters concentrate on long-term and strategic

issues• Duplications of personnel and equipment

Alpha project

Beta project

Gamma project

Design engineering Manufacturing Accounting

Design group

Design group

Design group

Manufacturinggroup

Manufacturinggroup

Manufacturinggroup

Accountinggroup

Accountinggroup

Accountinggroup

Matrix organization

• Definition: assign people from functional departments to work on one or more projects led by a project manager

Advantages

• Is oriented toward end results

• Professional identification is maintained

• Pinpoints product-profit responsibility

• Cross-functional coordination

Disadvantages:• Conflict in organization

authority exists• Possibility of disunity

of command exists• Requires managers

effective in human relations

Team-based structure

Definition: the entire organization consists of work groups or team that perform the organization’s work

Characteristics:

1. No rigid chain of command

2. Team member has authority to make decisions

Advantages:• Is flexible• Empower workers• Encourages

cooperation• Oriented toward end

results

Disadvantages:• Lack of responsibility• Central control may be

difficult• Requires managers

effective in human relations

The Boundaryless Organization

• An organization that is not defined or limited by boundaries or categories imposed by traditional structures

• Characteristics:– Minimize the chain of command– Replaces departments with empowered team– Participative decision-making– Coordination among occupational specialties

• Functional structure– An organization in which similar and related

occupational specialties are grouped together– Characteristics:

• Work specialization• Minimizes duplication of personnel and equipment• Follows principle of occupational specializing• Simplifies training• Furnishes means of tight control at top

Factors that affect structure • Organizational factors

– Strategy (structure should fit organizational strategy)• Growth strategy • Stability strategy• Retrenchment strategy

– Size and ageLarger organizations tended to be more specialized and standardized, and formalized but less centralized than smaller organizations

– Culture (i.e., a system of shared meaning within an organization that determines, to a large degree, how employees act)

• Strong culture substitute for the rules and regulations that formally guide employees

• Environmental factors– Technology (i.e., the sequence of physical techniques,

knowledge, and equipment used to turn organization inputs into outputs)

• Define organizational structure

• Define new roles (e.g., CIOs)

– Economic situation • Strong/weak economy

• Dynamic/static economy

– Social/political situation

Building an effective organization design

• Align with organizational goals• Make clear individual roles • Make clear sub-goals and policies• Be flexible • Make staff work effective

– Make line listen staff– Keep staff informed

• Recognize the importance of informal organization and grapevine

Evaluating effective organizational structure

• Effective two-way communication

• Align with organizational goals

• Clarify authority and responsibility

• Respond to environmental changes promptly

Why do we need organizational design?

• Achieve goals

• Make the best use of people’s experiences, knowledge, skills, and expertise, etc.

• Provide a smooth communication channel

• Reduce uncertainty

• Encourage cooperation