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Ch14: FOUNDATIONS OF ORGANIZATION STRUCTURE

WHAT IS ORGANIZATIONAL STRUCTURE?


Definition
o How job tasks are formally divided, grouped and
coordinated
6 elements
o Work specialization
Also division of labor
The degree to which act in org are subdivided into
separate jobs
Into a nb of steps
Specialized in part of act only
o Departmentalization
On what basis will jobs be grouped together
o Chain of command
To whom individuals and groups report
o Span of control
Nb of individuals a manager can
efficiently/effectively direct
o Centralization & decentralization
Where decision making authority lies
o Formalization
The degree to which there are rules/regulations to
direct employees
COMMON ORG DESIGNS
The Simple Structure
o Used in small businesses
Inadequate when E grows
o Characteristics
Low degree of departmentalization
Wide spans of control
Authority centralized in a single person
Little formalization
o Strengths
Fast
Flexible
Inexpensive to operate
Clear accountability
o Weaknesses
Only for small businesses
Risky bcs 1 person = authority

The Bureaucracy
o Characteristics
Highly routine tasks achieved thru specialization

Very formalized rules/regulations


Tasks grouped into functional dept.
Centralized authority
Narrow span of controls
Chain of command = decision making
o Strengths
Perform ++ standardized act
Less costly
Little need for innovative and experienced
decision makers
o Weakness
Obsessive concern with rules

The Matrix Structure


o 2 forms of departmentalization
Functional
Strength
o Specialists put together
Weakness
o Difficulty of coordination of diverse
specialists
On time
With budget
Product
Strength
o Coordination among spe
o Clear responsibility
o Dual chain of command
o Overall strength
Facilitate coordination
Better sharing of info
Reduce bureaupathologies
Eco of scales
Allocation of specialists
o Overall weaknesses
Confusion
Propensity to foster power struggles
Stress on individuals

NEW DESIGN OPTIONS


The Virtual Org
o Also called the network or modular
o Highly centralized
With no or little departmentalization
o Advantage
Flexibility
Need for little money

o Disadvantages
State of perpetual flux & reorganization
Low degree of interaction
The Boundary less Org
The Leaner Org: Org Downsizing
o Downsizing
Systematic effort to make an org leaner by:
Selling off business units
Closing locations
Reducing staff
o Advantages
Reduction in wage cost
Improve strategic focus
o Disadvantages
Effect on employee attitudes
Worry, stress
Less committed to org
Lower creativity
o Principles
Invest
Communication
Participation
Assistance

WHY DO STRUCTURES DIFFER?


2 models
MECHANISTIC MODEL
High specialization
Rigid departmentalization
Clear chain of command
Narrow spans of control
Centralization
High formalization

ORGANIC MODEL
Cross-functional teams
Cross-hierarchical teams
Free flow of info
Wide spans of control
Decentralization
Low formalization

Strategy
o Innovation strategy
Achieve meaningful & unique innovations
o Cost minimization strategy
Controls costs
Refrains from unnecessary expenses
Cut prices in selling products
o Imitation strategy
Minimize risk
Maximize opportunity for profit

Org sizes
o Over

Technology
o The way an org transfers inputs into outputs
o Degree of routineness
Environment

2000 employees
More specialization
More departmentalization
More vertical levels
More rules & regulations