Chapter I 5 Robbins & Judge Organizational Behavior 14th Edition Foundations of Organization Structure Kelli J. Schutte ‘william Jewell College Copyright © 2011 P: 154Chapter Learning O » 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. Gopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 5-2at Is Organizational Structure? > Organizational Structure — How job tasks are formally divided, grouped, and coordinated Key Elements: iF Copyright © 20: ep) 3 4, iS) 6. Work specialization Ee A Menartmentalization =a Chain of command Span of control Centralization and decentralization J Xx Formalization Pearson Education, Inc. publishing as Prentice Hall 531. 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... ries IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15-4Work Specialization Economies and Diseconomies = + Produstivity > = (low) <——— Werk specialization ———> (High) > Specialization can reach a point of diminishing returns > Then job enlargement gives greater efficiencies than does specialization IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 155- “ | 2. Departmentalization » The basis by which jobs are grouped together > Grouping Activities by: — Function — Product — Geography Process Customer Iropyfight © 2014 Pearson Education, Inc. publishing as Prentice Hal 1363. 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 Gopyright © 2011 Pearson Education, inc. publishing as Prentice Hall a4. 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 IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15-8Con sting Spans of Control Members at each level (Highest) Assuming Assuming span of 4 span of 8 | 1 1 l Zz 2 4 g é 53 3 16 64 Ss 4 64 Se g 4,096 NS 256 b> 6 1,024 Span of 8 Oo 7 Operatives = 4,096 pe Managers (levels 1-4) = 585 Span of 4: Operatives = 4,096 Managers (Levels 1-6) = 1,365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 throughout the organization. IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15-10» 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 Gopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 5-11ns: 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 Jock Geld, ‘ownermanager 1 r T T T T 1 Johnny Moore, | Edna Joiner, | Bob Munson, | Norma Slaman,| Jerry Plotkin, | Helen Wright, solesperson salesperson | salesperson’ | salesperson salesperson cashier Brie IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 1542> 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 IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15:13CSyerst palo) al mel msl [ear [U ol g-l el Strengths Weaknesses — Functional economies of — Subunit conflicts with scale organizational goals Minimum duplication of Obsessive concern with personnel and equipment rules and regulations — Enhanced communication — Lack of employee Centralized decision discretion to deal with making problems Copyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15-14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 — Breaks down unity-of-command concept IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15.45New Design Options: Virtual Organization — Asmall, core organization that outsources its major business functions iain noe ~ Highly centralized with aaae ‘agency little or no fim | }, departmentalization ‘es? * Provides maximum Executive flexibility while / concentrating on what sy the organization does Factories ‘Commissioned best Seu Keren ae * Reduced control over key parts of the business [Gopyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 15-15New Design Options: Boundaryless Organizatio 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. IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 1547wo Extreme Models o anizational Desi The mechanistic model The organic model * High specialization * Crossfunctional teams * Rigid deporimentalization * Crosshierarchical teams * Clear chain of command * Free flow of information * Narrow spans of control * Wide spans of control © Centralization © Decentralization ow formalization * High formalizationFour 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 * Astrategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting * Mechanistic model best Imitation Strategy * A strategy that secks to move into new products or new markets only after their viability has already been proven * Mixture of the two types of structure IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15:19y Structures Differ 2. Organizational Size — As organizations grow, they become more mechanistic, more specialized, with more rules and regulations 2. Technology — How an organization tra fers 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 Gopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15.20Three-Dimensional Environment Model Stable Abundant Volatility sine com Complexity Capacity Dynamic > 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 IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15-21Organiza al Designs and Employee Behav > 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. IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 1522‘ Global Implicat > 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 Gopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15:23Summary and Managerial Implications > Structure impacts both the attitudes and behaviors of the people within it are Structural designs | | Asseclated Perf * Strategy determines eer eic with ert Se * Size an * Technology oreo satisfaction ¢ Environment Moderated by individual differences and + eae cultural norms » Impact of Technology — Makes it easier to change structure to fit employee and organizational needs Eres IGopyright © 2011 Pearson Education, inc. publishing as Prentice Hall 15-24rotected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permit- ted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by Bt iettronic, mechanical, photocopying, recording, anata Without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2011 Pearson Education, Inc. Publishing as Prentice Hall tion, Inc. publishing as Prentice Hall