Week 11: Organizational Structure

and Social Networks

Part 1: Organizational Structure
Managing Behaviour in Organisations

Lecturer : Dr. Maria Mullin

 Individual Characteristics
Personality & Values
(Week 3)
Overview of the Subject
Ethics
(Week 1)
Individual Mechanisms
Group Mechanisms Attitudes, Beliefs, &
Perceptions (Week 4) Individual Outcomes
Teams & Diversity
(Week 8) Motivation & Goal Setting
Conflict & Negotiation (Week 5) Work Behaviours
(Week 9) (Week 2)
Well-being & Stress
(Week 6)
Power, Influence,
& Leadership (Week 10)
➢ Job performance
Decision Making
(Week 7)
Organisational Mechanisms

Org. Structure & Networks

(Week 11)
Org. Culture & Change
(Week 12)
Agenda
• Organizational Structure
• Social Networks
Organisational Structure

Organisational design
• The process of selecting and managing aspects of
organisational structure and culture to enable the
organisation to achieve its goals
Organisational structure
• The formal system of task, power, and reporting relationships

(Griffin et. al, 2021)

Two Sample Organizational Structures
 Designing Organizational Structures

• How jobs and tasks are divided and coordinated between

individuals and groups within the company.
• How employees communicate and coordinate
• How power is distributed in the organization.
An organizational chart is a drawing that represents every job in
the organization and the formal reporting relationships between
those jobs.
Elements of Organizational Structure
Organisational Structure Definition
Dimension
The degree to which tasks in an
Work Specialization organisation are divided into separate
jobs
Answers the question of “who reports
Chain of Command to whom” and signifies formal
authority relationships
Represents how many employees each
Span of Control manager in the organization has
responsibility for
Centralization Refers to where decisions are formally
made in organization
The degree to which rules and
Formalization procedures are used to standardize
behaviours and decisions in an
organisation.
1. Work specialization

The degree to which tasks in an organization are divided into

separate jobs (how many tasks does any one employee perform?)
• Also known as division of labor.
• How many tasks does an employee perform?
• Henry Ford’s assembly line worker
• What are the benefits? What are the disadvantages? What do you think?
Work specialization video
Trade off between productivity, flexibility, motivation.
Pros:
– Productive, employee works on the same task over and over again.
– Easy to train
– Easy to replace
Cons:
– Can’t update\practice new skills
– For small organizations that need to be flexible, can be very bad.
– Low job satisfaction (variety- job characteristics theory).
 2. Chain of command
Within an organization essentially answers the question “Who
reports to whom?”
• Specific flow of authority down through the levels of an organization’s
structure.
• Can be strictly hierarchical (high chain of command)
• Some organizations with very weak chain of command
• Consider “Are the employees reporting to the right manager?”
3. Span of control
How many employees the manager is responsible for in the
organization.
Narrow span of control:
Each manager has very few
subordinates.
TALL ORGANIZATION

Wide span of control:

The manager has a lot of
subordinates.
FLAT ORGANIZATION

Which one would you prefer?

Pros of narrow span of control (tall organizations)
– Allows managers to be much more hands-on with employees, close
mentoring relationships → close mentoring
– Especially good when the manager has substantially more skill or
expertise than the subordinates.

Cons of narrow span of control (tall organizations)

– You have to hire many managers → increases costs
– If it gets too narrow, employees may get resentful since they are
watched all the time.
– Many levels, communication is hard, slow decision making.

Organizations are getting more flat to reduce costs associated with many
layers of management (i.e. Coca-Cola has vice presidents with up to 90
employees reporting to them.
Best solution: Moderate span of control!
 Discussion Question

Imagine you are the manager of a company developing a drug that

is showing early signs that it can cure a dreadful disease, but you
are structurally bound by the need for policy and procedure with
commercialising that drug for human consumption.
Would you favour fast, flat communication and rapid movement
of product to market through a flat, organic structure, or would
you trust that process and policy driven by hierarchical and
mechanistic checks and balances will deliver the safest, albeit
slower, outcomes?
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 4. Centralization
• Where decisions are formally made in organizations.
• If only top managers are in charge → highly centralized.
• If lower managers are responsible as well→ decentralized.
• Organizations are getting more de-centralized, especially as more people
report to a manager (flat organizations), they also need to make some
decisions as well. Some decisions can still remain more centralized though.
• Wide span of control works hand in hand with de-centralization.
Centralised organisations
▪ Concentrate power and decision-
making authority at higher levels
of the organisation
▪ Clear lines of communication and
responsibility
▪ Decision implementation tends
to be straightforward
Decentralised organisations
▪ Lower levels have more
autonomy and authority for
making decisions
▪ Flatter structures, less need for
middle management
▪ Promotes product innovation
and increases the speed of
decision making
▪ Best for non-routine tasks in
complex environments
(Griffin et. al, 2021)
 Question?

What areas of an organisation (e.g. what functions) do you

think are the best to centralise? Which are the best to
decentralise?

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5. Formalization
A company is high in formalization when there are many specific rules and
procedures used to standardize behaviors and decisions.
• We may not directly see it on the organizational chart, but its impact is felt
throughout the organization.
• Necessary coordination mechanism that organizations rely on to get a
standardized product or deliver a standardized service.
• Mc Donald’s
 Elements in Combination: Mechanistic VS. organic organizations

Organic organizations Low Work specialization High Mechanistic organizations

flexible, adaptive,
outward-focused
organizations that thrive
in dynamic environments.
efficient, rigid, predictable,
and standardized
organizations that thrive in
Weak or multiple Chain of command Hierarchical
stable environments.

Wide Span of control Narrow

Low Centralization High

Low Formalization High

Mechanistic structure
• Rigid, traditional bureaucracy
• Centralised power
• Hierarchical communication
• Uniform job descriptions
• May minimise costs
• Slow to capitalise on new
opportunities
Organic structure
• Flexible, decentralised
• Open communication channels
• Focus on adaptability
• Faster response to market and
competitive changes
• May increase job satisfaction,
affective commitment and
learning
(Griffin et. al, 2021)
 Case Study
Case Study: Restructure intersects with culture and strategy at Woolworths
Summary: In 2019, Woolworths in Australia announced it would spend $1 billion on
restructuring its retail operations. A big retailer like Woolworths has a significant local
community impact as it offers employment for many and its groceries are essential
supplies for most in the local area. The Shop, Distributive and Allied Employees’
Association lodged a dispute with the Fair Work Commission questioning the extent of the
redundancies and the reasonableness of the timeframe. Woolworths’ announcement
included rational structural reasons, and competitive pressures were certainly a factor. It
announced $10 million in staff training and development and that there would be no net
reduction in staff numbers. Another aspect was the separation and sale of its poker
machines, pubs and bottle shops business. Shareholders generally approved of the
strategy to ensure the wholesome, fresh food image.
The strategic competitive rationale for the supermarket restructure was clear and yet the
reality of redundancies and changes to jobs, and the likely impact on overall culture
internally, unfolded because of structural shift. 21
 Case Study Questions
1. What could Woolworths managers do during the corporate restructuring to ensure
that their best employees do not leave?
2. From the facts of the case study, try to identify and explain whether Woolworths is
changing to a more organic or mechanistic type of structure?

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Common Organizational Forms
Traditional Structures:
1. Simple structure
2. Functional structure
3. Divisional structure
Contemporary Structures:
4. Matrix structure
5. Boundary-less organization
1. Simple structure
Perhaps the most common form of organizational
design, primarily because there are more small
organizations than large ones.
– Small firms, start-ups, family owned grocery
stores, individual-owned retail outlets and etc.
– A flat organization with 1 manager with
centralized structure.
2. Functional structure
An organizational form in which employees are grouped by the functions they
perform for the organization.
• Conflict between departments can occur.
3. Divisional structure
Separate, semi-autonomous units of divisions
Within one organization, there may be different divisions with their own goals to
accomplish.
 4. Matrix Structures
Matrix structures are a more complex form of organizational design that
tries to take advantage of two types of structures at the same time.
• The matrix represents a combination of a functional structure and a divisional
structure.

FUNCTIONAL
STRUCTURE

DIVISIONAL STRUCTURE
Project based
(e.g. Project Manager Taurus, Project
Manager Mustang, etc
Starbucks has 16,000 stores across 54 countries.
Every customer expects the order made exactly the same way, but customers also want each
location to be unique to its location.
Matrix structure: Employees don’t only report to their functional manager (what they do),
they also report to regional executives who are tasked with customizing the Starbucks
experience to the locale clientele.
Benefits of matrix structure:
• Flexible teams based on expertise and skill
• More quickly adaptable
• 2 chains of commands, so 2 sources of information
Risks:
• Conflict between the 2 chains of command.
 Group Exercise – To Matrix or Not to Matrix, that is the Question

Summary: Consider a luxury resort where some customers return to the same location
year after year, while others enjoy trying out different locations in the group. Now imagine
recent reports indicate that sales are down and customer complaints are up, and resort
managers are pointing fingers and insisting that the middle managers at each location are
not upholding company standards. Currently, the company has adopted a divisional
structure, with a vice-president for each of the four resorts. Frustrated by inconsistent
service and weak sales, they enlist the services of a consultant. After visiting each of the
resorts and speaking with employees and guests, the consultant is recommending that the
company move from its current divisional structure to a matrix organisation. The
consultant explains that a matrix organisation is used by many innovative organisations,
such as NASA, to achieve functional and divisional control. Although some managers think
that this is a great idea, others are concerned that their authority and control may be
undermined by this new organisational structure. The business knows that something has
to change, but is unsure if this is the right solution.
Task: In 10 minutes, form a group of four students and each group member will assume one of the
following roles:
– President of Resorts
– Sales manager for the area resorts
– Housekeeper at one resort
– Guest at another resort
Each group will answer the following questions:
1.Without consulting other members of the team, and from the perspective of your assigned role,
do you think that Resorts should adopt a matrix structure?
2. Assemble your group and have each member present the potential pros and cons of organising
as a matrix organisation.
3. As a group, develop an organisational chart for the company in its current divisional structure
and the proposed matrix structure.
4. Develop a list of alternatives to converting to a matrix structure.
5. Considering all perspectives, what is the best decision of Resorts?
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 5. Boundaryless organizations

Sometimes, boundaries between organizations are not ideal.

• Hollow Structure: Some processes are outsourced. For instance,
design and marketing are done in house, but manufacturing,
shipping, HR are outsourced (e.g., Furniture company, Herman
Miller)
• Modular Structure: Instead of outsourcing processes, they
outsource parts of the product (e.g., Boeing)
• Virtual Structure: Employees work in separate facilities, rely less on
face-to-face interaction.
Benefits of boundaryless organizations:
• Generate superior returns by focusing on what they do best.
Risks
• Organizations give up expertise and control in the functions or operations
that are outsourced.
• The success of such organizations depend on the success of the managers’
ability to get results from people over whom they do not have direct formal
authority.
• Employees might not have the same degree of commitment to the
organization as employees of traditional organizations.
Best when:
• Organizations have suitable partners they trust,
• Efficiency is very important,
• Organization can identify functions, processes, products, or components to
outsource
 What Influences Organisational Structure?
Influence Example
Business strategy Being a low-cost producer would require a more hierarchical, rigid structure than
would pursuing an innovation strategy.
External environment A rapidly changing environment requires a more flexible structure than a more stable
environment.
Nature of the organisation’s talent If workers have professional skills (e.g., lawyers, scientists) and need to work
together, then a flatter, team-based structure would be more appropriate than a taller,
bureaucratic structure.

Organisation size
Expectations of how employees
should behave
Organisation’s production
technology
Organisational change
Larger organisations tend to have greater specialisation, greater hierarchy, and more
rules than do smaller firms.
If employees are expected to follow explicit rules and procedures, a hierarchical,
centralised structure would be called for.
If the firm uses unit production and makes custom products, a flat structure with a low
managerial span of control is most appropriate.
As the environment and business strategies change, organisational structures
change too.

(Griffin et. al, 2021)

 Discussion Questions
1. If you started your own company selling iPhone applications, what
organisational structure would you create? Why?

2. If you wanted employees to work collaboratively and minimise conflict,

what organisational structures would you consider adopting? Why? Which
structures would you avoid? Why?

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Week 11: Organizational
Structure and Social
Networks
Part 2: Social networks
Managing Behaviour in Organisations

Seminar Leader: Dr. Maria Mullin

We are NOT talking about these =)

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How about the informal relationships?
Social networks between employees
 What are social networks
Crucial for day to day job:
• Allow you to generate new ideas
• Get information and support you need
• To expand your influence

A network is a set of relationships. It can have 2 levels:

• Network of the whole organization / department / community
(i.e., full networks) relationships between every member)
Full network of an organization
• Network of an individual (i.e., ego networks; relations between
you and your contacts; and relationships among your contacts)

Relationships can have different purposes as well:

• Advice networks, gossip networks, friendship networks, negative Ego network of an individual
ties, task information network, disease spread network, romantic
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relationship network....
Value that can come from Social Capital

Material resources
information, expertise, money

Positional resources
recognition, reputation, visibility, contacts

Emotional resources
friendship, understanding, inclusion, gratitude
 Why is it difficult?

• Takes time to build and maintain a network

• Not a top priority, because we tend to think it is not a part of daily job
• We don’t know how to develop our network – learning process
• Although we think relationships develop spontaneously, effective networks do not
develop spontaneously.
– If we only have people we love in our networks, everyone will be similar to us
• Only strong relationships are important
– Actually WEAK ties are very important as well. More extended network connect
us to new social circles
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Analysing full-networks
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Social Capital
Different positions in the
network

James is on the periphery; he is

not central in the network

Peter Matteo

Joel

Eric James
Lakshmi
Anna

Fatima Noah

Sophia Lakshmi has ties to many people;

is central
 Central Position
Advantages • Access to lots of information
• Popular=powerful=lots of
influence
• Knows what is happening within
the network
Disadvantages • Limited time and resources to
manage all the relationships
• Hard to build new connections
outside of the current network
due to lack of time for it
• Risk of burnout and distraction
Suggestions • Are they all similar people?
Diversity of contacts is important
to have access to non-redundant
information
• Manage ties that go outside of
the network if you are too
embedded
• Be selective about your
relationships
Peripheral Position
• Has more time to build
connections to the outside world
(boundary spanners)
• Can be a perihperal specialist, so
people don’t go to him\her all the
time, but only when they need
his\her specialized knowledge
• Tend to be more creative since
they are more likely to know
people outside of the network
and have access to different
perspectives and information.
• Less powerful
• Might not be aware about what is
happening in the organization, so
can lose opportunities
• Research show that peripheral
people who are creative tend to
be more central over time,
because everyone wants to be
close to them. Therefore, they
might lose the advantage of being
at the periphery.
 Central Position
Advantages • Access to lots of information
• Popular=powerful=lots of
influence
• Knows what is happening within
the network
Disadvantages • Limited time and resources to
manage all the relationships
• Hard to build new connections
outside of the current network
due to lack of time for it
• Risk of burnout and distraction
Suggestions • Are they all similar people?
Diversity of contacts is important
to have access to non-redundant
information
• Manage ties that go outside of
the network if you are too
embedded
• Be selective about your
relationships
Peripheral Position
• Has more time to build
connections to the outside world
(boundary spanners)
• Can be a perihperal specialist, so
people don’t go to him\her all the
time, but only when they need
his\her specialized knowledge
• Tend to be more creative since
they are more likely to know
people outside of the network
and have access to different
perspectives and information.
• Less powerful
• Might not be aware about what is
happening in the organization, so
can lose opportunities
• Research show that peripheral
people who are creative tend to
be more central over time,
because everyone wants to be
close to them. Therefore, they
might lose the advantage of being
at the periphery.
Bridging positions in the network
Structural holes: Empty space in a
network between 2 groups of actors

Peter Matteo

Joel

Lakshmi James
Eric
Anna

Fatima Noah

Sophia Eric is the bridge

between two groups of
people
Hedy Lamar Video

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48
Benefits of structural holes on innovation

49
But why do we care?

50
Let’s assume these are information ties, what
can be some problems in this organization?

51
How about this one?

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 NETWORKING QUIZ
Networking in your organization / School
1 Ask to serve on new work projects or committee assignments?
2 Volunteer for cross-functional task forces?
3 Attend your organization’s / schools social functions?
4 Ask your direct reports / professors how you can facilitate their development?
5 Meet your peers in the organization / school for coffee or lunch?
6 Send thank-you notes or gifts to those who have helped you?
Networking in your profession
7 Attend meetings or conferences of professional organizations?
8 Serve on committees for your professional organization / school?
9 Collaborate on projects with peers in your profession?
10 Socialize with peers in your profession?
11 Accept speaking engagements on your area of expertise?
12 Write articles on your area of expertise for newspapers, newsletters, blogs?
13 Send cards, news paper clippings or e-mails to keep in touch with members of your profession?
Networking in you community
14 Participate in local service groups (e.g., Rotary)?
15 Become involved in promoting a personal cause (e.g., increasing literacy preventing breast cancer, helping the elderly).
16 Become involved in theatre, arts or other events in your community?
17 Participate in city governance through serving on boards, councils, or committees?
18 Welcome members into your community?
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19 Meet others in your community who share your interest or athletic ability?
 Learn to Love
Networking

Casciaro, T., Gino, F. & Kouchaki, M. (2016), “Learn to love networking,” Harvard Business Review. May: 104-107
Video: How to Network

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Next Week...
Organizational Change