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Chapter 16: Foundations of Organization Structure
Student Study Slideshow
Bob Stretch Southwestern College

Ch. 16

Organizational Structure

Demonstrate how organizational structures differ. you should be able to: – – – – – – – – Identify the six elements of an organization’s structure. Analyze the behavioral implications of different organizational designs. Show how globalization affects organizational structure. Describe a matrix organization. . and contrast mechanistic and organic structural models. Identify the characteristics of a virtual organization. Show why managers want to create boundaryless organizations. Identify the characteristics of a bureaucracy.Chapter Learning Objectives • After studying this chapter.

6. 4. Centralization and decentralization Formalization .What Is Organizational Structure?  How job tasks are formally divided. grouped. Departmentalization Chain of command Span of control 5. 2. and coordinated Elements: Work specialization  Key 1. 3.

Work Specialization • The degree to which tasks in the organization are subdivided into separate jobs • Division of Labor – – – – – • Can create greater economies and efficiencies – but not always… Exhibit 16-1 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 .1.

Work Specialization Economies and Diseconomies  Specialization can reach a point of diminishing returns  Then job enlargement gives greater efficiencies than does specialization Exhibit 16-2 .

Departmentalization  The basis by which jobs are grouped together  Grouping Activities by:  Function  Product  Geography  Process  Customer 16-7 .2.

• Unity of Command A subordinate should have only one superior to whom he or she is directly responsible . Chain of Command • Authority The rights inherent in a managerial position to give orders and to expect the orders to be obeyed.3. • 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.

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 .4.

5.  Decentralization The degree to which decision making is spread throughout the organization. Centralization and Decentralization  Centralization degree to which decision making is concentrated at a single point in the organization. The .

 High formalization Minimum worker discretion in how to get the job done Many rules and procedures to follow  Low formalization Job behaviors are non-programmed Employees have maximum discretion . Formalization  The degree to which jobs within the organization are standardized.6.

Organizational Structure Designs 12 1 • Simple Structure • Bureaucracy • Matrix •Virtual 2 3 4 .

wide spans of control.Simple Structure A structure characterized by a low degree of departmentalization. authority centralized in a single person. and little formalization .

and decision making that follows the chain of command. . very formalized rules and regulations.Bureaucratic Structure A structure of highly operating routine tasks achieved through specialization. tasks that are grouped into functional departments. centralized authority. narrow spans of control.

An Assessment of Bureaucracies Strengths  Functional Weaknesses  Subunit economies of scale  Minimum duplication of personnel and equipment  Enhanced communication  Centralized decision making conflicts with organizational goals  Obsessive concern with rules and regulations  Lack of employee discretion to deal with problems .

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. .

Virtual Organization  A small. core organization that outsources its major business functions  Highly centralized with little or no departmentalization Provides maximum flexibility while concentrating on what the organization does best Reduced control over key parts of the business .

and replace departments with empowered teams  T-form Concepts Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries Break down external barriers to customers and suppliers . have limitless spans of control.New Design Options: Boundaryless Organization  An organization that seeks to eliminate the chain of command.

Mechanistic versus Organic Models 19 .

Mechanistic versus Organic Models 20 Mechanistic Organic High Specialization Cross-functional teams Rigid Departmentalization Cross-hierarchical teams Clear Chain of Command Free flow of information Narrow Spans of Control Centralization High Formalization Wide Spans of Control Decentralization Low Formalization .

Strategy Innovation Strategy • A strategy that emphasizes the introduction of major new products and services • Organic structure best .Why Do Structures Differ 1.

Why Do Structures Differ 1. avoidance of unnecessary innovation or marketing expenses. Strategy Cost-minimization Strategy • A strategy that emphasizes tight cost controls. and price cutting • Mechanistic model best .

Why Do Structures Differ 1. Strategy Imitation Strategy • A strategy that seeks to move into new products or new markets only after their viability has already been proven • Mixture of the two types of structure .

with more rules and regulations . Organizational Size  As organizations grow.Why Structures Differ 2. more specialized. they become more mechanistic.

the more mechanistic the structure with greater formalization  Custom activities need an organic structure . Technology  How an organization transfers its inputs into outputs  The more routine the activities.Why Structures Differ 3.

Environment  Institutions or forces outside the organization that potentially affect the organization’s performance  Three key dimensions: capacity. volatility. and complexity .Why Structures Differ 4.

Employee Behavior  Work specialization contributes to higher employee productivity.Organizational Designs . but it reduces job satisfaction.  The benefits of specialization have decreased rapidly as employees seek more intrinsically rewarding jobs. .

Employee Behavior  The effect of span of control on employee performance is contingent upon individual differences and abilities.Organizational Designs .   . task structures. and other organizational factors. People seek and stay at organizations that match their needs. Participative decision making in decentralized organizations is positively related to job satisfaction.