Robbins & Judge

Organizational Behavior
13th Edition

Chapter 16: Foundations of

Organization Structure

Student Study Slideshow

Bob Stretch
Southwestern College
© 2009 Prentice-Hall Inc. All rights reserved. 16-1
 Chapter Learning Objectives
• 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.

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

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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…
Exhibit 16-1

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 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

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2. Departmentalization
• The basis by which jobs are grouped together
• Grouping Activities by:
– Function
– Product
– Geography
– Process
– Customer
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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

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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

Exhibit 16-3

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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.

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6. Formalization
• 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

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Common Organization Designs: 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

Exhibit 16-4

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 Common Organizational Designs:
Bureaucracy
• 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

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 An Assessment of Bureaucracies
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

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 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
Exhibit 16-5

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 New Design Options: 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

Exhibit 16-6

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 New Design Options: Boundaryless
Organization
– 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
• Break down external barriers to customers and
suppliers

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 Four Reasons Structures Differ
Two extreme forms of organization (Exhibit 16-7)
1. Strategy
– Innovation Strategy
• A strategy that emphasizes the introduction of major new products
and services
• Organic structure best
– Cost-minimization Strategy
• A strategy that emphasizes tight cost controls, avoidance of
unnecessary innovation or marketing expenses, and price cutting
• Mechanistic model best
– 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
Exhibit 16-8

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 Why Structures Differ
2. Organizational Size
– As organizations grow, they become more mechanistic,
more specialized, with more rules and regulations
3. Technology
– How an organization transfers its inputs into outputs
• The more routine the activities, the more mechanistic the
structure with greater formalization
• Custom activities need an organic structure
4. Environment
– Institutions or forces outside the organization that
potentially affect the organization’s performance
– Three key dimensions: capacity, volatility, and complexity

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 Three-Dimensional Environment
Model
• 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
Exhibit 16-9

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 Organizational Designs and Employee
Behavior
• 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.
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 Global Implications
• 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

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 Summary and Managerial Implications
• Structure impacts both the attitudes and
behaviors of the people within it
• Impact of Technology
– Makes it easier to change structure to fit
employee and organizational needs

Exhibit 16-10

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