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MANORGBEV
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 Chapter 6 3

Organization
Structure and
Design
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Learning outcomes
Identify the basic elements of organizations.

Describe the bureaucratic perspective on organization design.

Identify and explain key situational influences on organization design.

Describe the basic forms of organization design that characterize many organizations.

Identify and describe emerging issues in organization design.

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The Basic Elements of Organizing

Organization structure and design
Refers to the overall set of elements that can be used to configure an organization.

Job specialization
The degree to which the overall task of the organization is broken down and divided into smaller
component parts

 Work teams
An alternative to job specialization that allows an entire group to design the work system
it will use to perform an interrelated set of tasks
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Alternatives to Specialization (Part 1)

Job rotation
An alternative to job specialization that involves systematically moving employees from one
job to another

Job enlargement
An alternative to job specialization that increases the total number of tasks that workers
perform
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Alternatives to Specialization (Part 2)

Job characteristics approach
An alternative to job specialization that suggests that jobs should be diagnosed and improved
along five core dimensions, taking into account both the work system and employee preferences

Five Core Dimensions

 Skill variety, the number of things a person does in a job
 Task identity, the extent to which the worker does a complete or identifiable portion of the
total job
 Task significance, the perceived importance of the task
 Autonomy, the degree of control the worker has over how the work is performed
 Feedback, the extent to which the worker knows how well the job is being performed
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Grouping Job: Departmentalization

Departmentalization
The process of grouping jobs according to
some logical arrangement
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Establishing Reporting Relationships

Chain of command
A clear and distinct line of authority among the positions in an organization

Span of management
The number of people who report to a particular manager
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Tall Versus Flat Organizations

In recent years, managers have begun to focus attention on the optimal number of layers in
their organizational hierarchy. Having more layers results in a taller organization, whereas
having fewer layers results in a flatter organization.

Tall Organizations
 Are more expensive because of the number of managers involved.
 Foster more communication problems because of the number of people through whom
information must pass.
Flat Organizations
 Lead to higher levels of employee morale and productivity.
 Create more administrative responsibility for the relatively few managers.
 Create more supervisory responsibility for managers due to wider spans of control.
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Distributing Authority
Authority
Power that has been legitimized by the organization

Delegation
The process by which a manager assigns a portion of his or her total workload to others

Reasons for Delegation:

 To enable the manager to get more work done by utilizing the skills and talents of
subordinates.
 To foster development of subordinates by having them participate in decision making and
problem solving.
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Decentralization and Centralization

Decentralization
The process of systematically delegating power and authority throughout the organization to
middle and lower level managers

Centralization
The process of systematically retaining power and authority in the hands of higher-level
managers
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Coordinating activities
Coordination
The process of linking the activities of the various departments of the organization

The Need for Coordination:

 The primary reason for coordination is that departments and work groups are
interdependent—they depend on one another for information and resources to perform
their respective activities.
 The greater the interdependence between departments, the more coordination the
organization requires if departments are to be able to perform effectively
 Three Major Forms of 14

Interdependence
Pooled interdependence
When units operate with little interaction; their output is pooled at the organizational level

Sequential interdependence
When the output of one unit becomes the input for another in a sequential fashion

Reciprocal interdependence
When activities flow both ways between units
 The Bureaucratic Model of 15

Organization design
Bureaucracy
A model of organization design based on a legitimate and formal system of authority

According to Weber, the ideal bureaucracy exhibits five basic characteristics:

 The organization should adopt a distinct division of labor, and each position should be filled by an
expert.
 The organization should develop a consistent set of rules to ensure that task performance is uniform.
 The organization should establish a hierarchy of positions or offices that creates a chain of command
from the top of the organization to the bottom.
 Managers should conduct business in an impersonal way and maintain an appropriate social distance
between themselves and their subordinates.
 Employment and advancement in the organization should be based on technical expertise, and
employees should be protected from arbitrary dismissal
 The Situational influences on 16

organization design (Part 1)

Situational view of organization design
Based on the assumption that the optimal design for any given organization depends on a set
of relevant situational factors

Core Technology
Technology
Conversion process used to transform inputs into outputs

Three basic forms of technology were identified by Joan Woodward.

1. Unit or small batch technology – the product is custom made to customer specifications and produced in small quantities.
2. Large batch or mass production technology – the product is manufactured in assembly line fashion by combining
components parts into another part or finished product.
3.Continuous process technology- raw materials are transformed to a finished product by a series of machine
 The Situational influences on 17

organization design (Part 2)

Environment

Mechanistic organization
Similar to the bureaucratic model, most frequently found in stable environments

Organic organization
Very flexible and informal model of organization design, most often found in unstable and unpredictable
environments

Differentiation
Extent to which the organization is broken down into subunits

Integration
Degree to which the various subunits must work together in a coordinated fashion
 The Situational influences on 18

organization design (Part 3)

Organizational Size and Life Cycle

Organizational size
Total number of full-time or full-time equivalent employees

Organizational life cycle

Progression through which organizations evolve as they grow and mature
 Basic Forms of Organization Design 19

(Part 1)
Functional (U-Form) Design
functional design Based on the functional approach to departmentalization

 Requires coordination across all

departments.
 Resembles functional
departmentalization in its advantages
and disadvantages.
 Promotes a narrowing functional rather
than broader organizational focus
 Tends to promoter centralization
 Is common in smaller organizations
 Basic Forms of Organization Design 20

(Part 2)
Conglomerate (H-Form) Design
Used by an organization made up of a set of unrelated businesses

 Organization consists of a set of unrelated businesses with a general manager for each
business.
 Holding-company design is similar to product departmentalization.
 Coordination is based on the allocation of resources across companies in the portfolio.
 Design has produced only average to weak financial performance; has been
abandoned for other approaches
 Basic Forms of Organization Design 21

(Part 3)
Divisional (M-Form) Design
Based on multiple businesses in related areas operating within a larger organizational framework

 Is based on multiple businesses in related areas operating within a larger organizational

framework; following a strategy of related diversification.
 Activities are decentralized down to the divisional level; others are centralized at the corporate
level.
 The largest advantages of the M-form design are the opportunities for coordination and sharing
of resources
 Basic Forms of Organization Design 22

(Part 4)
Matrix Design
Based on two overlapping bases of departmentalization

 A set of product groups or temporary

departments are superimposed across the
functional departments.
 Employees in the matrix become members
of both their departments and a project team
under a project manager.
 The matrix creates a multiple command
structure in which an employee reports to
both departmental and project managers
 Basic Forms of Organization Design 23

(Part 5)
Hybrid Design

Is based on two or more organization design forms such as a mixture of related divisions and a
single unrelated division.
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Emerging Issues In Organization Design

Team organization
An approach to organization design that relies almost exclusively on project-type teams, with
little or no underlying hierarchy

Virtual organization
One that has little or no formal structure

Learning organization
One that works to facilitate the lifelong learning and personal development of all its employees
while continually transforming itself to respond to changing demands and needs