1. Chapter 15
Foundations of
Organization Structure
ORGANIZATIONAL BEHAVIOR
S T E P H E N P. R O B B I N S
E L E V E N T H E D I T I O N
© 2005 Prentice Hall Inc. WWW.PRENHALL.COM/ROBBINS PowerPoint Presentation
All rights reserved. by Charlie Cook

2. What Is Organizational Structure?
What Is Organizational Structure?
Organizational Structure
How job tasks are formally
divided, grouped, and Key Elements:
Key Elements:
coordinated. • • Work specialization
Work specialization
• • Departmentalization
Departmentalization
• • Chain of command
Chain of command
• • Span of control
Span of control
• • Centralization and
Centralization and
decentralization
decentralization
• • Formalization
Formalization
© 2005 Prentice Hall Inc.
All rights reserved. 15–2

3. What Is Organizational Structure? (cont’d)
What Is Organizational Structure? (cont’d)
Work Specialization
The degree to which tasks in the organization are
subdivided into separate jobs.
Division of labor:
Division of labor:
• • Makes efficient use of employee skills
Makes efficient use of employee skills
• • Increases employee skills through repetition
Increases employee skills through repetition
• • Less between-job downtime increases productivity
Less between-job downtime increases productivity
• • Specialized training is more efficient.
Specialized training is more efficient.
• • Allows use of specialized equipment.
Allows use of specialized equipment.
© 2005 Prentice Hall Inc.
All rights reserved. 15–3

4. What Is Organizational Structure? (cont’d)
What Is Organizational Structure? (cont’d)
Departmentalization
The basis by which jobs are grouped together.
Grouping Activities By:
Grouping Activities By:
•• Function
Function
•• Product
Product
•• Geography
Geography
•• Process
Process
•• Customer
Customer
© 2005 Prentice Hall Inc.
All rights reserved. 15–4

5. What Is Organizational Structure? (cont’d)
What Is Organizational Structure? (cont’d)
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
© 2005 she is directly responsible.
he or Prentice Hall Inc.
All rights reserved. 15–5

6. What Is Organizational Structure? (cont’d)
What Is Organizational Structure? (cont’d)
Span of Control
The number of subordinates a manager can efficiently
and effectively direct.
Concept:
Concept:
Wider spans of management increase organizational
Wider spans of management increase organizational
efficiency.
efficiency.
Narrow Span Drawbacks:
Narrow Span Drawbacks:
• •Expense of additional layers of management.
Expense of additional layers of management.
• •Increased complexity of vertical communication.
Increased complexity of vertical communication.
• •Encouragement of overly tight supervision and
Encouragement of overly tight supervision and
discouragement of employee autonomy.
© 2005 Prentice Hall Inc. employee autonomy.
discouragement of
All rights reserved. 15–6

7. What Is Organizational Structure? (cont’d)
What Is Organizational Structure? (cont’d)
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.
Formalization
The degree to which jobs within the organization are
standardized.
© 2005 Prentice Hall Inc.
All rights reserved. 15–7

8. Common Organization Designs
Common Organization Designs
Simple Structure
A structure characterized by a low degree of
departmentalization, wide spans of control, authority
centralized in a single person, and little
formalization.
© 2005 Prentice Hall Inc.
All rights reserved. 15–8

9. Common Organization Designs (cont’d)
Common Organization Designs (cont’d)
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.
© 2005 Prentice Hall Inc.
All rights reserved. 15–9

10. The Bureaucracy
The Bureaucracy
 Strengths  Weaknesses
– Functional – Subunit conflicts with
economies of scale organizational goals
– Minimum duplication – Obsessive concern
of personnel and with rules and
equipment regulations
– Enhanced – Lack of employee
communication discretion to deal
– Centralized decision with problems
making
© 2005 Prentice Hall Inc. 15–
All rights reserved. 10

11. Common Organization Designs (cont’d)
Common Organization Designs (cont’d)
Matrix Structure
A structure that creates dual lines of authority and
combines functional and product departmentalization.
Key Elements:
Key Elements:
+ Gains the advantages of functional and product
+ Gains the advantages of functional and product
departmentalization while avoiding their weaknesses.
departmentalization while avoiding their weaknesses.
+ Facilitates coordination of complex and
+ Facilitates coordination of complex and
interdependent activities.
interdependent activities.
– Breaks down unity-of-command concept.
– Breaks down unity-of-command concept.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 11

12. New Design Options
New Design Options
Team Structure
The use of teams as the central device to coordinate
work activities.
Characteristics:
Characteristics:
• •Breaks down departmental barriers.
Breaks down departmental barriers.
• •Decentralizes decision making to the team level.
Decentralizes decision making to the team level.
• •Requires employees to be generalists as well as
Requires employees to be generalists as well as
specialists.
specialists.
• •Creates aa“flexible bureaucracy.”
Creates “flexible bureaucracy.”
© 2005 Prentice Hall Inc. 15–
All rights reserved. 12

13. New Design Options (cont’d)
New Design Options (cont’d)
Virtual Organization
A small, core organization that outsources its major
business functions.
Highly centralized with little or no departmentalization.
Concepts:
Concepts:
Advantage: Provides maximum flexibility while
Advantage: Provides maximum flexibility while
concentrating on what the organization does best.
concentrating on what the organization does best.
Disadvantage: Reduced control over key parts of
Disadvantage: Reduced control over key parts of
the business.
the business.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 13

14. New Design Options (cont’d)
New Design Options (cont’d)
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:
T-form Concepts:
Eliminate vertical (hierarchical) and horizontal
Eliminate vertical (hierarchical) and horizontal
(departmental) internal boundaries.
(departmental) internal boundaries.
Breakdown external barriers to customers and
Breakdown external barriers to customers and
suppliers.
suppliers.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 14

15. Why Do Structures Differ?
Why Do Structures Differ?
Mechanistic Model
A structure characterized by extensive
departmentalization, high formalization, a limited
information network, and centralization.
Organic Model
A structure that is flat, uses cross-hierarchical and
cross-functional teams, has low formalization,
possesses a comprehensive information network, and
relies on participative decision making.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 15

16. Why Do Structures Differ? – Strategy
Why Do Structures Differ? – Strategy
Innovation Strategy
A strategy that emphasizes the introduction of major
new products and services.
Cost-minimization Strategy
A strategy that emphasizes tight cost controls,
avoidance of unnecessary innovation or marketing
expenses, and price cutting.
Imitation Strategy
A strategy that seeks to move into new products or
new markets only after their viability has already
© 2005 proven. Hall Inc.
been Prentice 15–
All rights reserved. 16

17. Why Do Structures Differ? – Size
Why Do Structures Differ? – Size
Size
How the size of an organization affects its structure.
As an organization grows larger, it becomes more
mechanistic.
Characteristics of large organizations:
Characteristics of large organizations:
• •More specialization
More specialization
• •More vertical levels
More vertical levels
• •More rules and regulations
More rules and regulations
© 2005 Prentice Hall Inc. 15–
All rights reserved. 17

18. Why Do Structures Differ? – Technology
Why Do Structures Differ? – Technology
Technology
How an organization transfers its inputs into outputs.
Characteristics of routineness (standardized or
Characteristics of routineness (standardized or
customized) in activities:
customized) in activities:
• •Routine technologies are associated with tall,
Routine technologies are associated with tall,
departmentalized structures and formalization in
departmentalized structures and formalization in
organizations.
organizations.
• •Routine technologies lead to centralization when
Routine technologies lead to centralization when
formalization is low.
formalization is low.
• •Nonroutine technologies are associated with delegated
Nonroutine technologies are associated with delegated
decision authority.
decision authority.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 18

19. Why Do Structures Differ? – Environment
Why Do Structures Differ? – Environment
Environment
Institutions or forces outside the organization that
potentially affect the organization’s performance.
Key Dimensions-
Key Dimensions-
• • Capacity: the degree to which an environment can
Capacity: the degree to which an environment can
support growth.
support growth.
• • Volatility: the degree of instability in the environment.
Volatility: the degree of instability in the environment.
• • Complexity: the degree of heterogeneity and
Complexity: the degree of heterogeneity and
concentration among environmental elements.
concentration among environmental elements.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 19

20. “Bureaucracy Is Dead”
“Bureaucracy Is Dead”
 Characteristics of  Why Bureaucracy
Bureaucracies Survives
– Specialization – Large size prevails.
– Formalization – Environmental
turbulence can be
– Departmentalization
largely managed.
– Centralization
– Standardization
– Narrow spans of control achieved through hiring
people who have
– Adherence to a chain of
undergone extensive
command.
educational training.
– Technology maintains
control.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 20

21. Organizational Designs and Employee
Organizational Designs and Employee
Behavior
Behavior
Research Findings:
Research Findings:
• • Work specialization contributes to higher employee
Work specialization contributes to higher employee
productivity, but it reduces job satisfaction.
productivity, but it reduces job satisfaction.
• • The benefits of specialization have decreased rapidly as
The benefits of specialization have decreased rapidly as
employees seek more intrinsically rewarding jobs.
employees seek more intrinsically rewarding jobs.
• • The effect of span of control on employee performance is
The effect of span of control on employee performance is
contingent upon individual differences and abilities, task
contingent upon individual differences and abilities, task
structures, and other organizational factors.
structures, and other organizational factors.
• • Participative decision making in decentralized
Participative decision making in decentralized
organizations is positively related to job satisfaction.
organizations is positively related to job satisfaction.
© 2005 Prentice Hall Inc. 15–
All rights reserved. 21