Lecture no. 2 org.structure
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Lecture no. 2 org.structure
- 2. What Is Organizational Structure? Key Elements (WDC-SC/DF) : • Work specialization • Departmentalization • Chain of command • Span of control • Centralization and decentralization • Formalization
- 3. What Determines Organizational Structure? À To what degree are tasks subdivided into separate jobs? Á On what basis will jobs be grouped together? Â To whom do individuals and groups report? Ã How many individuals can a manager efficiently and effectively direct? Ä Where does decision-making authority lie? Å To what degree will there be rules and regulations to direct employees and managers?
- 4. Key Design Questions and Answers for Designing the Proper Organization Structure
- 6. Common Organization Designs A Simple Structure: Jack Gold’s Men’s Store
- 7. Organizational Chart of a Manufacturing Firm Board member Board member Board member Board member Chief Executive Officer Legal counsel President Industrial Products Director- Human Resources Consumer Products Director- Human Resources Western Region Industrial Products Sales Manager Eastern Region Industrial Products Sales Manager Western Region Consumer Products Sales Manager Eastern Region Consumer Products Sales Manager etc. etc. etc. etc. etc. etc. etc. etc. etc. etc. Industrial Products Director- Production Consumer Products Director- Production Industrial Products Director- R&D Consumer Products Director- R&D V.P Research and Development V.P Sales/ Marketing V.P Human Resources V.P Production Industrial Products Director- Sales Consumer Products Director- Sales
- 8. Tall versus Flat Organizations Chief Executive Chief Executive TallhierarchyFlathierarchy Relatively wide span of control Relatively narrow span of control Tall Organization Flat Organization
- 9. A Product Organization Pro- duction Acctg.Sales R&D Pro- duction Acctg.Sales R&D Pro- duction AcctgSales R&D Product Group 2 Product Group 1 Product Group 3 President Chief Executive Officer
- 10. A Horizontal Organization Team responsible for core process (e.g., generating and fulfilling orders) Team responsible for core process (e.g., product development) Team responsible for core process (e.g., flow of materials) Adviser Adviser Adviser Overall Manager Objective: Reduced cycle time Objective: More new products Objective: Enhanced product quality
- 12. The Bureaucracy Strengths – Functional economies of scale – Minimum duplication of personnel and equipment – Enhanced communication – Centralized decision making Weaknesses – Subunit conflicts with organizational goals – Obsessive concern with rules and regulations – Lack of employee discretion to deal with problems
- 13. Decentralization: Benefits When Low and When High Low Decentralization (High Centralization) Eliminates the additional responsibility not desired by people performing routine jobs Permits crucial decisions to be made by individuals who have the “big picture” High Decentralization (Low Centralization) Can eliminate levels of management, making a leaner organization Promotes greater opportunities for decisions to be made be people closest to problems Table 12-1
- 14. The Matrix Structure Cross-Functional Coordination Clear Accountability Allocation of Specialists Dual Chain of Command
- 16. Mechanistic vs. Organic Designs Dimension Stability Specialization Formal rules Authority Mechanistic Change unlikely Many specialists Rigid rules Centralized in a few top people Organic Change likely Many generalists Considerable flexibility Decentralized, diffused throughout the organization Structure Table 12-2
- 17. Mechanistic Versus Organic Models
- 19. Organization Structure: Its Determinants and Outcomes
- 20. New Design Options Concepts: Provides maximum flexibility while concentrating on what the organization does best. Disadvantage is reduced control over key parts of the business.
- 21. What Is Organizational Structure? (cont’d) 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
- 22. Economies and Diseconomies of Work Specialization E X H I B I T 15-2
- 23. What Is Organizational Structure? (cont’d) Grouping Activities By: • Function • Product • Geography • Process • Customer
- 24. What Is Organizational Structure? (cont’d) Narrow Span Drawbacks: • Expense of additional layers of management. • Increased complexity of vertical communication. • Encouragement of overly tight supervision and discouragement of employee autonomy. Concept: Wider spans of management increase organizational efficiency.
- 25. Contrasting Spans of Control E X H I B I T 15-3
- 26. What Is Organizational Structure? (cont’d)
- 27. Common Organization Designs (cont’d) Key Elements: + Gains advantages of functional and product departmentalization while avoiding their weaknesses. + Facilitates coordination of complex and interdependent activities. – Breaks down unity-of- command concept.
- 28. New Design Options Characteristics: • Breaks down departmental barriers. • Decentralizes decision making to the team level. • Requires employees to be generalists as well as specialists. • Creates a “flexible bureaucracy.”
- 29. New Design Options (cont’d) T-form Concepts: Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries. Breakdown external barriers to customers and suppliers.
- 30. Why Do Structures Differ?
- 31. Why Do Structures Differ?
- 32. Why Do Structures Differ? – Strategy
- 33. The Strategy-Structure Relationship E X H I B I T 15-9
- 34. Why Do Structures Differ? – Technology Characteristics of routineness (standardized or customized) in activities: • Routine technologies are associated with tall, departmentalized structures and formalization in organizations. • Routine technologies lead to centralization when formalization is low. • Nonroutine technologies are associated with delegated decision authority.
- 35. Why Do Structures Differ? – Environment Key Dimensions: • 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.
- 36. What Is Organizational Structure? (cont’d)
- 37. The Three Dimensional Model of the Environment E X H I B I T 15-10 Complexity Volatility Capacity
- 38. Organizational Designs and Employee Behavior 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.