Ch05.pptx

Part 3: Organizing
PowerPoint Presentation by Charlie Cook
Copyright © 2004 Prentice Hall, Inc.
All rights reserved.
Chapter 5
Basic
Organization
Designs

Copyright © 2004 Prentice Hall, Inc. All rights reserved. 5–2
L E A R N I N G O U T C O M E S
After reading this chapter, I will be able to:
1. Identify and define the six elements of
organization structure.
2. Describe the advantages and disadvantages of
work specialization.
3. Contrast authority and power.
4. Identify the five different ways by which
management can departmentalize.
5. Contrast mechanistic and organic organizations.
6. Summarize the effect of strategy, size,
technology, and environment on organization
structures.

L E A R N I N G O U T C O M E S (cont’d)
After reading this chapter, I will be able to:
7. Contrast the divisional and functional
structures.
8. Explain the strengths of the matrix structure.
9. Describe the boundaryless organization and
what elements have contributed to its
development.
10. Explain what is meant by the term learning
organization.
11. Describe what is meant by the term
organization culture.

Organization Design and Structure
• Organization design
A process in which managers develop or change their
organization’s structure
• Work specialization
A component of organization structure that involves
having each discrete step of a job done by a different
individual rather than having one individual do the
whole job

Economies and Diseconomies of Work
Specialization
EXHIBIT 5.1

Organizational Structure: Control
• Chain of command
The management principle that no person should
report to more than one boss
• Span of control
The number of subordinates a manager can direct
efficiently and effectively
 Influenced by: similarity and complexity of employee
tasks, proximity of employees, presence of
standardized procedures, capabilities of the information
management system, strength of the firm’s value
system, and preferred style of management.

Organizational Structure: Control
(cont’d)
• Authority
The rights inherent in a managerial position to give
orders and expect them to be obeyed
• Power
An individual’s capacity to influence decisions
• Responsibility
An obligation to perform assigned activities

Types of Organizational Authority
• Line authority
The position authority (given and defined by the
organization) that entitles a manager to direct the
work of operative employees
• Staff authority
Positions that have some authority (e.g., organization
policy enforcement) but that are created to support,
assist, and advise the holders of line authority

Chain of Command
EXHIBIT 5.2

Line Versus Staff Authority
EXHIBIT 5.3

Authority Versus Power
EXHIBIT 5.4a

Authority Versus Power (cont’d)
EXHIBIT 5.4b

Types of Power
EXHIBIT 5.5
Coercive power Power based on fear.
Reward power Power based on the ability to distribute
something that others value.
Legitimate power Power based on one’s position in the
formal hierarchy.
Expert power Power based on one’s expertise,
special skill, or knowledge.
Referent power Power based on identification with a
person who has desirable resources or
personal traits.

Centralization And Decentralization
• Centralization
A function of how much decision-making authority is
pushed down to lower levels in an organization; the
more centralized an organization, the higher the level
at which decisions are made
• Decentralization
The pushing down of decision-making authority to the
lowest levels of an organization

Types of Departmentalization
EXHIBIT 5 .6
Functional
Product
Customer
Geographic
Process

Departmentalization
• Functional departmentalization
 The grouping of activities by functions performed
• Product departmentalization
 The grouping of activities by product produced
• Customer departmentalization
 The grouping of activities by common customers
• Geographic departmentalization
 The grouping of activities by territory
• Process departmentalization
 The grouping of activities by work or customer flow

Mechanistic and Organic Organizations
• Mechanistic organization
The bureaucracy; a structure that is high in
specialization, formalization, and centralization
• Organic organization
An adhocracy; a structure that is low in specialization,
formalization, and centralization
Structure follows strategy

Mechanistic versus Organic Organizations
• Rigid hierarchical relationships
• Fixed duties
• Many rules
• Formalized communication
channels
• Centralized decision authority
• Taller structures
• Collaboration (both vertical and
horizontal)
• Adaptable duties
• Few rules
• Informal communication
• Decentralized decision authority
• Flatter structures
EXHIBIT 5.7

Technology and Structure
• Unit production
Production in terms of units or small batches
• Mass production
Production in terms of large batch manufacturing
• Process production
Production in terms of continuous processing

Organization Design Applications
• Simple structure
An organization that is low in specialization and
formalization but high in centralization
• Functional structure
An organization in which similar and related
occupational specialties are grouped together
• Divisional structure
An organization made up of self-contained units

Bureaucracy and Functional Structure
EXHIBIT 5.8

Divisional Structure
EXHIBIT 5.9

Other Organizational Structures
• Matrix structure
An organization in which specialists from
functional departments are assigned to work on
one or more projects led by a project manager

Sample Matrix Structure
EXHIBIT 5.10

Other Organizational Structures
• Team-based structure
An organization that consists entirely of work groups
or teams
• Boundaryless organization
An organization that is not defined or limited by
boundaries or categories imposed by traditional
structures

Learning Organization
• An organization that has developed the capacity
to continuously adapt and change because all
members take an active role in identifying and
resolving work-related issues.
Organization design
Information sharing
Leadership
Organizational culture

Characteristics of a Learning Organization
EXHIBIT 5.11
Source: Based on P.M. Senge. The Fifth Discipline: The Art and Practice of Learning Organizations (New
York: Doubleday, 1990); and R. M. Hodgetts, F. Luthans and S. M. Lee. “New Paradigm Organizations:
From Total Quality to Learning to World Class,” Organizational Dynamics (Winter 1994) pp. 4–19

Organization Culture
• Organization culture
A system of shared meaning within an organization
that determines, to a large degree, how employees
act
Shared values are shown in cultural elements:
 Stories, rituals, material symbols, and language unique
to the organization
Results from the interaction between:
 The founders’ biases and assumptions
 What the first employees learn subsequently from their
own experiences.

Ten Characteristics of Organization Culture
• Member identity
• Group emphasis
• People focus
• Unit integration
• Control
• Risk tolerance
• Reward criteria
• Conflict tolerance
• Means-end orientation
• Open-systems focus
EXHIBIT 5.12

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