organizational structure and design in principle of management (chapter 6)

6.1 Describe six key elements in organizational design

1.Work specialization

dividing work activities into separate job tasks (division of labor)

allows organization to efficiently use the diversity of skill that workers have

this element could lead to great increseas in productivity

Ex : McDonald’s uses high specilization to get its products made and delivered to customers efficiently

2.Departmentalization

Hows job are grouped together

5 common forms of departmentalization

1.functional

2.product

3.customers

4.geographic

5.process

3.Authority and responsibility

rights inherent in a managerial position to give orders and expect the orders to be obeyed

Line authority -entitles a manager to direct the work of an employee according to the chain of command staff authority-functions to support, assist, advise, and generally reduce some of their informational burdens.

When managers delegate authority, they must allocate commensurate responsibility

That is, when employees are given rights they also assume a corresponding obligation to perform and be held accountable for their performance.

unity of command-a structure in which each empoyee reports to only one manager How do authority and power differ ?

Sources of power

4.Span of control

the number of employees a manager efficiently and effectively can supervise

span of control received a great deal of attention from early management writers

5.Centralization and decentralization

differ

Today’s organizations are more complex and responsive to dynamic changes in their environments, so many managers believe that decisions need to be made by those individuals closest to the problems. Notice, however, that decentralization doesn’t imply that top-level managers no longer make decisions.

6.Formalization how standardized an organization’s jobs are and the

extent to which employee behaviour is guided by rules and procedures.

when formalization is high employees have little discretion over what’s, when and how its done

when formalization is low employees have more discretion in how they do their work

6.2 The Mechanistic Model and The Organic Model of

Organizational Design

Models of Organizational DesignOrganic

Mechanistic

Rigid hierarchical relationship

Fixed duties

Many rules

Formalized communication channels

Centralized decision authority

Taller structures

Collaboration (both vertical & horizontal)

Adoptable duties

Few rules

Informal communication

Decentralized decision authority

Flatter structures

Strategy and Structure•Based on the work of Alfred Chandler. It believes goals are important part of organization’s strategies and that structure should facilitate goal achievement.

•Simple strategy means simple structure and elaborate strategy means morecomplex structure.

•Certain structural designs work best with different organizational strategies.

•Passionate pursuit of innovation is associated with an organic structure, while apassionate pursuit of cost control is associated with a mechanistic organization.

Size and StructureMechanistic Organic

More than 2,000 employees

makes forces organizations to

become more mechanistic.

Less than 2,000 employees

can be organic.

Technology and StructureEvery organization uses some form of technology to convert its inputs to outputs. For example :

•Your smartphone or tablet: standardized assembly line.

•Your resume: custom design and print.

•Your bottle of ibuprofen: continuous flow of production process.

Environment and Structure

Environment is a constraint on managerial discretion. Environment also has a major effect on an organization’s structure:

1. Stable environment: Mechanistic structure

2. Dynamic/uncertain environment: Organic structure

It helps explain why so many managers today have restructured their organizations to be lean, fast, and flexible.

6.3 Compare and Contrast Traditional and Contemporary

Organizational Designs

Traditional Organizational DesignsSimple structure

Low departmentalization, wide spans of control, centralized authority, little formalization

Functional structure Departmentalization by function

• Operations, finance, human resources, and product research and development

Divisional structure Composed of separate business units or divisions with

limited autonomy under the coordination and control the parent corporation.

Strengths and Weaknesses of Traditional Organizational Designs

Contemporary Organizational DesignsTeam Structure• What it is: A structure in which the entire organization is made up of work

groups or teams.

• Advantages: Employees are more involved and empowered. Reduced barriers among functional areas.

• Disadvantages: No clear chain of command. Pressure on teams to perform.

Matrix-Project StructureWhat it is: A structure that assigns specialists from different functional areas

to work on projects but who return to their areas when the project is completed. Project is a structure in which employees continuously work on projects. As one project is completed, employees move on to the next project.

• Advantages: Fluid and flexible design that can respond to environmental changes. Faster decision making.

• Disadvantages: Complexity of assigning people to projects. Task and personality conflicts.

Contemporary Organizational Designs (cont’d)

Boundaryless Structure

What it is: A structure that is not defined by or limited to artificial horizontal, vertical, or external boundaries; includes virtual and network types of organizations.

• Advantages: Highly flexible and responsive. Draws on talent wherever it’s found.

• Disadvantages: Lack of control. Communication difficulties.

Organizational Designs

• Contemporary Organizational DesignsTeam structures

The entire organization is made up of work groups or self-managed teams of empowered employees.

Matrix and project structures Specialists from different functional departments are assigned

to work on projects led by project managers. Matrix and project participants have two managers. In project structures, employees work continuously on

projects; moving on to another project as each project is completed.

An Example of a Matrix and Project Organization

Organizational Designs

• Contemporary Organizational Designs(cont’d)Boundaryless Organization

An flexible and unstructured organizational design that is intended to break down external barriers between the organization and its customers and suppliers.

Removes internal (horizontal) boundaries:• Eliminates the chain of command• Has limitless spans of control• Uses empowered teams rather than departments

Eliminates external boundaries:• Uses virtual, network, and modular organizational structures to

get closer to stakeholders.

Removing External Boundaries

Virtual Organization An organization that consists of a small core of full-time employees

and that temporarily hires specialists to work on opportunities that arise. An organization enjoys a network of talent without unnecessary overhead and structural complexity.

Network Organization or Modular Organization A small core organization that outsources its major business functions

(e.g., manufacturing) in order to concentrate what it does best.

6.4 Discuss the design challenges faced by today’s

organizations

Current Organizational Design Challenges

Keeping employees connectedManaging global structural issuesBuilding a learning organizationDesigning flexible work arrangements

ORGANIZATIONAL CULTURE• Strong Mutual Relationships•Sense of Community• Caring•Trust

LEADERSHIP• Shared Vision• Collaboration

INFORMATION SHARING• Open

• Timely• Accurate

ORGANIZATIONAL DESIGN• Boundaryless

• Teams• Empowerment

A Learning Organization

THE LEARNING ORGANIZATION

Flexible Work Arrangements

Telecommuting Compressed workweek Flextime Job Sharing Contingent workers

THE END