8/9/2019 Chapter 5new
1/17
Chapter 5Chapter 5
Designing OrganizationalDesigning Organizational
Structure:Structure:
Authority and ControlAuthority and ControlWhats on the agenda?Whats on the agenda?
How and Why Vertical Differentiation OccursHow and Why Vertical Differentiation OccursFactors Affecting the Shape of the HierarchyFactors Affecting the Shape of the HierarchyThe Principles of Bureaucratic StructureThe Principles of Bureaucratic StructureRestructuring the OrganizationRestructuring the Organization
8/9/2019 Chapter 5new
2/17
A basic design challenge involves deciding
how much authority to centralize at the top
of an organizations and how much to
decentralize to middle and lower levels.
An organizations hierarchy begins to emerge
when the organization experiences
problemsin coordinating and motivating employees.
These problems lead to organizations:
- Increasing the number of managers
- Increasing the number of levels in the
management hierarchy
8/9/2019 Chapter 5new
3/17
An organization with many management levels relative to its size is
a tall organization.
An organization with few levels relative to its size is a flat
organization.
It is key to understand that this characteristic is relative to
organizational size.
Problems with Tall Hierarchies
Communication Problemsboth timing and distortion
Motivation Problemsan increase in levels of management leads
to a decrease in responsibility and motivation
Bureaucratic Costsmanagers cost money
Types of OrganizationsTypes of Organizations
8/9/2019 Chapter 5new
4/17
Principle of Minimum Chain ofCommand
An organization should choose the minimum number of
management levels consistent with its goals and the environment
in which it exists.
In other words, keep the organization as flat as possible while
maintaining control over activities.
How can an organization avoid becoming too tall
One way is by increasing managers span of controlthe number
of subordinates a manager directly manages.
In general, a managers span of control is limited by two factors:
the complexity and interrelatedness of tasks.
8/9/2019 Chapter 5new
5/17
Factors affecting the shape of the hierarchy:
Horizontal Differentiationan organization
that is divided into subunits has many different
hierarchies, not just one.
Centralizationwith decentralization, lessdirect managerial supervision is needed
Standardizationreduces the need for
levels of management because rules
substitute for direct supervision
8/9/2019 Chapter 5new
6/17
33 -- 66
Copyright 2001 Prentice Hall
FIGURE 3.9
Horizontal Differentiation into Functional Hierarchies
Sales Engineering Manufacturing Purchasing Research and
Development
6
5
4
3
2
1
7
1 1
2 2
3 3
3-11
8/9/2019 Chapter 5new
7/17
The Principles of Bureaucratic Structure:
Bureaucracya form of organizational structure in which people can
be held accountable for their actions while conforming to well-
specified rules and standard operating procedures
Weber outlined six principles that underlie effective structure.
Bureaucratic Principal One:
A bureaucracy is founded on the concept ofrational-legal authority.
Rational-legal authority is due to the position in an organization, notbecause of personal qualities such as charisma, wealth, or status.
8/9/2019 Chapter 5new
8/17
Chapter 5Chapter 5
Bureaucratic Principal TwoBureaucratic Principal Two::
Organizationalroles are held on theOrganizationalroles are held on the
basis ofbasis of
technical competence, not because oftechnical competence, not because of
social status, kinship, orheredity.social status, kinship, orheredity.
8/9/2019 Chapter 5new
9/17
Chapter 5Chapter 5
Bureaucratic Principal ThreeBureaucratic Principal Three::
Aroles taskresponsibility and decisionAroles taskresponsibility and decision--makingmaking
authority and its relationship to otherrolesauthority and its relationship to otherroles
in the organization should be clearlyin the organization should be clearly
specified.specified.
A clear pattern of vertical and horizontalA clear pattern of vertical and horizontal differentiation cuts down on role conflictdifferentiation cuts down on role conflict
and role ambiguity.and role ambiguity.
8/9/2019 Chapter 5new
10/17
Chapter 5Chapter 5
Bureaucratic Principal FourBureaucratic Principal Four::
The organization ofroles in a bureaucracyThe organization ofroles in a bureaucracy
is such that each loweroffice in theis such that each loweroffice in thehierarchyhierarchy
is under the control and supervision of ais under the control and supervision of a
higheroffice.higheroffice.
People can recognize the chain of command.People can recognize the chain of command.
8/9/2019 Chapter 5new
11/17
Chapter 5Chapter 5
Bureaucratic Principal FiveBureaucratic Principal Five::
Rules, standard operating procedures,Rules, standard operating procedures,andand
norms should be used to controlnorms should be used to control
behavior
behavior
and the relationship between rolesand the relationship between roles
in an organization.in an organization.
8/9/2019 Chapter 5new
12/17
Chapter 5Chapter 5
Bureaucratic Principal SixBureaucratic Principal Six::
Administrative acts, decisions, andrulesAdministrative acts, decisions, andrules
should be formulated and put inshould be formulated and put in
writing.writing.
This provides history and continuity.This provides history and continuity.
8/9/2019 Chapter 5new
13/17
Chapter 5Chapter 5
It is important to know thatIt is important to know that bureaucracybureaucracy
isnt isnt alwaysalwaysa negative term.a negative term.
Typically this is our first reaction becauseTypically this is our first reaction because
we usually only think of bureaucracieswe usually only think of bureaucracies
when they break down or becomewhen they break down or become
dysfunctional.dysfunctional.
8/9/2019 Chapter 5new
14/17
Chapter 5Chapter 5
Restructuring an OrganizationRestructuring an Organization
RestructuringRestructuring refers to the process by whichrefers to the process by which managers change task and authoritymanagers change task and authority
relationships to improve organizationalrelationships to improve organizational
effectiveness.effectiveness.
One type of restructuring that has becomeOne type of restructuring that has become
common in recent years iscommon in recent years is downsizingdownsizing..
8/9/2019 Chapter 5new
15/17
Chapter 5Chapter 5
DownsizingDownsizing is the process by which managersis the process by which managers
streamline the organizational hierarchystreamline the organizational hierarchy
and lay off managers and workers toand lay off managers and workers toreduce bureaucratic costs.reduce bureaucratic costs.
Other important trends that go hand in handOther important trends that go hand in hand
with restructuring and downsizing are thewith restructuring and downsizing are the use ofuse of empowered workers, selfempowered workers, self--managedmanaged
teams, and contingent workersteams, and contingent workers..
8/9/2019 Chapter 5new
16/17
Chapter 5Chapter 5
EmpowermentEmpowerment is the process of givingis the process of giving
employees throughout the organization theemployees throughout the organization the
authority to make important decisions.authority to make important decisions.
SelfSelf--managed teamsmanaged teams are work groups thatare work groups that
consist of people who are jointlyconsist of people who are jointly
responsibleresponsible for ensuring that the team accomplishesfor ensuring that the team accomplishes
its goals and who lead themselves.its goals and who lead themselves.
8/9/2019 Chapter 5new
17/17
Chapter 5Chapter 5
Contingent workersContingent workers are employed forare employed for
temporary periods by an organizationtemporary periods by an organization
and who receive no indirect benefits suchand who receive no indirect benefits such
asas health insurance or pensions.health insurance or pensions.