Chapter6_Organizational Structure and Design

Chain of CommandThe line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom.

Chapter6 Organizational Structure and Design

• Six key elements in organizational design
  • Work specialization Dividing work activities into separate job tasks; Individual employees “specialize” in doing part of an activity rather than the entire activity in order to increase work output. Also called division of labor
  • Departmentalization How jobs are grouped together
    • Functional Departmentalization Grouping activities by functions performed
    • Product Departmentalization Grouping activities by major product areas
    • Customer Departmentalization Grouping activities by customer
    • Geographic Departmentalization Grouping activities on the basis of geography or territory
    • Process Departmentalization Grouping activities on the basis of work or customer flow
    • Recent trend
      • Cross-functional Teams Teams made up of individuals from various departments and that cross traditional departmental lines
  • Authority、Responsibility and Power
    • Chain of Command The line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom
    • Authority The rights inherent in a managerial position to give orders and expect the orders to be obeyed
      • Line Authority Authority that entitles a manager to direct the work of an employee
      • Staff Authority Positions with some authority that have been created to support, assist, and advise those holding line authority
    • Responsibility An obligation to perform assigned duties
    • Power refers to an individual’s capacity to influence decisions. Authority is part of the larger concept of power
      • Coercive power Power based on fear. The power a leader has to punish or control
      • Reward power The power to give positive rewards. A reward can
      • Legitimate power The power a leader has as a result of his or her position in the organization.
      • Formal power
      • Expert power Power based on expertise, special skills, or knowledge.
      • Referent power Comes from being trusted and respected because of a person’s desirable resources or personal traits.
      • Informal power
  • Span of control The number of employees a manager can efficiently and effectively supervise
    • determinants
      • Job complexity
      • Similarity of subordinate jobs
      • Physical proximity of subordinates
      • Abilities of employees
      • Abilities of the manager
  • Centralization and Decentralization
    • Centralization The degree to which decision making takes place at upper levels of the organization
    • Decentralization The degree to which lower-level managers provide input or actually make decisions
  • Formalization How standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures
• What Contingency Variables Affect Structural Choice?
  • Mechanistic or Organic organizations
    • Mechanistic Organization A bureaucratic organization; a structure that’s high in specialization, formalization, and centralization
    • Organic Organization A structure that’s low in specialization, formalization, and centralization
  • Four contingency variables
    • Strategy —>Structure
    • Size —>Structure
    • Technology—>Structure Every organization uses some form of technology to convert its inputs into outputs. Joan Woodward divided the firms into three distinct technologies that had increasing levels of complexity and sophistication
      • Unit Production The production of items in units or small batches (NONROUTINE TEC). Large turbines, ships or repair works and experimental plants
      • Mass Production Large-batch manufacturing (ROUTINE TEC)
      • Process Production The production of continuous process products such as oil and chemical refiners (ROUTINE TEC)
    • Environment —>Structure
• What are some common organizational designs?
  • Traditional organizational designs
    • simple Structure An organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization
    • Functional Structure An organizational design that groups similar or related occupational specialties together
    • Divisional Structure An organizational structure made up of separate business units or divisions
  • Contemporary Organizational Structures
    • Team Structure A structure in which the entire organization is made up of work teams. Employee empowerment is crucial because there is no line of managerial authority from top to bottom
    • Matrix Structure A structure in which specialists from different functional departments are assigned to work on projects led by a project manager
    • Project Structure A structure in which employees continuously work on projects, no formal departments where employees return at the completion of a project.
    • Boundaryless Organization Internal boundaries within the company will be eliminated and external barriers between the company and its customers and suppliers will be broken down.
    • Virtual Organization An organization that consists of a small core of full-time employees and outside specialists temporarily needed to work on projects.
    • Network Organization Which is one that uses its own employees to do some work activities and networks of outside suppliers to provide other needed product components or work processes.
• What Are Current Organizational Design Challenges?
  • Keeping employees connected
  • Managing global structural issues
  • Building a learning organization Designing flexible work arrangements