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Organizational BehaviorRobbins & Judge

Chapter 16: Foundations of Organization

Structure

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Summary of Lecture 29- Emotions and Moods

- Sources of Emotions and Moods

- External constraints on Emotions

- Impact of emotional labor on employees

- Affective Events Theory

- Emotional Intelligence

- OB Issues and Emotions

- OB Issues and Moods

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice HallRobbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Learning Objectives

- Organizational Structure

- Characteristics of Bureaucracy

- Describe Matrix Organization

- Why managers want to create boundary-less organizations

- List the factors that favor different organizational structure

- Explain behavioral implications of different organizational structures

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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What Is Organizational Structure?

- How job tasks are formally divided, grouped, and coordinated

Work specializationTo what degree are activities subdivided into separate jobs?

DepartmentalizationOn what basis will jobs be grouped together?

Chain of commandTo whom do individuals and groups report?

Span of controlHow many individuals can a manager efficiently and effectively direct?

Centralization and decentralization

Where does decision making authority lie?

FormalizationTo what degree will there be rules and regulations to direct employees and managers?

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Work SpecializationHenry Ford earned fortune by building automobile on assembly lines

Every workers was assigned a specific and repetitive task

Breaking jobs into small and standardized tasks he was able to produce a car in 10 seconds

Employees having limited skills

Productivity increases in short run if employees perform repetitive tasks

Employee attain highest level of expertise

The concept gained popularity as division of labor and work specialization

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Work SpecializationEach individual perform specific activity of job in which he specializes

Less time require for changing tasks

It is easier for organization to train and attract worker to do specific and repetitive tasks

Work specialization increases efficiency by introduction of innovative machinery

Later on it was found that repetitive tasks result into boredom, fatigue, stress, low level of productivity and increased absenteeism

Still this approach is in practice and offer economies in several jobs. For example McDonald, Car Manufacturer

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Work Specialization

Work specialization offer benefits but later on it reaches to point of diminishing

It is believed that job enlargement offer greater efficiencies

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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DepartmentalizationAfter division of jobs through work specialization it is needed to group these jobs together so common and dependent tasks can be coordinated

Departmentalization is used to group jobs

Group activities is often based on functions performed

Manufacturing Organization might group jobs in departments like engineering, finance, production, purchase, and HR (personnel administration)

Departmentalization by functions is every where and in every organization

Jobs can also be departmentalized by the type of product the organization produces (FMCG often use this)

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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DepartmentalizationDepartmentalization by geography or territory (region)

In Process departmentalization jobs are grouped into departments specializes in specific phase in the production

For example: Aluminum tubing plant can be departmentalized in casting, press, tubing finishing and inspecting.

Process formula is also applicable in service sector. NADRA, LICENCE Office

Customer based departmentalization

Microsoft uses this type of grouping to reach to particular customers having distinct set of needs. Large corporations, small business, home users

Large corporations may use all type of departmentalization

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Chain of CommandThe chain of command can be describes as unbroken line of authority from top management to lower staff in which every body is clear to whom report and seek directions

Authority: Refers to the right inherit in management position to give orders and expect orders to be obeyed

Each manager in organization is given authority to perform his job responsibility

Unity of Command: It means individual should have only one superior to whom that person report and responsible

The concept of chain of command is diminishing in organizational design with the development in technology and information tools

The concept of empowering employees also contradict chain of command design. Team work and Self management team and concept of multiple bosses eliminating this concept

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Span of ControlHow many employees can each manager efficiently and effectively direct?

Span of control determines number of managers and level of management in the organization

Wider span means more employees under control/supervision. In other fewer managers are needed to run the organization

At the same time wider span means ineffective or less supervision and control

Narrow span result into more close supervision

At the same time disadvantage with narrow span of control is i) Salary budget increases ii) Vertical communication becomes more complex and iii) discourage employee autonomy

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Span of ControlIn recent years, wider span of control is gaining acceptance because of certain reasons given as follows

Reduce cost, increase flexibility, speed up decision making, and empower employees

Organizations are investing on training of employees to decrease likelihood of ineffectiveness inherit in wider span of control design

Because trained employees can perform their work with efficiency and can handle problems at their own or can consult colleagues

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Centralization and Decentralization

In past organizations were more centralized, however in recent years decentralization is more common

Centralization means degree to which decision making power is concentrated at single point

It includes concept of formal authority

If employees is consulted or given authority to make decision, the organization is more decentralized

Decentralization offer certain benefits

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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FormalizationFormalization means degree to which jobs in the organization are standardized

In case of formalization, job incumbent has very little discretion on his work. What, when and how it is to be done

In formalized job clear cut organizational rules and policies that determine job behavior and tasks. Standard operating procedures means clear guidelines what and how to perform job tasks means little deviation from standardized work behavior

Degree of formalization varies from job to job and form organization to organization. In some professions and jobs formalization works whereas in some professions less formalization is more effective way

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Organizational DesignThe Bureaucracy

Disadvantages:

Interdepartmental conflicts

Strict rules and regulation at time does not answer the situation

Innovative and flexibility benefits are not there

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Organizational DesignThe Matrix Organization

Combine two forms of departmentalization: functional and product

Employees in the matrix have two bosses their functional department manager and product manager

Example: University: Academic departments like Marketing, Finance, Economics are functional departmentalization and over which specific programs (product that is BS, MS, PhD) is overlaid on the function

Teacher of Marketing department teaching course at undergraduate level. He may report to Head of Marketing department and In-charge undergraduate program

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Organizational DesignThe Matrix Organization

Advantages:Organizational goals gain value and priority

Better communication and more flexibility as organization grow and things get complex

Efficient allocation of specialist

Disadvantages Power struggle

Conflict when it is not clear to whom what to report

Reporting to more than one boss creates role ambiguity and role conflict

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Organizational DesignThe Simple StructureIn simple structure low degree of formalization and departmentalization, wide span of control, centralized authority, one man decides things and two or three vertical levels

Also called simple structure

Example: Retail Store, Small private firms. Owner also Manager

Suitable for small business but when business grow it can be ineffective because it is near to impossible to make all decisions in the organization by one man. Assimilate and interpret all information. Control all employees

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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New Organizational Designs

Team Structure

When organizations use teams to organization work activities it is said to be horizontal organization or team structure

Organizations use cross functional and self managed teams

AdvantagesDecentralizationBreak departmental barriersEmployees are generalist and specialist as wellBetter decision making and problem solution

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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New Organizational Designs

The Virtual OrganizationWhy to own when you can rent?

Also called network or modular organization

Different companies having specialties in specific area come together to accomplish project

When large organization use the virtual structure they frequently outsource manufacturing

AdvantagesNot lasting organization to maintain, project completed team dismantleWide variety of skills and expertise are used at work. Example: Mega construction, P&G outsource its IT operations

Disadvantage: Issue of management control on business activities

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Independent research and development firm

Factories in South Korea

Advertising agency

Commissioned sales representative

Executivegroup

Advertising agency

The Virtual Organization

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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New Organizational Designs

The Boundaryless OrganizationThe boundaryless organization seek to eliminate chain of command, little span of control, and empowered teams instead of departments, removing vertical hierarchies

Internal barriers across department can be reduced by transfer posting of employees in different department and using cross functional teams

External boundaries are eliminated by forming joint venture and strategic alliances

Information technology is encouraging and facilitating to realize the concept of boundary less organization

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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New Organizational Designs

We can categorized discussed designs into two extremes1 Mechanistic Model

- High specialization- Rigid departmentalization- Clear chain of command- Narrow span of control- Centralization- High formalization

2 Organic Model- Cross functional teams- Cross hierarchical teams- Free flow of information- Wide span of control- Decentralization- Low formalization

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Organizational Designs

The question arises why different organizations follow different structures?What are the forces that influence organizational design?

Strategy

Strategy Structural Options

Innovation Organic: Loose structure, low specialization, low formalization, decentralized

Cost minimization Mechanistic: tight control,, extensive, work specialization, high formalization, high centralization

Imitation Mechanistic and Organic: Mix of loose with tight properties, tight controls over current activities, and looser controls for new undertaking

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Organizational Designs

Organization Size

Technology means how input s are transferred into out (Process: routine activities non routing activities)

EnvironmentStable and Dynamic environmentSimple and Complex

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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OB and Organizational Designs

Work specialization- Higher employee productivity at the cost reduced job satisfaction- Consider Individual differences

Span of Control- Wider span of control may result into employee satisfaction and higher performance - Consider Individual differences- How employees and managers feel

Centralization and Decentralization

To maximize employees satisfaction and productivity consider- Individual differences- Work task - National Culture - Individuals work for organization where they find themselves fit

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Managerial Implications

Internal structure contribute in explaining and predicting individual behavior

Structure limits and control what employee do?

How employee perceive organizational structure it is more predictive of their behavior

Structure should be matched with strategy

Also consider other factors such as size, technology and environment before deciding structure

Whatever structure you choose employee and management should know what is objective and make it more clear that every body understand prevalent structure in the organization

Make easier to change the structure according to needs and situation

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall

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Discussion Question 1: What is purpose of organization design?

Discussion Question 2: In your opinion which organizational structure is best?

Discussion Question 3: If organization is pursuing innovative strategy which structure best fits?

Discussion Question 4: What is influence of organizational structure on work performance?

Discussion Questions

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Summary

- Organizational Structure

- Characteristics of Bureaucracy

- Describe Matrix Organization

- Why managers want to create boundary-less organizations

- List the factors that favor different organizational structure

- Explain behavioral implications of different organizational structures

Robbins and Judge (2008): Organizational Behavior, Pearson, Prentice Hall