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16-1 ©2005 Prentice Hall
Chapter 1313Organizational Organizational
Design and Design and StructureStructure
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Chapter Objectives
Understand the relationship between organizational design and an organization’s structure
Explain the main contingencies affecting the process of organizational design and differentiate between a mechanistic and an organic structure
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Chapter Objectives
Cite the advantages of grouping people into functions and divisions and distinguish between the main forms of organizational structure from which an organization can choose
Explain why coordination becomes a problem with the growth of an organization and differentiate between the three main methods it can use to overcome this problem and link its functions and divisions
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Chapter Objectives
Gain an understanding of the enormous impact modern information technology has had on the process of organizational design and structure both inside organizations and between them
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Opening Case: A New Approach to Organizing at Sun Life
Why did Sun Life Change Its Structure? Rigid and bureaucratic structure Customer response too slow Reorganization into series of cross-
functional product teams
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Designing Organizational Structure
Organizational Structure: Formal system of task and job reporting relationships
Organizational Design: Arrangement of tasks and job relationships that comprise the organizational structure
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Figure 16.1 Contingencies Affecting Organizational Design
OrganizationalDesign
Organization’sEnvironment
HR and EmploymentRelationships
Organization’sTechnology
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Routine vs Complicated Technology
Task Variety
Task Analyzability
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Kinds of Technology
Small-Batch
Continuous-Process
Mass-Production
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Small Batch Production
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Organic and Mechanistic Structures
Organic Dynamic, flexible Empowered teams Continuous
improvement Norms and values
Mechanistic Formal, controlling Centralized decision-
making Clearly defined tasks Rules and
regulations
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The Functional Structure
Advantages Coordination Communication Skill Improvement Motivation Controlling
Disadvantages Limited growth under
existing structure Limits to number of
products and services
Coordination difficulties at larger size
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Figure 16.2 Dell’s Functional Structure
CEOMichael Dell
Manufacturing SalesProduct
DevelopmentCustomer
Service
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Divisional Structures
Product Market Geographic
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Figure 16.3 Product Structure
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Figure 16.3 Market Structure
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Figure 16.3 Geographic Structure
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The Divisional Structure
Advantages As size and complexity
of organization increases, – Coordination– Communication– Motivation– Autonomy
Disadvantages Increased costs Duplication of functions Miscommunication
across divisions Competition for
resources Conflict
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The Matrix Structure
Complex network of reporting relationships among product teams and functions
People and resources grouped by – Function– Product
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Figure 16.4 A Matrix Structure
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The Matrix Structure
Advantages Coordination Fast new product
development Communication Cooperation Innovation Creativity Autonomy
Disadvantages Role conflict Role ambiguity Stress Unclear individual
contributions to team performance
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Techniques for Enhancing Coordination
Allocation of Authority Mutual Adjustment and Integrating
Mechanisms Standardization
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Allocation of Authority
Span of control Tall and Flat Hierarchies Chain of Command Centralization versus Decentralization
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Figure 16.5 A Wide Span of Control
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Figure 16.5 A Narrow Span of Control
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Figure 16.6 Flat Organizational Structure
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Figure 16.6 Tall Organizational Structure
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Mutual Adjustment and Integrating Mechanisms
Direct contact Liaison roles Teams and task forces Cross-functional teams
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Figure 16.7 Using a Team to Increase Coordination
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Figure 16.8 A Cross-Functional Team Structure
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Cross-functional Team Structure at Chrysler
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Standardization
Standardizing inputs Standardizing conversion processes
– Formalization Standardizing outputs
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The Effects of IT
Virtual Organizations
NetworkStructure
