Mgt 2030 Chapter 12

8/13/2019 Mgt 2030 Chapter 12

1/34

Chapter 12

Organizational Structures

Keane Donaldson

Candice Johnson

Matt RosenthalShirley Yin

8/13/2019 Mgt 2030 Chapter 12

2/34


Todays companies, more team

orientated.

Organizational Structures,

becoming more important.

Defines how job tasks are

coordinated.

8/13/2019 Mgt 2030 Chapter 12

3/34


Many different physical layouts.

Could be very tall, or very flat.

8/13/2019 Mgt 2030 Chapter 12

4/34


Could be anywhere in-between

those extremes.

Flat Structure Team orientated.

Open atmosphere.

Problems solved quickly.

More interaction between different

hierarchical levels.

8/13/2019 Mgt 2030 Chapter 12

5/34


Tall Structure More levels of organization

Limited interaction.

More personal responsibility.

If you have a problem, you would talk to

your manager, who would talk to their

manager, etc.

Often, the message that you told toyour manager, is different from the one

they portray to their manager

8/13/2019 Mgt 2030 Chapter 12

6/34


When deciding which

organizational structure is best for

their company managers need to

address six key elements: Work Specialization

Departmentalization

Chain of command

Span of control

Centralization and decentralization

Formalization

8/13/2019 Mgt 2030 Chapter 12

7/34

Six Key Questions

8/13/2019 Mgt 2030 Chapter 12

8/34

Six Key Elements

1. Work Specializat ionor Divisionof Labor:

The degree to which tasks in the

organization are subdivided into separate

jobs Ex. Henry Ford, assembly line

Individuals specialize in doing part of an

activity, rather than the whole thing

May lead to boredom, fatigue, stress andincreased absenteeism

Raises employee productivity and

efficiency, but lowers job satisfaction

8/13/2019 Mgt 2030 Chapter 12

9/34

Six Key Elements

2. Departmental izat ion: The basis on which jobs are grouped

together

Creates competitiveness betweendepartments

Narrow vision with respect toorganizational goals

5 different kinds of departmentalization: Functional

Product

Geographic

Process

Customer

8/13/2019 Mgt 2030 Chapter 12

10/34

Six Key Elements:Types of Departmentalization

A) Functional Functional Departmentalization groups

activities by functions performed.

More efficient to put together people with

common skills and orientation into a

common unit.

8/13/2019 Mgt 2030 Chapter 12

11/34


B) Product: Grouping your organization

depending on the type of product

created is productdepartmentalization.

Increases accountability for product

performance.

Also works with services.

8/13/2019 Mgt 2030 Chapter 12

12/34


C) Geographic: Departmentalized on the basis of geography,

or territory.

Ex. International companies having differentdepartments for each country.

D) Process: Organizes departments by the processing

that occurs.

Ex. inspecting, packing, shipping

E) Customer: Departmentalize by the type of customer the

organization seeks to reach.

Ex. Corporate or individual customers.

8/13/2019 Mgt 2030 Chapter 12

13/34

Six Key Elements

3. Chain of Command: Unbroken line of authority that extends form

the top of the organization to the bottom.

Designates where you go if you have a

problem.

Becoming less structured than it was in the

past.

4. Span of Control: The number of employees a manager can

efficiently and effectively direct.

Generally determines the number of levels

an organization has.

8/13/2019 Mgt 2030 Chapter 12

14/34

Six Key Elements

5. Centralization andDecentralization:

Decentralization: The decision discretion is pushed down to

lower-level employees.

Take action quicker.

More people provide input into decisions.

Easier to address customer concerns.

Centralization: The degree to which decision making is

concentrated at a single point in theorganization.

Top management makes all the decisions.

8/13/2019 Mgt 2030 Chapter 12

15/34

Six Key Elements

6. Formalization The degree to which jobs within the

organization are standardized.

Low Formalization:

Job behaviours are relatively non-programmed.

Lots of employee freedom.

Less standardization.

High Formalization:

Explicit job description.

Lots or organizational rules.

Clearly defined procedures for work

processes.

8/13/2019 Mgt 2030 Chapter 12

16/34

Two Models of

Organizations

Mechanistic Model: A structure characterized by extensive

departmentalization, high formalization,a limited information network and

centralization.

Organic Model: A structure that is flat, uses cross

hierarchical and cross-functional teams,

has low formalization, possesses acomprehensive information network,and relies on group decision making.

8/13/2019 Mgt 2030 Chapter 12

17/34

Mechanistic vs. Organic Models

8/13/2019 Mgt 2030 Chapter 12

18/34

Two Models of Organizations

Which model is chosen depends on

the members of the organizations

experience, personality, the work

task and their cultural background.Mechanistic:

People with a high degree of bureaucratic

orientation

Organic: People with a low degree of bureaucratic

orientation

8/13/2019 Mgt 2030 Chapter 12

19/34

Traditional Organizational

Designs

There are three:

The Simple Structure

The Bureaucracy

The Matrix Structure

8/13/2019 Mgt 2030 Chapter 12

20/34


Designs

The Simple Structure:A structure with a low degree ofdepartmentalization. It has wide spans of control, its

power is centralized in a single person and there is

little formalization.

Characteristics: Flat, usually only two or three vertical levels.

Widely used in small businesses, where themanager = owner.

The strength is in its simplicity.

Fast, flexible, inexpensive to maintain, directaccountability.

Risky: Everything depends on one person.

8/13/2019 Mgt 2030 Chapter 12

21/34


Designs

The Bureaucracy:An organization which uses standardization in a

highly efficient manor.

Characteristics: Routine operating tasks.

Specialization.

Clearly stated rules and regulations.

Tasks that are grouped into functional

departments.

Centralized authority.

8/13/2019 Mgt 2030 Chapter 12

22/34

The Bureaucracy

Advantages:

Perform standardized activities in a highly

efficient manner.

Can operate with lesser talented staff, which will

have a smaller payroll.

Rules and regulations instead of managerialdiscretion.

Centralized decision making.


Designs

O

8/13/2019 Mgt 2030 Chapter 12

23/34


Designs

The BureaucracyDisadvantages:

Each Functional Department can get a self-

focus; they may forget that they are all inter-

dependent.

Obsessive concern for following the rules.

8/13/2019 Mgt 2030 Chapter 12

24/34

T diti l O i ti l

8/13/2019 Mgt 2030 Chapter 12

25/34


Designs

The Matrix Structure

Advantages: Does not become overloaded when complexity

arises. Improves communication and flexibility.

Eliminates the dreaded bureau-pathologies.

Your specialists are grouped together.

Disadvantages: Confusion and power struggles.

Stress on employees.

Unclear expectations.

8/13/2019 Mgt 2030 Chapter 12

26/34

New Design Options

The Team Structure.

The Modular Organization.

The Virtual Organization.

The Boundary-less Organization.

8/13/2019 Mgt 2030 Chapter 12

27/34

New Design Options

The Team Structure:

The use of teams as a central device to coordinate

all work activities.

Characteristics:

Breaks down departmentalization.

Teams are given decision making power.

Teams generally consist of 3-20 people.

The teams can be short or long term.

8/13/2019 Mgt 2030 Chapter 12

28/34

New Design Options

The Modular Organization:A small core organization that outsourcers major

business functions.

Characteristics: Outsourcing employees and/or materials.

Contracting allows job to be done better or

cheaper.

Organization devote their talent to their mostimportant activities.

There is an increased focus on customers and

materials.

8/13/2019 Mgt 2030 Chapter 12

29/34

8/13/2019 Mgt 2030 Chapter 12

30/34

New Design Options

The Boundary-less Organization:

An organization that seeks to eliminate the chain of

command, have limitless spans of control and

replace departments with empowered teams.

Characteristics: Replaces departments with empowered teams.

Uses a participative decision-making style.

Heavy reliance on IT.

Can be difficult to manage.

8/13/2019 Mgt 2030 Chapter 12

31/34

Why Do Structures Differ?

1. Strategy: Innovation: a strategy that emphasizes the

introduction of major new products and

services.

Cost minimization: a strategy thatemphasizes tight cost controls, avoidance of

unnecessary innovation or marketing

expenses and price cutting.

Mechanistic imitation: a strategy that seeks

to move into new products or new marketsonly after their viability has already been

proven.

8/13/2019 Mgt 2030 Chapter 12

32/34


2. Organizational Size: Size affects structure at a decreasing

rate.

The impact of size is less important as

the organization expanses (after 2000employees).

3. Technology: The way in which an organization

transfers its inputs into outputs. Degree of routine-ness.

Related to formalization or centralization.

8/13/2019 Mgt 2030 Chapter 12

33/34


4. Environment: Those institutions or forces outside

the organization that potentially affect

the organizations performance.

Environmental uncertainty. Static environment vs. dynamic

environment.

3 Dimensions to the environment: Capacity: the degree to which it can support

growth

Instability: volatility dimension

Complexity: the degree of heterogeneity and

concentration among environmental

elements

8/13/2019 Mgt 2030 Chapter 12

34/34

Questions?

Documents

Mgt 2030 Chapter 12