OB - Chapter 16 Organizational Structure

8/2/2019 OB - Chapter 16 Organizational Structure

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ROBBINS & JUDGEORGANIZATIONAL BEHAVIOUR13TH EDITION

Chapter 16: Foundations of Organization

Structure

Student Study Slideshow

Bob Stretch

Southwestern College


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Organizational Structureh. 16


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Chapter Learning Objectives After studying this chapter, you should be able to:

Identify the six elements of an organizations structure.

Identify the characteristics of a bureaucracy.

Describe a matrix organization.

Identify the characteristics of a virtual organization.

Show why managers want to create boundaryless organizations.

Demonstrate how organizational structures differ, and contrastmechanistic and organic structural models.

Analyze the behavioral implications of different organizationaldesigns.

Show how globalization affects organizational structure.


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What Is Organizational Structure?How job tasks are formally divided, grouped, and

coordinated

Key Elements:

1. Work specialization

2. Departmentalization

3. Chain of command

4. Span of control5. Centralization and decentralization

6. Formalization


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1. Work Specialization The degree to which tasks in the organization are

subdivided into separate jobs

Division of Labor Makes efficient use of employee skills

Increases employee skills through repetition Less between-job downtime increases productivity

Specialized training is more efficient

Allows use of specialized equipment

Can create greater economies and efficiencies butnot always

Exhibit 16-1


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Work Specialization Economies andDiseconomiesSpecialization can reach a point of diminishing

returns

Then job enlargement gives greater efficiencies

than does specialization

Exhibit 16-2


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2. DepartmentalizationThe basis by which jobs are grouped together

Grouping Activities by:

Function

Product

Geography

Process

Customer 16-7


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3. Chain of Command Authority

The rights inherent in a managerial position to give ordersand to expect the orders to be obeyed.

Chain of CommandThe unbroken line of authority that extends from the topof the organization to the lowest echelon and clarifies whoreports to whom.

Unity of CommandA subordinate should have only one superior to whom heor she is directly responsible


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4. Span of Control The number of subordinates a manager can efficiently

and effectively direct

Wider spans of management increase organizational

efficiencyNarrow span drawbacks:

Expense of additional layers of management

Increased complexity of vertical communication

Encouragement of overly tight supervision and

discouragement of employee autonomy


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5. Centralization and DecentralizationCentralizationThe degree to which decision making is

concentrated at a single point in the

organization.

DecentralizationThe degree to which decision making is spread

throughout the organization.


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6. Formalization The degree to which jobs within the organization are

standardized.

High formalizationMinimum worker discretion in how to get the job

done

Many rules and procedures to follow

Low formalizationJob behaviors are non-programmed

Employees have maximum discretion


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Organizational Structure Designs1 Simple Structure

2

Bureaucracy3 Matrix

4 Virtual

12


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Simple StructureA structure characterized by a low degree of

departmentalization, wide spans of control,

authority centralized in a single person, and little

formalization


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Bureaucratic StructureA structure of highly operating routine tasks achieved

through specialization, very formalized rules and

regulations, tasks that are grouped into functional

departments, centralized authority, narrow spans of

control, and decision making that follows the chain of

command.


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An Assessment of BureaucraciesStrengths

Functional economies of

scale

Minimum duplication ofpersonnel and equipment

Enhanced communication

Centralized decisionmaking

WeaknessesSubunit conflicts with

organizational goals

Obsessive concern withrules and regulations

Lack of employee

discretion to deal with

problems


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Matrix StructureA structure that creates dual lines of authority and

combines functional and product departmentalization

Key Elements Gains the advantages of functional and product

departmentalization while avoiding their weaknesses

Facilitates coordination of complex and interdependent

activities

Breaks down unity-of-command concept.


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Virtual OrganizationA small, core organization that outsources

its major business functions

Highly centralized with little or no

departmentalization

Provides maximum flexibility while

concentrating on what the organization does

best

Reduced control over key parts of the

business


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New Design Options: BoundarylessOrganizationAn organization that seeks to eliminate the chain

of command, have limitless spans of control, and

replace departments with empowered teams

T-form Concepts

Eliminate vertical (hierarchical) and horizontal

(departmental) internal boundaries

Break down external barriers to customers and

suppliers


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Mechanistic versus Organic Models19


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Mechanistic versus Organic ModelsMechanistic Organic

High Specialization Cross-functional teams

Rigid Departmentalization Cross-hierarchical teams

Clear Chain of Command Free flow of information

Narrow Spans of Control Wide Spans of Control

Centralization Decentralization

High Formalization Low Formalization

20


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Why Do Structures Differ1.StrategyInnovation Strategy

A strategy that emphasizes the introduction of

major new products and services

Organic structure best


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Why Do Structures Differ1.StrategyCost-minimization Strategy

A strategy that emphasizes tight cost controls,

avoidance of unnecessary innovation or

marketing expenses, and price cutting

Mechanistic model best


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Why Do Structures Differ1.StrategyImitation Strategy

A strategy that seeks to move into new

products or new markets only after their

viability has already been proven

Mixture of the two types of structure


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Why Structures Differ2.Organizational Size As organizations grow, they become more

mechanistic, more specialized, with more

rules and regulations


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Why Structures Differ3. Technology How an organization transfers its inputs into

outputs

The more routine the activities, the moremechanistic the structure with greater

formalization

Custom activities need an organic structure


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Why Structures Differ4. Environment Institutions or forces outside the organization

that potentially affect the organizations

performance

Three key dimensions: capacity, volatility, and

complexity


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Organizational Designs - Employee Behavior Work specialization contributes to higher

employee productivity, but it reduces job

satisfaction.

The benefits of specialization have decreased

rapidly as employees seek more intrinsically

rewarding jobs.


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OB - Chapter 16 Organizational Structure