24043476 sess 7 organizational structure

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Organizational StructureOrganizational Structure

Dr. Meenakshi KhemkaDr. Meenakshi Khemka



Organization StructureOrganization Structure 22

Organizational StructureOrganizational Structure -- DefinitionDefinition

How job tasks are

formally divided

grouped and

coordinated




Organizational StructureOrganizational Structure

Key Elements

Work specialization

Departmentalization

Chain of command

Span of control

Centralization and decentralization

Formalization




Key Design Questions and AnswersKey Design Questions and Answers

The Key Question The Answer Is Provided by

1. To what degree are articles Work specialization

subdivided into separate jobs?

2. On what basis will jobs be grouped Departmentalization

togeth

er?3. To whom do individuals and groups Chain of command

report?

4. How many individuals can a manager Span of control

efficiently and effectively direct?

5. Where does decision-making Centralization

authority lie? and decentralization

6. To what degree will there be rules Formalization

and regulations to direct employees

and managers?




Departmentalization

The basis by which jobs are grouped together

Function

Product

Geography

Process

Customer




Contrasting Spans of ControlContrasting Spans of Control




Common Organization DesignsCommon Organization Designs

Simple Structure

A structure characterized by a low degree of departmentalization,

wide spans of control, authority centralized in a single person, and

little formalization

Owner

Sales

person

Sales

person

Sales

person

Sales

person

Sales

personCashier




Simple StructureSimple Structure

StrengthsStrengths

simplicity: fast, flexible, inexpensivesimplicity: fast, flexible, inexpensive

WeaknessWeakness

works best in small organizationsworks best in small organizations

can slow down decisioncan slow down decision--making in largermaking in larger

organizationsorganizations

can be risky as it relies on one person to make allcan be risky as it relies on one person to make all

decisionsdecisions




Bureaucracy

Bureaucracy is characterized by

highly routine operating 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 follows chain of command




BureaucracyBureaucracy

Strengths

Functional economies of

scale

Minimum duplication of personnel & equipment

Enhanced

communication

Centralized decision

making

Weaknesses

Subunit conflicts with

organizational goals

Obsessive concern with

rules and regulations

Lack of employee

discretion to deal withproblems




Matrix Structure

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

A structure that creates dual lines of authority and combines

functional and product departmentalization




Matrix Structure (College of BusinessMatrix Structure (College of Business

Administration)Administration)

(Dean)

(Director)

Employee




Team Structure

Characteristics

Breaks down departmental barriers

Decentralizes decision making to the team level

Requires employees to be generalists as well as

specialists

The use of teams as the central device to coordinate

work activities




Virtual Organization

Concepts

Advantage: Provides maximum flexibility while concentrating

on what the organization does best

Disadvantage: Reduced control over key parts of the business

A small, core organization that outsources its major business functions

Highly centralized with little or no departmentalization




A Virtual OrganizationA Virtual Organization




Boundaryless Organization

T-f orm Concepts

Eliminate vertical (hierarchical) and horizontal

(departmental) internal boundaries

Breakdown external barriers to customers andsuppliers

An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace

departments with empowered teams



Organization StructureOrganization Structure

The Mechanistic Model The Organic Model

High specialization

Rigid departmentalization

Clear chain of command

Narrow spans of control

Centralization

High f ormalization

Cross-f unctional teams

Cross-hierarchical teams

Free f low of inf ormation

Wide spans of control

Decentralization

Low f ormalization

Mechanistic versus Organic ModelsMechanistic versus Organic Models




The StrategyThe Strategy--Structure RelationshipStructure Relationship

Strategy Structural Option

Innovation Organic: A 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 loosewith tight properties; tight controls over

current activities and looser controls for

new undertakings




Organization Size

Large organizations typically employing 2000 or

more people tend to have

more specialization

more departmentalization

more vertical levels

Why do Structures Differ?




Technology

Routine tasks are associated with taller, more

departmentalized and centralized structures

Non-routine tasks would be characterized by

delegated decision making authority





Environment

There are three key dimensions of anThere are three key dimensions of an

organizational environmentorganizational environment

Capacity (Degree to which it can supportCapacity (Degree to which it can support

growth)growth)

Complexity (Degree of heterogeneity andComplexity (Degree of heterogeneity and

concentration)concentration)

Volatility (Degree of instability)Volatility (Degree of instability)





Organization Structure:Organization Structure:

Determinants and OutcomesDeterminants and Outcomes




THANK THANK

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24043476 sess 7 organizational structure

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