chapter 5 organization design

Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaChapter 5Basic Organization Designs

Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education Canada

Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaLEARNING OUTLINE Follow this Learning Outline as you read and study this chapterDefining Organizational StructureDiscuss the traditional and contemporary view of work specializationDescribe each of the five forms of departmentalization.Explain cross-functional teamsDefine chain of command, authority, responsibility, and unity of commandDiscuss the traditional and contemporary views of chain of commandDiscuss the traditional and contemporary views of span of control


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaLEARNING OUTLINE (contd) Follow this Learning Outline as you read and study this chapter Defining Organizational Structure (contd)Explain what factors influence the amount of centralization and decentralization in an organizationExplain how formalization is used in organizational design Organizational Design DecisionsContrast mechanistic and organic organizationsExplain the relationship between an organizations strategy and structureExplain how an organizations size affects its structure


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaLEARNING OUTLINE (contd) Follow this Learning Outline as you read and study this chapter Organizational Design Decisions (contd)Discuss Woodwards findings on the relationship of technology and structureExplain how environmental uncertainty affects an organizations structure Common Organizational DesignsContrast the three traditional organizational designsExplain team-based, matrix, and project structuresDiscuss the design of virtual, network, and modular organizationsDescribe the characteristics of a learning organization


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.1 Purposes of OrganizingDivides work to be done into specific jobs and departmentsAssigns tasks and responsibilities associated with individual jobsCoordinates diverse organizational tasksClusters jobs into unitsEstablishes relationships among individuals, groups, and departmentsEstablishes formal lines of authorityAllocates and deploys organizational resources


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational StructureThe formal arrangement of jobs within an organizationOrganizational DesignA process involving decisions about six key elements:Work specializationDepartmentalizationChain of commandSpan of controlCentralization and decentralizationFormalization

Defining Organizational Structure


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational StructureWork SpecializationThe degree to which tasks in the organization are divided into separate jobs with each step completed by a different personOverspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Structure (contd)FormalizationThe degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and proceduresHighly formalized jobs offer little discretion over what is to be doneLow formalization means fewer constraints on how employees do their work


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Structure (contd)Chain of CommandThe continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to whom


Authority vs. ResponsibilityRights inherent in managerial position to give orders and expect them to be followed

Related to ones position--not the characteristics of personObligation to perform

Goes hand-in-hand with authority

Copyright 2005 Prentice Hall, Inc. All rights reserved. 5*Organizational Structure: Control (contd)AuthorityThe rights inherent in a managerial position to give orders and expect them to be obeyed.PowerAn individuals capacity to influence decisions.ResponsibilityAn obligation to perform assigned activities.

Copyright 2005 Prentice Hall, Inc. All rights reserved.

Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Structure (contd)AuthorityThe rights inherent in a managerial position to tell people what to do and to expect them to do itResponsibilityThe obligation or expectation to perform. Responsibility brings with it accountability (the need to report and justify work to managers superiors)Unity of CommandThe concept that a person should have one boss and should report only to that personDelegationThe assignment of authority to another person to carry out specific duties


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Structure (contd)Line vs. Staff Authority (Exhibit 5-3, p.146)Line managers are responsible for the essential activities of the organization, including production and sales. Line managers have the authority to issue orders to those in the chain of commandThe president, the production manager, and the sales manager are examples of line managersStaff managers have advisory authority, and cannot issue orders to those in the chain of command (except those in their own department)


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Structure (contd)CentralizationThe degree to which decision making is concentrated at a single point in the organizationOrganizations in which top managers make all the decisions and lower-level employees simply carry out those ordersDecentralizationThe degree to which lower-level employees provide input or actually make decisionsEmployee EmpowermentIncreasing the decision-making discretion of employees


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaFigure 5.4a Factors that Influence the Amount of CentralizationMore CentralizationEnvironment is stableLower-level managers are not as capable or experienced at making decisions as upper-level managersLower-level managers do not want to have a say in decisionsDecisions are significantOrganization is facing a crisis or the risk of company failureCompany is largeEffective implementation of company strategies depends on managers retaining say over what happens


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaFigure 5.4b Factors that Influence the Amount of DecentralizationMore DecentralizationEnvironment is complex, uncertainLower-level managers are capable and experienced at making decisionsLower-level managers want a voice in decisionsDecisions are relatively minorCorporate culture is open to allowing managers to have a say in what happensCompany is geographically dispersedEffective implementation of company strategies depends on managers having involvement and flexibility to make decisions


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Structure (contd)Span of ControlThe number of employees who can be effectively and efficiently supervised by a managerWidth of span is affected by:Skills and abilities of the manager and the employeesCharacteristics of the work being doneSimilarity of tasksComplexity of tasksPhysical proximity of subordinatesStandardization of tasksSophistication of the organizations information systemStrength of the organizations culturePreferred style of the manager


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.3 Contrasting Spans of ControlAssuming Span of 4Span of 4:Employees:Managers (level 16)= 4096= 1365Span of 8:Employees:Managers (level 14)Assuming Span of 81234567(Highest)(Lowest)Members at Each Level1416642561024409618645124096Organizational Level


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaDepartmentalization by TypeFunctional Grouping jobs by functions performedProductGrouping jobs by product lineGeographicalGrouping jobs on the basis of territory or geography

Process Grouping jobs on the basis of product or customer flowCustomerGrouping jobs by type of customer and needs


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.2a Functional Departmentalization+ Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations+ Coordination within functional area+ In-depth specialization Poor communication across functional areas Limited view of organizational goalsManagerManager


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.2b Geographical Departmentalization+ More effective and efficient handling of specific regional issues that arise+ Serve needs of unique geographic markets better Duplication of functions Can feel isolated from other organizational areas


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.2c Product Departmentalization+Allows specialization in particular products and services+Managers can become experts in their industry+Closer to customersDuplication of functionsLimited view of organizational goalsSource: Bombardier Annual Report.


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.2d Process Departmentalization+More efficient flow of work activitiesCan only be used with certain types of products


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.2e Customer Departmentalization+ Customers needs and problems can be met by specialists Duplication of functions Limited view of organizational goals


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Design DecisionsMechanistic OrganizationA rigid and tightly controlled structureHigh specializationRigid departmentalizationNarrow spans of controlHigh formalizationLimited information network (mostly downward communication)Low decision participation by lower-level employeesOrganic OrganizationHighly flexible and adaptable structureNonstandardized jobsFluid team-based structureLittle direct supervisionMinimal formal rulesOpen communication networkEmpowered employees


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.5 Mechanistic Versus Organic OrganizationMechanistic High Specialization Rigid Departmentalization Clear Chain of Command Narrow Spans of Control Centralization High FormalizationOrganic Cross-Functional Teams Cross-Hierarchical Teams Free Flow of Information Wide Spans of Control Decentralization Low Formalization


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaStructural Contingency FactorsStructural decisions are influenced by:Overall strategy of the organizationOrganizational structure follows strategySize of the organizationFirms change from organic to mechanistic organizations as they grow in sizeTechnology use by the organizationFirms adapt their structure to the technology they useDegree of environmental uncertaintyDynamic environments require organic structures; mechanistic structures need stable environments


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaStructural Contingency Factors (contd)Strategy Frameworks:InnovationPursuing competitive advantage through meaningful and unique innovations favours an organic structuringCost minimizationFocusing on tightly controlling costs requires a mechanistic structure for the organizationImitationMinimizing risks and maximizing profitability by copying market leaders requires both organic and mechanistic elements in the organizations structure


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaStructural Contingency Factors (contd)Strategy and StructureAchievement of strategic goals is facilitated by changes in organizational structure that accommodate and support changeSize and StructureAs an organization grows larger, its structure tends to change from organic to mechanistic with increased specialization, departmentalization, centralization, and rules and regulations


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaStructural Contingency Factors (contd)Technology and StructureOrganizations adapt their structures to their technologyWoodwards classification of firms based on the complexity of the technology employed:Unit production of single units or small batchesMass production of large batches of outputProcess production in continuous process of outputsRoutine technology = mechanistic organizationsNonroutine technology = organic organizations


Copyright 2005 Prentice Hall, Inc. All rights reserved. 5* Technology and StructureUnit productionProduction in terms of units or small batchesMass productionProduction in terms of large batch manufacturingProcess productionProduction in terms of continuous processing


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.6 Woodwards Findings on Technology, Structure, and Effectiveness


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaStructural Contingency Factors (contd)Environmental Uncertainty and StructureMechanistic organizational structures tend to be most effective in stable and simple environmentsThe flexibility of organic organizational structures is better suited for dynamic and complex environments


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaCommon Organizational DesignsTraditional DesignsSimple StructureLow departmentalization, wide spans of control, centralized authority, little formalizationFunctional StructureDepartmentalization by functionOperations, finance, human resources, and product research and developmentDivisional StructureComposed of separate business units or divisions with limited autonomy under the coordination and control of the parent corporation


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.7 Strengths and Weaknesses of Common Traditional Organizational Designs


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Designs (contd)Contemporary Organizational DesignsTeam StructuresThe entire organization is made up of work groups or self-managed teams of empowered employeesMatrix StructuresSpecialists for different functional departments are assigned to work on projects led by project managersMatrix participants have TWO managersProject StructuresEmployees work continuously on projects, moving on to another project as each project is completed


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.9 A Matrix Organization in an Aerospace Firm


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Designs (contd)Boundaryless OrganizationA flexible and an unstructured organizational design that is intended to break down external barriers between the organization and its customers and suppliersRemoves internal (horizontal) boundaries:Eliminates the chain of commandHas limitless spans of controlUses empowered teams rather than departmentsEliminates external boundaries:Uses virtual, network, and modular organizational structures to get closer to stakeholders


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaRemoving BoundariesVirtual OrganizationAn organization that consists of a small core of full-time employees and that temporarily hires specialists to work on opportunities that ariseNetwork OrganizationA small core organization that outsources its major business functions (e.g., manufacturing) in order to concentrate on what it does bestModular OrganizationA manufacturing organization that uses outside suppliers to provide product components for its final assembly operations


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOutsourcing IssuesProblems in OutsourcingChoosing the wrong activities to outsource Choosing the wrong vendorWriting a poor contractFailing to consider personnel issuesLosing control over the activityIgnoring the hidden costsFailing to develop an exit strategy (for either moving to another vendor, or deciding to bring the activity back in-house)


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaOrganizational Designs (contd)Learning OrganizationAn organization that has developed the capacity to continuously learn, adapt, and change through the practice of knowledge management by employeesCharacteristics of a learning organization:An open team-based organization design that empowers employeesExtensive and open information sharingLeadership that provides a shared vision of the organizations future; support; and encouragementA strong culture of shared values, trust, openness, and a sense of community


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.10 Characteristics of a Learning Organization


Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Fifth Canadian Edition 5-*Copyright 2008 Pearson Education CanadaExhibit 5.8 Contemporary Organizational Designs


Copyright 2005 Prentice Hall, Inc. All rights reserved. 5*Organization CultureOrganization culture (10 Characteristics, p.160)A system of shared meaning within an organization that determines, to a large degree, how employees actShared values are shown in cultural elements:Stories, rituals, material symbols, and language unique to the organizationResults from the interaction between:The founders biases and assumptionsWhat the first employees learn subsequently from their own experiences.


****4At the beginning of this course, we spoke about the 4 key management activities. One of those activities was organizing. We will now look at what occurs in this activity.The structure of the organization is the framework or skeleton for dividing, assigning and coordinating work.Whenever managers develop or change the structure, it is called organization design.**5We will be examining in depth these six elements of structure: work specialization, chain of command, Span of control, authority and responsibility, centralization vs. decentralization, and departmentalization.

***9Another component of organizational design are the concepts of authority and responsibility.Authority refers to the inherent rights managers have in giving direction and orders and expecting those orders to be followed. It is important to note that the concept of authority is related to the position and not the person.When a person has been delegated authority, the person also has the responsibility--or obligation to perform the tasks or assignments.These concepts become quite important when a manager wants to empower employees. Remember empowerment from preceding chapters? Empowerment is the delegation of decision-making (authority) over some work process. However, for this to work effectively, employees need to be responsible for the success of the process. And for empowerment to truly work, a person needs to have both responsibility and authority--it isnt appropriate to hold someone accountable for something that they have no authority over.1*Authority refers to the rights inherent in a managerial position, such as giving orders and expecting that the orders will be obeyed. Authority, therefore, is related to ones position within an organization and ignores the personal characteristics of the individual manager. When managers delegate authority, they must allocate commensurate responsibility to perform.How does the contemporary view of authority and responsibility differ from the historical view? Early management scholars assumed that the authority and rights inherent in ones formal position were the sole source of influence; so, managers were all powerful.

13There are 5 sources of power: Coercive power which is based on fear. For example, a manager who intimidates employees. Reward power which is based on the ability to distribute something that others value. For example, a manager is using reward power when making decisions about increases in pay. Legitimate power which is based on ones position in the formal hierarchy. This is the most closely aligned power concept to authority. Expert power which is based on ones expertise, special skill, or knowledge. For example, a person in the research department may have incredible influence over the CEO because the researcher has very specialized skills in the biotechnology field. Referent power which is based on identifying with a person who has desirable resources or personal traits. For example, a person who can explain the feelings of employees to a senior manager.

*******************1*Organizations use technology to transform inputs into outputs. The British scholar, Joan Woodward, studied small manufacturing firms in England and categorized them based on the sizes of their production runs. She reached two conclusions: (1) distinct relationships exist between a firms technology classification and its structure; (2) organizational effectiveness is contingent upon fit between technology and structure.Her study, like many others, focused on the processes or methods that companies can use to transform inputs into outputs and how they differ according to degree of routineness. Organic organizations are most effective in dynamic, uncertain environments. Mechanistic organizations are ill-equipped to function in such environments and are most effective in stable environments. To compete in the global village, many managers have redesigned their organizations to make them more organic.

************1*The term organization culture refers to a system of meaning that members share and that distinguishes the organization from others. This system strongly influences how employees will behave while they are at work. The culture of an organization can be analyzed based on how it rates on ten characteristics, which are relatively stable and predictable over time.

chapter 5 organization design

Documents

fundamentals of management

mary coulter

nancy langton

canadian edition

design of virtual

learning organizationchapter

contemporary views of

organizations strategy