organizational behaviour chapter 12 - organizational structure

7/29/2019 Organizational Behaviour Chapter 12 - Organizational Structure

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Organizational Structure

Toqeer Ahmed

[email protected]


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Organizational Structure

Organizational Structuredefines how job tasks are

formally divided, grouped and coordinated

The organization structure determines reporting relationships and

helps to clarify individuals responsibilities

When designing an organization structure, managers

consider 6 elements Work specialization

Departmentalization

Chain of command

Span of control Centralization/decentralization

formalization


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Work Specialization

Work can be performed more efficiently if employees are allowed to

specialize

Henry Ford was the first to really explore specialization, allowing him

to turn out many new cars a day from it

Specialization is the degree to which tasks are subdivided into separate

jobs (the task of assembling an engine)

Allows employees to improve through repetition

Pay scales often reflect the degree of skills required for a job.

Employees acquire new skills to earn more

Specialization also encourages the development of specialized tools to

further drive efficiency

Specialization can lead to boredom, fatigue, stress, and lower

productivity and quality

Building teams of interchangeable skills can help to reduce boredom


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Departmentalization

Departmentalizationis a basis on which jobs re grouped to

coordinate common or linked tasks

5 Key Types of Departmentalization

Functionalorienting groups by similar task (engineering dept)

Productoperating a group oriented around a complete product(Business Units are similar when the group owns the P&L)

GeographicCommon in Sales organizations, organizing byterritory

ProcessOrienting around a portion of a process (most common ina manufacturing firm, such as finishing dept, procurement dept)

CustomerOrienting around types of customers (Corel organizes

around retail, small business, corporate, government, legal)

You can have more than one type of departmentalization ina business Sales by territory, Marketing by product, Manufacturing by process


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Chain of Command

Chain of commandthe unbroken line of authority from

the top to the bottom of the organization

Defines who has the right to give out orders and expect

them to be obeyed

Currently, this element of structuring organizations is used

less

Teams have been empowered to carry out specific tasks


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Span of Control

Span of Controlrefers to the number of levels and

managers an organization has

All things equal, generally, the wider or larger the span, the

more efficient. Wider spans also encourage more

employee empowerment

However, managers cannot manage an infinite number of

employees effectively (general rule is 6 to 18 employees)


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Centralization/decentralization

Centralizationthe degree to which decision making is

concentrated at a single point in the organization

The more decisions made by top brass without consulting

employees, the more centralized

Decentralization is a growing trend to leverage front line

employees proximity to the action.

Increases empowerment and job satisfaction

Improves quality of decision making

Allows senior management to concentrate on more strategic

matters


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Formalization

Formalizationthe degree to which jobs within the

organization are standardized

Formalization provides structure and can build quality but

takes away control and decision making

Formalization is used most often in the food, airline,

automotive industries


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Common Organization Structures

Now that we know the elements that are considered when

designing an organization, what are the 3 most common

structures used

3 Most commonly used structures are

The Simple Structure (for small businesses)

The Bureaucracy (for large or government organizations)

The Matrix (for agile companies)


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The Simple Structure

Most commonly used in small structures, it is almost the

default structure when no specific thought is put into it

Characterized by

low degree of departmentalization,

wide spans of control,

authority centralized to one person (the owner),

with little formalization

The outcome is a flat structure, fast, simple, clear, flexible

This structure gives a small company that small company

feel. But it is very difficult to maintain once the company grows and

owners cannot directly impact every decision


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The Bureaucracy

Characterized by

Standardization of tasks and processes (filling out forms, you

guessed it, paper forms!!!, aaahhh)

Highly routine tasks, specialization with formalized rules

Centralized authority and clear vertical communication lines

This structure strives for efficiency, economies, minimumduplication of tasks

It does well when individual employees leave the

organization as it is easy to train new staff on established

processes


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A very popular organization structure in the high-tech

world Combines the benefits of functional and product

departmentalization forms

Functional specialists are grouped together to forma pool

of resources (developers, testers, documentationspecialists)

Product departments (or Business Units), responsible forthe complete product, draft individuals from their poolsonto product teams

Employees end up with 2 bosses

Ads: Promotes product ownership and specialization


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Structural Designs of the 21st Century

The Team

Usually cross-functional teams with a specific set of goals, helps tobreak down barriers and decentralizes decision making to the teamlevel

The Modular Organization

A small core organization which outsources major business

functions, relying on a network at the organizational level Teams are assembled for a finite period, then disband

Ex: an ad agency which outsources its printing, accounting,purchasing to concentrate on creative design

The Virtual Organization

Similar to a modular organization, except that in this case, businesspartners also seek to share skills, costs and tap into each othersmarkets

Akin to developing alliances to provide full service solutions


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Why do Organization Structures differ?

Strategystructures are a means through which

organizations try to achieve their goals

It is also a means through which they respond to environmental

change

Organization SizeAs organizations grow, different

stresses are placed on the organization, as a result it mightrespond with a reorganization of resources

EnvironmentThe organizational environment is made up

of institutions or forces outside the organization that affect

its ability to perform

Chapter 13
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