Post on 10-Apr-2018
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Organizational StructureOrganizational Structure
Dr. Meenakshi KhemkaDr. Meenakshi Khemka
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Organization StructureOrganization Structure 22
Organizational StructureOrganizational Structure -- DefinitionDefinition
How job tasks are
formally divided
grouped and
coordinated
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Organization StructureOrganization Structure 33
Organizational StructureOrganizational Structure
Key Elements
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
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Organization StructureOrganization Structure 44
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?
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Organization StructureOrganization Structure 55
Departmentalization
The basis by which jobs are grouped together
Function
Product
Geography
Process
Customer
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Organization StructureOrganization Structure 66
Contrasting Spans of ControlContrasting Spans of Control
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Organization StructureOrganization Structure 77
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
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Organization StructureOrganization Structure 88
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
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Organization StructureOrganization Structure 99
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
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Organization StructureOrganization Structure 1010
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
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Organization StructureOrganization Structure 1111
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
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Organization StructureOrganization Structure 1212
Matrix Structure (College of BusinessMatrix Structure (College of Business
Administration)Administration)
(Dean)
(Director)
Employee
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Organization StructureOrganization Structure 1313
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
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Organization StructureOrganization Structure 1414
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
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Organization StructureOrganization Structure 1515
A Virtual OrganizationA Virtual Organization
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Organization StructureOrganization Structure 1616
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
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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
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Organization StructureOrganization Structure 1818
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
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Organization StructureOrganization Structure 1919
Organization Size
Large organizations typically employing 2000 or
more people tend to have
more specialization
more departmentalization
more vertical levels
Why do Structures Differ?
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Organization StructureOrganization Structure 2020
Technology
Routine tasks are associated with taller, more
departmentalized and centralized structures
Non-routine tasks would be characterized by
delegated decision making authority
Why do Structures Differ?
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Organization StructureOrganization Structure 2121
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)
Why do Structures Differ?
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Organization StructureOrganization Structure 2222
Organization Structure:Organization Structure:
Determinants and OutcomesDeterminants and Outcomes