Basic Organisational Design 204

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Part 3: OrganizingPart 3: Organizing

BasicOrganization

Designs

BasicOrganization

Designs


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L E A R N I N G O U T C O M E S

After reading this chapter, I will be able to:1. Identify anddefine the six elements of

organization structure.

2. Describe the advantages anddisadvantages of

work specialization.

3. Contrast authority and power.

4. Identify the five different ways by which

management can departmentalize.

5. Contrast mechanistic and organic organizations.

6. Summarize the effect of strategy, size,

technology, and environment on organization

structures.


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L E A R N I N G O U T C O M E S (contd)

After reading this chapter, I will be able to:7. Contrast the divisional and functional

structures.

8. Explain the strengths of the matrix structure.

9. Describe the boundaryless organization and

what elements have contributed to its

development.

10. Explain what is meant by the term learningorganization.

11. Describe what is meant by the term

organization culture.


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Organization Design andStructure

Organization design

A process in which managers develop or change their

organizations structure

Work specializationA component of organization structure that involves

having each discrete step of a job done by a different

individual rather than having one individual do the

whole job


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Economies and Diseconomies of Work

Specialization

EXHIBIT 5.1


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Organizational Structure: Control

Chain of command

The management principle that no person should

report to more than one boss

Span of controlThe number of subordinates a manager can direct

efficiently and effectively


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Organizational Structure: Control

(contd)Authority

The rights inherent in a managerial position to give

orders and expect them to be obeyed

Power

An individuals capacity to influence decisions

Responsibility

An obligation to perform assigned activities


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Types of Organizational Authority

Line authority

The position authority (given and defined by the

organization) that entitles a manager to direct the

work of operative employees

Staff authority

Positions that have some authority (e.g., organization

policy enforcement) but that are created to support,

assist, and advise the holders of line authority


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Chain ofCommand

EXHIBIT5.2


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Line Versus Staff Authority

EXHIBIT5.3


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Authority Versus Power

EXHIBIT5.4a


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Authority Versus Power (contd)

EXHIBIT5.4b


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Centralization And Decentralization

Centralization

A function of how much decision-making authority is

pushed down to lower levels in an organization; the

more centralized an organization, the higher the level

at which decisions are made

Decentralization

The pushing down of decision-making authority to the

lowest levels of an organization


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Types of Power

EXHIBIT5.5

Coercive power Power based on fear.

Reward power Power based on the ability to distribute

something that others value.

Legitimate power Power based on ones position in the

formal hierarchy.

Expert power Power based on ones expertise,

special skill, or knowledge.

Referent power Power based on identification with a

person who has desirable resources orpersonal traits.


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Types of Departmentalization

EXHIBIT5.6

Functional

Product

Customer

Geographic

Process


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Departmentalization

Functional departmentalization

The grouping of activities by functions performed

Product departmentalization

The grouping of activities by product produced

Customerdepartmentalization

The grouping of activities by common customers

Geographic departmentalization

The grouping of activities by territory

Process departmentalization

The grouping of activities by work or customer flow


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Mechanistic and Organic Organizations

Mechanistic organization

The bureaucracy; a structure that is high in

specialization, formalization, and centralization

Organic organizationAn adhocracy; a structure that is low in specialization,

formalization, and centralization

Structure follows strategy


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Mechanistic versus Organic Organizations

Rigid hierarchical relationships

Fixed duties

Many rules

Formalized communicationchannels

Centralized decision authority

Taller structures

Collaboration (both vertical and

horizontal)

Adaptable duties

F

ew rules Informal communication

Decentralized decision authority

Flatter structures

EXHIBIT5.7


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Technology andStructure

Unit production

Production in terms of units or small batches

Mass production

Production in terms of large batch manufacturing Process production

Production in terms of continuous processing


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Organization Design Applications

Simple structure

An organization that is low in specialization and

formalization but high in centralization

Functional structureAn organization in which similar and related

occupational specialties are grouped together

Divisional structure

An organization made up of self-contained units


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Functional Structure

EXHIBIT5.8


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Divisional Structure

EXHIBIT5.9


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Other Organizational Structures

Matrix structure

An organization in which specialists from functional

departments are assigned to work on one or more

projects led by a project manager

Team-based structure

An organization that consists entirely of work groups

or teams

Boundaryless organizationAn organization that is not defined or limited by

boundaries or categories imposed by traditional

structures


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4

Sample Matrix Structure

EXHIBIT5.10


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Learning Organization

An organization that has developed the capacity

to continuously adapt and change because all

members take an active role in identifying and

resolving work-related issues.

Organization design

Information sharing

Leadership

Organizational culture


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6

Characteristics of a Learning Organization

EXHIBIT5.11

Source: Based on P.M. Senge. The Fifth Discipline: The Art and Practice of Learning Organizations (New

York: Doubleday, 1990); and R. M. Hodgetts, F. Luthans and S. M. Lee. New Paradigm Organizations:

From Total Quality to Learning to World Class, Organizational Dynamics (Winter 1994) pp. 419


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Organization Culture

Organization culture

A system of shared meaning within an organization

that determines, to a large degree, how employees

act

Shared values are shown in cultural elements:

Stories, rituals, material symbols, and language unique

to the organization

Results from the interaction between:

The founders biases and assumptions

What the first employees learn subsequently from their

own experiences.


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Ten Characteristics of Organization Culture

Member identity

Group emphasis

People focus

Unit integration Control

Risk tolerance

Reward criteria

Conflict tolerance

Means-end orientation Open-systems focus

EXHIBIT5.12

Basic Organisational Design 204

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