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Chapter6Organizational Structure and Design

Learning Outcomes

• Describe six key elements in organizational design.

• Identify the contingency factors that favor either the mechanistic model or the organic model of organizational design.

• Compare and contrast traditional and contemporary organizational designs.

• Discuss the design challenges faced by today’s organizations.

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6.1Describe six key elements in organizational design.

Elements of Organizational Structure

• Work specialization• Departmentalization• Authority and responsibility• Span of control• Centralization vs. decentralization• Formalization

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Specialization

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Departmentalization

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Types of Authority Relationships

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Line and Staff Authority

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Unity of Command

A structure in which each employee reports to only one manager.

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How Do Authority and Power Differ?Authority: a right whose legitimacy is based on an authority figure’s position in the organization; it goes with the job

Power:an individual’s ability to influence decisions

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Power Versus Authority

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Sources of Power

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Span of Control

Most effective and efficient span depends on:• Employee experience and training (more they

have, larger span).• Similarity of employee tasks (more similarity,

larger span).• Complexity of those tasks (more complex, smaller

span).

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Centralization & Decentralization

Centralizationdecision making takes place at upper levels of the organization

Decentralizationlower-level managers provide input or actually make decisions

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Formalization

How standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures.

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6.2 Identify the contingency factors that favor either the mechanistic model or the organic model of organizational design.

Models of Organizational Design

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Strategy and Structure

Certain structural designs work best with different organizational strategies.

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Size and Structure

MechanisticMore than 2,000 employees makes forces organizations to become more mechanistic.

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OrganicLess than 2,000 employees can be organic.

Technology and Structure

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Environment and Structure

Stable environment: mechanistic structure

Dynamic environment: organic structure

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6.3 Compare and contrast traditional and contemporary organizational designs.

Traditional Organizational Designs

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Contemporary Organizational Design

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Team Structure

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A structure in which the entire organization is made up of work teams that do the organization’s work.

Matrix and Project Structures

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Project Structure

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A structure in which employees continuously work on projects.

Boundaryless Organizations

An organization whose design is not imposed by a predefined structure.

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6.4Discuss the design challenges faced by today’s organizations.

Current Organizational Design Challenges

• Keeping employees connected• Managing global structural issues• Building a learning organization• Designing flexible work arrangements

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A Learning Organization

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Flexible Work Arrangements

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• Telecommuting• Compressed workweek• Flextime• Job Sharing• Contingent workers

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