foundation of organizational structure
TRANSCRIPT
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ORGANIZATIONAL BEHAVIOR
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After studying chapter 15 and listening to class lecture,you should be able to:
1. Identify the six key elements that define an organization’s structure.
2. Explain the characteristics of a bureaucracy.3. Describe a matrix organization.4. Explain the characteristics of a virtual organization.5. Summarize why managers want to create boundaryless
organizations.6. Contrast mechanistic and organic structural models.7. List the factors that favor different organizational
structures.8. Why do structures differ?
L E
A R
N I
N G
O
B J
E C
T I V
E S
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What Is Organizational Structure?
Key Elements:
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization
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What Determines What Determines Organizational Structure?Organizational Structure?
To what degree are tasks subdivided into separate jobs? On what basis will jobs be grouped together? To whom do individuals and groups report? How many individuals can a manager efficiently and effectively direct? Where does decision-making authority lie? To what degree will there be rules and regulations to direct employees
and managers?
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Key Design Questions and Answers for Designing the Proper Organization Structure
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StrategyStrategy
Why DoWhy DoStructuresStructures
Differ?Differ?
OrganizationOrganizationSizeSize
TechnologyTechnology EnvironmentEnvironment
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Common Organization Designs
A Simple Structure:Jack Gold’s Men’s Store
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Organizational Chart of a Manufacturing FirmBoard
memberBoard
memberBoard
memberBoard
member
ChiefExecutive
OfficerLegal
counsel
President
IndustrialProductsDirector-Human
Resources
ConsumerProductsDirector-Human
Resources
WesternRegion
IndustrialProducts
SalesManager
EasternRegion
IndustrialProducts
SalesManager
WesternRegion
ConsumerProducts
SalesManager
EasternRegion
ConsumerProducts
SalesManager
etc. etc. etc. etc. etc. etc. etc. etc. etc. etc.
IndustrialProductsDirector-
Production
ConsumerProductsDirector-
Production
IndustrialProductsDirector-
R&D
ConsumerProductsDirector-
R&D
V.P Researchand Development
V.P Sales/Marketing
V.P HumanResources
V.P Production
IndustrialProductsDirector-
Sales
ConsumerProductsDirector-
Sales
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Tall versus Flat OrganizationsChief
Executive
ChiefExecutive
Tall
hier
arch
yFl
at h
iera
rchy
Relatively widespan of control
Relatively narrowspan of control
Tall Organization
Flat Organization
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A Product Organization
Pro-duction Acctg.Sales R&D Pro-
duction Acctg.Sales R&DPro-duction AcctgSales R&D
ProductGroup 2
ProductGroup 1
ProductGroup 3
President
ChiefExecutive
Officer
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A Horizontal Organization
Team responsible for core process(e.g., generating and fulfilling orders)
Team responsible for core process(e.g., product development)
Team responsible for core process(e.g., flow of materials)
Adviser
Adviser
Adviser
Overall Manager
Objective:Reducedcycle time
Objective:More new products
Objective:Enhancedproductquality
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Common Organization Designs
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The Bureaucracy
Strengths– Functional
economies of scale
– Minimum duplication of personnel and equipment
– Enhanced communication
– Centralized decision making
Weaknesses– Subunit conflicts
with organizational goals
– Obsessive concern with rules and regulations
– Lack of employee discretion to deal with problems
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Decentralization: Benefits When Low and When High
Low Decentralization(High Centralization)
Eliminates the additional responsibility not desired by people performing routine jobs
Permits crucial decisions to be made by individuals who have the “big picture”
High Decentralization(Low Centralization)
Can eliminate levels of management, making a leaner organization
Promotes greater opportunities for decisions to be made be people closest to problems
Table 12-1
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The Matrix StructureThe Matrix Structure
Cross-FunctionalCross-FunctionalCoordinationCoordination
ClearClearAccountabilityAccountability
Allocation Allocation of Specialistsof Specialists
Dual ChainDual Chainof Commandof Command
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Matrix Structure (College of Business Administration)
(Dean)
(Director)
Employee
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A Matrix Organization
ProjectGammamanager
Productionsupportgroup
Legalsupportgroup
Accountingsupportgroup
Engineeringsupportgroup
ProjectBeta
manager
Productionsupportgroup
Legalsupportgroup
Accountingsupportgroup
Engineeringsupportgroup
ProjectAlpha
manager
Productionsupportgroup
Legalsupportgroup
Accountingsupportgroup
Engineeringsupportgroup
Productiondepartment
Legaldepartment
Accountingdepartment
Engineeringdepartment
Farm MachineryDivision
President
Functionalauthority
Projectauthority
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Mechanistic vs. Organic Designs
Dimension
Stability
Specialization
Formal rules
Authority
Mechanistic
Change unlikely
Many specialists
Rigid rules
Centralized in a few top people
Organic
Change likely
Many generalists
Considerable flexibility
Decentralized, diffused throughout the organization
Structure
Table 12-2
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Mechanistic Versus Organic Models
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A Virtual Organization
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Organization Structure: Its Determinants and Outcomes
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New Design Options
Concepts:
Provides maximum flexibility while concentrating on what the organization does best.
Disadvantage is reduced control over key parts of the business.
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What Is Organizational Structure? (cont’d)
Division of labor:
• Makes efficient use of employee skills
• Increases employee skills through repetition
• Less between-job downtime increases productivity
• Specialized training is more efficient
• Allows use of specialized equipment
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Economies and Diseconomies of Work Specialization
E X H I B I T 15-2
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What Is Organizational Structure? (cont’d)
Grouping Activities By:
• Function
• Product
• Geography
• Process
• Customer
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What Is Organizational Structure? (cont’d)
Narrow Span Drawbacks:• Expense of additional
layers of management.• Increased complexity of
vertical communication.• Encouragement of overly
tight supervision and discouragement of employee autonomy.
Concept:Concept:Wider spans of Wider spans of management increase management increase organizational efficiency.organizational efficiency.
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Contrasting Spans of Control
E X H I B I T 15-3
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What Is Organizational Structure? (cont’d)
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Common Organization Designs (cont’d)
Key Elements:
+ Gains advantages of functional and product departmentalization while avoiding their weaknesses.
+ Facilitates coordination of complex and interdependent activities.
– Breaks down unity-of-command concept.
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New Design Options
Characteristics:• Breaks down
departmental barriers.• Decentralizes decision
making to the team level.• Requires employees to
be generalists as well as specialists.
• Creates a “flexible bureaucracy.”
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New Design Options (cont’d)
T-form Concepts:
Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries.
Breakdown external barriers to customers and suppliers.
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Why Do Structures Differ?
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Why Do Structures Differ?
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Why Do Structures Differ? – Strategy
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The Strategy-Structure Relationship
E X H I B I T 15-9
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Why Do Structures Differ? – Technology
Characteristics of routineness (standardized or customized) in activities:
• Routine technologies are associated with tall, departmentalized structures and formalization in organizations.
• Routine technologies lead to centralization when formalization is low.
• Nonroutine technologies are associated with delegated decision authority.
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Why Do Structures Differ? – Environment
Key Dimensions:
• Capacity: the degree to which an environment can support growth.
• Volatility: the degree of instability in the environment.
• Complexity: the degree of heterogeneity and concentration among environmental elements.
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What Is Organizational Structure? (cont’d)
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The Three Dimensional Model of the Environment
E X H I B I T 15-10
Complexity
Volatility
Capacity
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Organizational Designs and Employee Behavior
Research Findings:
• Work specialization contributes to higher employee productivity, but it reduces job satisfaction.
• The benefits of specialization have decreased rapidly as employees seek more intrinsically rewarding jobs.
• The effect of span of control on employee performance is contingent upon individual differences and abilities, task structures, and other organizational factors.
• Participative decision making in decentralized organizations is positively related to job satisfaction.