organizational behavior - session7

Organisational Behavior, Do Tien Long

Foundations of Organizational

Structure

Lecturer: Do Tien Long09 04 51 54 [email protected]

mailto:[email protected]


What Is Organizational Structure?What Is Organizational Structure?

Key Elements:

• Work specialization

• Departmentalization

• Chain of command

• Span of control

• Centralization and decentralization

• Formalization

Key Elements:

• Work specialization

• Departmentalization

• Chain of command

• Span of control

• Centralization and decentralization

• Formalization

Organizational Structure

How job tasks are formally divided, grouped, and coordinated.


Key Design Questions and Answers for Designing the Proper Organization StructureKey Design Questions and Answers for Designing the Proper Organization Structure

E X H I B I T 16–1E X H I B I T 16–1

The Key Question The Answer Is Provided By1. To what degree are articles Work specialization

subdivided into separate jobs?

2. On what basis will jobs be grouped Departmentalizationtogether?

3. To whom do individuals and groups Chain of commandreport?

4. How many individuals can a manager Span of controlefficiently and effectively direct?

5. Where does decision-making Centralizationauthority lie? and decentralization

6. To what degree will there be rules Formalizationand regulations to direct employeesand managers?


What Is Organizational Structure? (cont’d)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

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

Work Specialization

The degree to which tasks in the organization are subdivided into separate jobs.


Economies and Diseconomies of Work SpecializationEconomies and Diseconomies of Work Specialization

E X H I B I T 16–2E X H I B I T 16–2



Grouping Activities By:

• Function

• Product

• Geography

• Process

• Customer

Grouping Activities By:

• Function

• Product

• Geography

• Process

• Customer

Departmentalization

The basis by which jobs are grouped together.



Chain of Command

The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.

Authority

The rights inherent in a managerial position to give orders and to expect the orders to be obeyed.

Unity of Command

A subordinate should have only one superior to whom he or she is directly responsible.



Narrow Span Drawbacks:• Expense of additional layers of management.• Increased complexity of vertical communication.• Encouragement of overly tight supervision and

discouragement of employee autonomy.

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:Wider spans of management increase organizational efficiency.

Concept:Concept:Wider spans of management increase organizational Wider spans of management increase organizational efficiency.efficiency.

Span of ControlThe number of subordinates a manager can efficiently and effectively direct.


Contrasting Spans of ControlContrasting Spans of Control

E X H I B I T 16–3E X H I B I T 16–3



CentralizationThe degree to which decision making is concentrated at a single point in the organization.

FormalizationThe degree to which jobs within the organization are standardized.

DecentralizationThe degree to which decision making is spread throughout the organization.


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.

E X H I B I T 16–5E X H I B I T 16–5


Common Organization Designs (cont’d)Common Organization Designs (cont’d)

Bureaucracy

A structure of highly operating routine 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 that follows the chain of command.


The BureaucracyThe BureaucracyStrengths– 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


Common Organization Designs (cont’d)Common Organization Designs (cont’d)

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.

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.

Matrix Structure

A structure that creates dual lines of authority and combines functional and product departmentalization.


Matrix Structure (College of Business Administration)Matrix Structure (College of Business Administration)

(Dean)

(Director)

Employee

E X H I B I T 16–6E X H I B I T 16–6


New Design OptionsNew 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.”

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.”

Team Structure

The use of teams as the central device to coordinate work activities.


New Design Options (cont’d)New Design Options (cont’d)

Concepts:Advantage: Provides maximum flexibility while concentrating on what the organization does best.

Disadvantage: Reduced control over key parts of the business.

Concepts:Advantage: Provides maximum flexibility while concentrating on what the organization does best.

Disadvantage: Reduced control over key parts of the business.

Virtual Organization

A small, core organization that outsources its major business functions.

Highly centralized with little or no departmentalization.


A Virtual OrganizationA Virtual Organization

E X H I B I T 16–7E X H I B I T 16–7


New Design Options (cont’d)New Design Options (cont’d)

T-form Concepts:Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries.

Breakdown external barriers to customers and suppliers.

T-form Concepts:Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries.

Breakdown external barriers to customers and suppliers.

Boundaryless Organization

An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams.


Chapter Check-Up: StructureIf someone has a high need for affiliation, If someone has a high need for affiliation,

would a virtual organization be a good fit for would a virtual organization be a good fit for

him or her? Why or why not? him or her? Why or why not?

Discuss with a classmate whether or not an organic organization would be a good fit for this same person.


Why Do Structures Differ?Why Do Structures Differ?Mechanistic Model

A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization.


Why Do Structures Differ?Why Do Structures Differ?Organic Model

A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.


Mechanistic Versus Organic ModelsMechanistic Versus Organic Models

E X H I B I T 16–8E X H I B I T 16–8


Why Do Structures Differ? – StrategyWhy Do Structures Differ? – StrategyInnovation StrategyA strategy that emphasizes the introduction of major new products and services.

Imitation StrategyA strategy that seeks to move into new products or new markets only after their viability has already been proven.

Cost-minimization StrategyA strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting.


The Strategy-Structure RelationshipThe Strategy-Structure Relationship

E X H I B I T 16–9E X H I B I T 16–9

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 loose with tight properties; tight controls over current activities and looser controls for new undertakings


Why Do Structures Differ? – SizeWhy Do Structures Differ? – Size

Characteristics of large organizations:• More specialization• More vertical levels• More rules and regulations

Characteristics of large organizations:• More specialization• More vertical levels• More rules and regulations

Size

How the size of an organization affects its structure. As an organization grows larger, it becomes more mechanistic.


Why Do Structures Differ? – TechnologyWhy Do Structures Differ? – TechnologyTechnology

How an organization transfers its inputs into outputs.

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.

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.


Why Do Structures Differ? – EnvironmentWhy 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.

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.

Environment

Institutions or forces outside the organization that potentially affect the organization’s performance.


The Three Dimensional Model of the EnvironmentThe Three Dimensional Model of the Environment

Complexity

Volatility

Capacity

E X H I B I T 16–10E X H I B I T 16–10


“Bureaucracy Is Dead”“Bureaucracy Is Dead”Characteristics of Bureaucracies– Specialization– Formalization– Departmentalization– Centralization– Narrow spans of control– Adherence to a chain of

command

Why Bureaucracy Survives– Large size prevails– Environmental turbulence

can be largely managed– Standardization achieved

through hiring people who have undergone extensive educational training

– Technology maintains control


Organizational Designs and Employee BehaviorOrganizational 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.

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.


Organization Structure: Its Determinants and OutcomesOrganization Structure: Its Determinants and Outcomes

Implicit Models of Organizational StructurePerceptions that people hold regarding structural variables formed by observing things around them in an unscientific fashion.

E X H I B I T 16–11E X H I B I T 16–11

Associated with


Job DesignJob Design

Specification of (1) a job’s content, (2) the work method to be used in its performance, (3) how it relates to other jobs in the company

Allows employees to control various aspects of their work

Making more effective use of employee potentials to enhance quality of work life and improve company performance


Job SpecializationJob SpecializationJob specialisation – the result of the division of labourDivision of labour – the successive division of an activity into smaller and smaller elements


Division of Labor and SpecializationDivision of Labor and Specialization

Complete activity Separate tasksAssigned to Individual

Specialists

Division of Labor

AssembleTest

Package

Assembleonly

Test only

Packageonly


Advantages and Disadvantages of Job SpecializationAdvantages and Disadvantages of Job Specialization

AdvantagesLess skilled employees can be hired, simple assignmentsReducing training costRepetition lead to expertise and increase productivityWork is perform more quicklyMinimize dependence on particular employees or special skills

DisadvantagesDiminished motivationPoor-quality outputDiminished job satisfactionHigh turnoverHigh absenteeismSabotage and strikes


Job Enlargement and Job EnrichmentJob Enlargement and Job Enrichment

Job Enlargement – extension of job’s scope, so that number of different actives an employee performs is increased, also known as Horizontal loading– Job scope – number of tasks an employee performs

in a particular jobJob Enrichment – extension of job’s dept so that employee discretion or control over a job is increased, also known as Vertical loading– Job dept – degree to which individuals can plan and

control work involved in their jobs


Job Enlargement and Job EnrichmentJob Enlargement and Job Enrichment

Job 15 Activities

Job Enlargement

2 activities from the preceding

1 activities from the following

Horizontal Loading

Job Enrichment

Job 2Basic Activities

Added Responsibilities

Vertical Loading


Core Dimensions for Enrichment Core Dimensions for Enrichment

1. Skill variety – extent to which the job entails a number of activities requiring different skills

2. Task identity – degree to which the job allows completion of a major identifiable piece of work, rather than just a fragment

3. Task significant – extent to which a worker sees job output as having an important impact on other

4. Autonomy – amount of discretion allowed in determined schedules and work method to achieve required output

5. Feedback – degree to which job provides for clear, timely information about performance results


Implementing Job EnrichmentImplementing Job EnrichmentCombine tasks – increase skill variety and take identity by combining several jobs into a larger jobAssign whole pieces of work – increase task identity and task significance by giving a “whole” piece of work so that they can accomplish a meaningful taskEstablish client relationships – increase skill variety, autonomy, and performance feedback bay allowing employees to deal directly with consumers, suppliers, peers performing related jobsGrant additional authority – allowing employees more authority for quality control and self-determination of work proceduresOpen feedback channels – providing open feedback channels so that employees can monitor and self-correct their work behavior


Implementing Job EnrichmentImplementing Job Enrichment

Implementing Method

1.Combine Tasks

2.Assign Whole Piece of Work

3.Establish Client Relationship

4.Grant Additional Authority

5.Open Feedback Channels

Core Job Dimensions

1.Skill Variety

2.Task Identity

3.Task Significant

4.Autonomy

5.Performance Feedback


Attention to Job DesignAttention to Job DesignManagers determine the quantity and quality of different core dimensionsWell-devised program can bring four beneficial effects:1. High work motivation2. High quality performance3. High job satisfaction4. Low absenteeism and turnover

Not all employees desire enriched jobs


Job AnalysisJob Analysis

Job Analysis – the process of collecting and studying information pertaining to a jobJob Description – a written statement of the tasks to be performed on a particular jobJob Speciation – the qualifications for adequate job performance


With which type of structure do you think trust is most necessary? Why? Are the “substitutes for trust” that are potentially built into some structures? If so, which ones?

Chapter Check-Up: Structure


GROUP WORKSGROUP WORKSQUESTIONS: 2, 3, 4 (P. 439)CASE: Motorola – What went wrong? (P. 441)