STRUCTURAL COMPONENTS
& ORGANIZATION DESIGNS
Organization Design – A
Definition
Used to manage the total organization
the overall pattern of structural
components and arrangement
.
Research on Organizational
Design
There are three popular approaches to the
study of organizational design:
1. The researcher attempts to relate the
behavior of individuals to such phenomena
as organization structure and various
applications of the principles.
Research on Org Design II
2. The researcher attempts to explain the
features of organizational structures and the
principles of organization theory.
3. The researcher conducts comparative
research which is concerned with the
similarities, dissimilarities and consequences
of various organization structures and
approaches to designing organizations.
An Organization Chart
The Organization Chart – What it
Shows
Organization charts convey five major points about an
organization’s structure:
1. Activities of the organization: the chart as a whole
indicates the range of activities in which the
organization is involved.
2. Subdivisions of the organization: each box represents
a subdivision of the organization responsible for a portion
of the work.
3. Type of work performed: the label in each box indicates
the department’s area of responsibility.
The Organization Chart – What it
Shows II
4. Levels of management: the chart shows the management
hierarchy; all persons who report to the same individual
are on the same management level, or horizontal level on
the chart.
5. Lines of Authority: the lines that connect the boxes show
the official lines of authority and channels of
communication for the organization.
The Organization Chart – What it
Doesn’t Show
There are a number of things the organization chart does not
show about the firm:
1.
2.
3.
4.
5.
6.
7.
Degree of responsibility and authority of individuals;
Degree of decentralization that exists;
Staff and line functions;
Position status or importance;
Lines of actual communication;
Relationships among members; and
The ‘informal’ organization.
The Chain of Command
Line Organization Chart
Board of Directors
President
VP - Finance
Region 1
VP - Operations
Region 2
VP - Marketing
Region 3
Line & Staff Organization Chart
Functional Authority in a LineStaff Organization
Fully-Developed Functional
Authority in a Line-Staff
Organization
Personal Staff vs Professional Staff
Structural Components
Organization
Structure
Departmentalization
Span of Control
Height of Hierarchy
Coordination
Internal Factors
Formalization
Centralization
Complexity
Span of Control
Span of Control is the number of
employees who report to a single
manager or supervisor.
Height of the Hierarchy
The hierarchy describes who reports to
whom and the span of control of each
manager. The hierarchy is depicted by the
vertical lines on the organization chart.
The hierarchy is related to the span of
control. When spans are narrow the
height of the hierarchy will be large (tall).
When spans are wide, the height of the
hierarchy will be low (flat).
Span of Control - Illustration
Factors Influencing the Span of
Control
• Competence of supervisor and subordinates
• Physical dispersion of subordinates
• Extent of non-supervisory work in manager’s
job
• Degree of interaction required
• Extent of standardized procedures
• Similarity of tasks being performed
• Frequency of new problems
• Preferences of supervisors and subordinates
James Worthy – Sears, Roebuck
In 1950, James Worthy, an early behaviorist studied the
Sears store network. He found that there were two distinct
types of stores present in the network: tall and flat.
Metropolitan stores: larger, many employees, many staff,
and large inventory.
Rural stores: small, few employees, little/no staff, and
modest inventory.
Worthy/Sears, continued
• Tall stores were characterized by
relatively high turnover among
employees, significant numbers of
grievances, low employee morale.
• Flat stores were characterized by low
rates of turnover, few grievances, and
moderate morale.
Organizational Design Forms
Simple Organization
Entrepreneur
Employees
Characteristics of Simple
Organizations
1.
2.
3.
4.
5.
Small
Flat
Highly Centralized
Very Flexible
Fast
Departmentalization
Departmentalization is the lateral (horizontal)
differentiation of the organization in departments.
Departments are organizational units that share
a common supervisor and common resources,
are jointly responsible for performance, and tend
to identify and collaborate with one another.
Bases of Departmentalization
1. Organizational function
2. Product
3. Process
4. Geography or territory
5. Customer
Criteria for Relative Advantages of
Alternative Departmentalization Bases
1. Which approach (basis) permits the maximum
use of special technical language?
2. Which provides the most efficient utilization of
machinery and equipment?
3. Which provides the best hope of obtaining the
required control and coordination?
Functional Structure
President
VP - Marketing
VP - Operations
VP - HRM
Functional structure is a design that groups similar or
related occupational specialties together.
Advantages of Functional
Departmentalization
• Promotes skill specialization
• Reduces duplication of resources and
coordination problems within the functions
• Enhances career development within
departments
• Superiors & subordinates share common
expertise
• Promotes high-quality technical problem
solving
Disadvantages of Functional
Departmentalization
•
•
•
•
Emphasizes routine tasks
Reduces communication between departments
May create conflict over product priorities
Can make scheduling difficult across
departments
• Focuses on departmental as opposed to
organizational issues
• Develops managers who are experts in narrow
fields
Strengths of Functional
Departmentalization
• Best in a stable environment
• Best in small-medium sized organizations
• Best when only one/few products or
services
• Economies of scale within functional
groups
Weaknesses of Functional
Departmentalization
• Slow response time to environmental
changes
• Less innovation
• “Tunnel vision” on organizational goals
• Decisions may pile up at top: hierarchy
overload
Fully Implemented Functional Design