OBJECTIVES
LEARNING
Lecture 5b
ORGANIZATIONAL STRUCTURES
1. Identify the six key elements that define an
organization’s structure.
2. Examine Common and New Organizational designs
3. Explain extreme models of organizational designs
•
Contrast mechanistic and organic structural models.
4. Identify determinants of organizational structure
•
List the factors that favor different organizational
structures.
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15–1
What Is Organizational Structure?
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15–2
What Is Organizational Structure?
Key Elements:
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and
decentralization
• Formalization
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15–3
Key Design Questions and Answers for Designing the
Proper Organization Structure
EXHIBIT
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1
15–4
Elements of Organizational Structure
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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15–5
Elements of Organizational Structure
Work Specialization
•A funny take
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15–6
Economies and Diseconomies of Work
Specialization
EXHIBIT
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2
15–7
Elements of Organizational Structure
Grouping Activities By:
• Function
• Product
• Geography
• Process
• Customer
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15–8
Elements of Organizational Structure
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15–9
Elements of Organizational Structure
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15–10
Elements of Organizational Structure
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15–11
Elements of Organizational Structure
Concept:
Wider spans of
management increase
organizational efficiency.
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15–12
Elements of Organizational Structure
Narrow Span Drawbacks:
• Expense of additional
layers of management.
• Increased complexity of
vertical communication.
• Encouragement of overly
tight supervision and
discouragement of
employee autonomy.
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15–13
Elements of Organizational Structure
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15–14
Organization Designs
Common Organizational Designs
 Simple Structure
 Bureaucracy
 Matrix Structure
New Organizational Designs
 Team Structure
 Virtual Structure
 Boundaryless Organization
EXHIBIT
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3
15–15
Common Organization Designs
A Simple Structure:
Jack Gold’s Men’s Store
EXHIBIT
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3
15–16
Common Organization Designs (cont’d)
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15–17
The Bureaucracy
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15–18
The Bureaucracy
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15–19
The Bureaucracy
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15–20
The Bureaucracy
 Strengths
– Functional
economies of scale
– Minimum duplication
of personnel and
equipment
– Enhanced
communication
– Centralized decision
making
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 Weaknesses
– Subunit conflicts with
organizational goals
– Obsessive concern
with rules and
regulations
– Lack of employee
discretion to deal
with problems
15–21
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-ofcommand concept.
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15–22
New Organizational 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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15–23
New Organizational 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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15–24
New Organizational Design Options
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15–25
A Virtual Organization
EXHIBIT
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4
15–26
New Organizational Design Options
T-form Concepts:
Many companies are finding
that a flexible and unstructured
approach are effective means
to running a company
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Eliminate vertical
(hierarchical) and
horizontal (departmental)
internal boundaries.
Breakdown external
barriers to customers and
suppliers.
15–27
EXTREME MODELS OF ORGANIZATIONAL DESIGN
AND
DETERMINATS OF ORGANIZATIONAL STRUCTURE
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15–28
EXTREME MODELS OF ORGANIZATIONAL DESIGN
Mechanistic
model
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Organic model
15–29
EXTREME MODELS OF ORGANIZATIONAL DESIGN
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15–30
EXTREME MODELS OF ORGANIZATIONAL DESIGN
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15–31
Mechanistic Versus Organic Models
EXHIBIT
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5
15–32
DETERMINANTS OF ORGANIZATIONAL STRUCTURE
• Strategy
• Organization Size
• Technology
• Environment
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15–33
Why Do Structures Differ? – Strategy
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15–34
Why Do Structures Differ? – Strategy
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15–35
Why Do Structures Differ? – Strategy
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15–36
The Strategy-Structure Relationship
EXHIBIT 6
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15–37
Why Do Structures Differ? – Organization Size
Smaller newer organizations tend to have less
formalised structure in order to facilitate flexibility
responsiveness and growth
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15–38
Why Do Structures Differ? – Organization Size
Large organizations tend to need more formalised
structure in order to deliver standardised quality
outputs efficiently
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15–39
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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15–40
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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15–41
The Three Dimensional Model of the
Environment
Mechanistic
Structures
Volatility
Capacity
Complexity
Organic
Structures
EXHIBIT
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15–42
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.
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15–43
Organization Structure: Its Determinants and
Outcomes
EXHIBIT
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15–44