ORGANIZATIONAL STRUCTURES AND SYSTEM

ORGANIZATION

• A coordinated group of people who perform tasks to produce goods or services.

• Also known as Company

• Collectivities of parts that cannot accomplish their goals as effectively if they operated separately.

STRUCTURAL THEORY

• A broader field that builds upon the classical theory, recognizing that organizations are more complex than just the formal structure.

• Explores on the concepts of relationships, environment, and human behavior in workspace setting and how that affects the overall form of an organization.

Why does structural theory exists?

• Different organizational needs

• Economic changes

• To consider the employees’ motivation and human factors

SEVEN BASIC PARTS OF AN ORGANIZATION

• Operating Core

• Strategic Apex

• Middle Line

• Technostructure

• Support Staff

• Ideology

• Politics

ORGANIZATIONAL STRUCTURE

• Refers to the division of labor as well as the patterns of coordination, communication, workflow, and formal power that direct organizational activities.

• It establishes new communication patterns and aligns employee behavior with the corporate vision

• An organization’s ability to divide work among people depends on how well those people can coordinate with each other.

Why is it important to understand ORGANIZATIONAL STRUCTURE?

• This concept is relevant to other organizational theories as well.

• Defines clear roles and expectations.

• Creates new lines of communication.

• Realigns power and decision-making.

• Reinforces company values and vision.

Division of labor

The subdivision of work into separate jobs assigned to different people.

Coordination

• A system or process that everyone in the group works in concert.

• “Coordinating Mechanisms”

Informal Communication

Includes sharing information on mutual tasks as well as forming common mental models so employees can synchronize work activities using the same mental road map.

Direct Communication:

Important in nonroutine and ambiguous situations where employees need to exchange a large volume of information through face-to-face communication and other media-rich channels.

Liaison Roles:

Employees with this role are expected to communicate and share information with coworkers in other units.

Integrator Roles:

Employees with this role are responsible for coordinating a work process by encouraging employees in each unit to share information with coworkers in other work units. Rely on persuasion and commitment.

Temporary Teams:

They organize employees from several departments into temporary teams. Give employees more authority and opportunity to coordinate through informal communication.

Formal Hierarchy

• Hierarchy assigns legitimate power to an individual; this power is used to direct work processes and allocate resources.

• Work is coordinated through direct supervision – the chain of command.

Disadvantages of Formal Hierarchy:

• Not agile for coordination in complex and novel situations.

• Managers can only supervise limited employees.

• Limit autonomy and involvement.

Standardization

• Involves creating routine patterns of behavior or output.

• Three distinct forms: Standardized Processes, outputs, and skills.

Standardization Processes:

• Involve prescribing specific procedures or steps for completing tasks.

• Often through job descriptions, checklists, SOPs, and policy manual.

• Works best in: Routine work (mass production), simple work.

• Less effective in: Nonroutine (e.g. Product Designing), complex work.

Standardized output

• Involves ensuring that individuals and work units have clearly defined foals and output measures.

• Example: Customer satisfaction, production efficiency.

Standardized skills

• The coordination of work effort to ensure that the job incumbents have the necessary knowledge and skills.

• Careful selection/hiring of employees.

• Training programs.

MAIN ELEMENTS OF ORGANIZATIONAL STRUCTURE

• Span of control

• Centralization

• Formalization

• Span of control and Formalization

• Formalization and Standardization

• Departmentalization

• Team-Based Structure

• Matrix Structure

Span of control

Refers to the number of employees directly reporting one manager/supervisor.

Factors for efficient span of control:

• Employee’s skill capabilities

• Nature of work

• Degree of interdependence

Centralization

Formal decision-making authority is held by small group of people, typically those at the top of the organizational hierarchy.

Decentralization

The dispersion of decision authority and power throughout the organization.

Formalization

The degree to which organizations standardize behavior through rules, procedures, formal training, and related mechanisms.

Formalization (Disadvantages)

Disadvantages:

• Rules and procedures reduce organizational flexibility.

• High levels of formalization tend to undermine organizational learning and creativity.

• Formalization is also a source of job dissatisfaction and work stress

Span of control and Formalization

The wider the span of control, the greater the need for formalization.

Formalization and Standardization

These 2-work hand in hand because they both aim to create consistency in how work is done and what results are expected

Departmentalization

• Specifies how employees and their activities are grouped together.

• A fundamental strategy for coordinating organizational activities.

People behave and communicate in an organization in these ways:

• Establishes interdependencies among employees and subunits.

• Focuses people on common mental models or ways of thinking.

• Encourages specific people and work units to coordinate through informal communication.

Types of Departmentalization

• Simple Structure

• Functional Structure

• Divisional Structure

Simple Structure:

They only employ a few people and typically offer only one distinct product or service.

• Minimal hierarchy

• Employees perform broadly defined roles.

• Highly flexible

• Simple structure usually depends on the owner’s direct supervision to coordinate work activities.

Advantages and Disadvantages of Simple Structure

Advantages:

• Flexible

• Easy to make quick decisions and adjust to changes.

  Disadvantages

• Relies too much on the owner.

• If the company grows and becomes more complicated, it’s hard for the owner to manage everything alone.

Functional Structure advantages and disadvantages

Advantages:

• Specialization

• Efficiency

• Easy to manage.

  Disadvantages:

• Less teamwork between departments

• Focus on own departmental goals.

• Limited learning.

Divisional Structure:

Multidivisional of M-form structure. It groups employees around geographical areas, outputs (products or services), or clients.

Variations of Divisional Structure

• Geographic Divisional Structure

• Product/service Divisional Structure

• Client Divisional Structure

Geographic Divisional Structure

Organizes employees around distinct regions of the country or world

Product/service Divisional Structure:

Organizes employees around distinct outputs.

Client Divisional Structure:

Organizes employees around specific customer groups.

Advantages and Disadvantages of Divisional Structure

Advantages:

• Building-block structure; it accommodates growth relatively easily.

• Outcome-focused; it directs employee attention to customers and products, rather than to their own specialized knowledge.

  Disadvantages:

• Tendency to duplicate resources.

• Expertise is spread across several autonomous business units, so they don’t often share knowledge with each other.

• Power struggles between executives.

Team-Based Structure

• Built around self-directed teams that complete an entire piece of work, such as manufacturing a product or developing an electronic game.

• This type of structure is usually organic.

• Minimal supervision, No formal leader, Highly decentralized.

Cross-functional teams

(made up of people from different departments) improve communication and teamwork across the organization.

Advantages and Disadvantages of Team based structure

Advantages:

• Flexible and adapts quickly to changes.

• Cost-efficient since teams rely less on manager or supervision.

  Disadvantages:

• Can be costly because it requires regular training to improve teamwork skills.

• Teamwork can take more time to organize compared to traditional hierarchy.

• Employees might feel stressed because their roles aren’t always clear.

• Team leaders may feel pressure from handling conflict, losing authority, and not having clear career growth.

Matrix Structure

An organizational structure that overlays two structures (such as a geographical divisional and a functional structure) in order to leverage the benefits of both.

Common Types of Matrix Structure:

• Product-Geographic Matrix Structure

• Project-Functional Matrix Structure

Product-Geographic Matrix Structure:

This structure combines geographic regions (e.g., countries or markets) with products or brands (e.g., Pantene, Tide)

Project-Functional Matrix Structure:

This structure combines functional departments (e.g., art, programming, audio) with project teams working on specific product (like a game).

Advantages and Disadvantages of Matrix Structure

Advantages:

• Great for project-based organizations because it uses resources and expertise well, especially when workloads change.

• When managed well, it helps with better communication, flexibility, and innovation compared to other structures.

• Allows employees to focus on projects or clients while still being organized by their area of expertise.

  Disadvantages:

• Increases conflict among managers who equally share power.

• Project leaders might squabble with functional leaders regarding the assignment of specific employees to projects as well as regarding the employee’s technical competence.

• The existence of two bosses can dilute accountability.

Network Structure

• Alliance of several organizations for the purpose of creating a product or serving a client.

• Core Competencies: Knowledge base that resides throughout the organization and provides a strategic advantage.

Advantages and Disadvantages of Network Structure

Advantages:

• It’s flexible, like an organism, and can quickly adjust to changes.

• If a company needs new products or services, it can form partnerships with other businesses that have the right resources.

• This will help companies stay competitive, especially with the help of technology.

  Disadvantages:

• Make the main company vulnerable to outside market changes.

• Other companies might drive up the cost of subcontractors, and it might actually be cheaper for the company to hire its own workers instead.

DIMENSIONS OF ORGANIZATIONAL STRUCTURE

Traditional and Non traditional

DIMENSIONS OF ORGANIZATIONAL STRUCTURE (Traditional)

• Have formally defined roles for their members.

• Very rule driven.

• Stable

• Resistant to change

• Traditional organizational structures are sometimes called “Mechanistic” or “Bureaucratic” structures.

DIMENSIONS OF ORGANIZATIONAL STRUCTURE (Non traditional)

Characterized by less-formalized work roles and procedures.

4 Important Characteristics of Nontraditional

• High flexibility and adaptability.

• Collaboration among workers.

• Less emphasis on organizational status.

• Group decision making.

• Organic

The Bureaucracy

• Characterized by a well-defined authority hierarchy with strict rules for governing work behavior.

• Represented by a pyramid: High Status = top, Low status = bottom

SIX CHARACTERISTICS OF A BUREAUCRATIC ORGANIZATION

1. Specialization of Labor

2. Well-defined authority hierarchy

3. Formal Rules and Procedures

4. Impersonality

5. Employment decisions based on merit

6. Emphasis on written records

Specialization of Labor

• The complex goals or outputs of the organization are broken down into separate jobs with simple routine, and well-defined tasks.

• In this way, each person becomes a specialized expert at performing a certain task.

Well-defined authority hierarchy

• Characterized by pyramid-type arrangement in which each lower position is controlled and supervised by the next higher level.

• Every position is under the direct supervision of someone higher up, so that there is no confusion about who reports to whom

Formal Rules and Procedures

• There are strict rules and regulations to ensure uniformity and to regulate work behavior.

• Because of these extensive rules and procedures, there should bever be any doubt what a particular worker is supposed to be doing.

• Everyone’s job is well defined, and procedures for coordinating activities with other workers should be clearly established.

Impersonality

• Behavior is based on logical rather than emotional thinking.

• Person preference and emotional factors do not have a place in any work-related decisions.

• True bureaucratic service organization would never give preferential treatment to one customer or another.

Employment decisions based on merit

• Hiring and promotion decisions are based on who is best qualified for the job rather than on the personal preferences of those making the personnel decisions.

• People who are effective workers should be only ones advancing to higher-level positions.

Emphasis on written records

• To ensure uniformity of action and fair equitable treatment of employees, bureaucracies keep meticulous records of past decisions and actions.

• All behaviors are occurring in the organization are recorded, which contributes to the image of bureaucrats and compulsive “paper-shufflers”

The line-staff organizational structure

Made up of two groups of employees, each with different goals.

Line (The line-staff organizational structure)

• Engaged directly in tasks that accomplish its goals.

• Directly contribute to the organization’s primary function.

Staff (The line-staff organizational structure)

Specialized position designed to support the line.

NONTRADITIONAL ORGANIZATIONAL STRUCTURE

• The team organization

• The project task force

• The matrix organization:

The team organization

• Consisting of a team of members organized around a particular project or product.

• Place much less emphasis on organizational status than do traditional structures.

The project task force

Temporarily assembled workers to complete a specific job or project

The matrix organization:

• A hybrid of traditional and nontraditional organizational designs

• Blends functional and product structures.

• Offers both traditional and nontraditional.

• Characterized by high flexibility and adaptability. Suits projects that require creativity.

• Two Reporting Lines:

  To a Functional Manager

  To a Product Manager

CONTINGENCY MODELS OF ORGANIZATIONAL STRUCTURE

• One size doesn’t fit all.

• Need to consider various factors to determine “best” organizational structure.

Joan Woodward

• proposed the earliest contingency models of organizational structure.

• Manufacturing companies should be organized based on what they produce.

Manufacturers into three types:

• Small-batch production

• Mass production

• Continuous-process production

Perrow’s Model:

Rather than focusing solely on production technology, you need to consider all aspects of the job.

Classified work-related technology along two dimensions:

• Analyzable/ non-analyzable

• Exceptional work situations

Four categories of organizational technology:

• Routine

• Nonroutine

• Craft

• Engineering

Routine:

Formal, rule-driven, centralized.

Nonroutine:

Less formal, more flexible.

Craft:

Combination of both traditional and non-traditional.

Engineering:

Combination of both traditional and nontraditional.

Lawrence and Lorsch Model:

looks at how structure must adapt to fit changing environmental conditions.

2 processes that determine a company’s ability to keep up with external changes:

• Differentiation

• Integration

Differentiation:

The complexity of an organization’s culture.

Integration:

Amount and quality of collaboration among divisions of an organization.

Chain of command

• The number of authority levels in an organization.

• Follows the lines of authority and status vertically through the organization.

• Work is coordinated through direct supervision.

ORGANIGRAM

a visual chart that shows the structure of an organization.

Span of Control

• Is also called Span of management.

• The number of people directly reporting to the next level in the hierarchy.

• The number of workers who must report to a single supervisor

WIDE SPAN OF CONTROL

one supervisor manages many workers.

NARROW SPAN OF CONTROLS

one supervisor manages only a few workers

Tall organization:

• Has a long chain of command.

• Many authorities level.

• Narrow span of control

Flat Organization

• Has short chain of command.

• Wide span of control

EXTERNAL ENVIRONMENT

Factors and forces outside the organization that influences its performance and company operations.

Four Characteristics of External Environment

• Dynamic vs. Stable Environments

• Complex vs. Simple Environments

• Diverse vs. Integrated Environments

• Hostile vs. Munificent Environments

SOCIAL SYSTEM

• The human components of a work organization that influence the behavior of individuals and groups.

• Sometimes referred to as the informal component of an organization.

• It includes the unwritten rules, relationships, and interactions between people that aren’t part of the official structure.

• When a social system stops functioning, no identifiable structure remains.

COMPONENTS OF SOCIAL SYSTEM

• Roles

• Norms

• Organizational Climate

Aspects of roles:

• Roles are Impersonal.

• Roles are related to Task behavior.

• Roles can be difficult to pin down.

• Roles are learned quickly and can produce major behavior changes.

• Roles and jobs are two different things.

Issues of roles

• ROLE CONFLICT

• ROLE AMBIGUITY

• ROLE OVERLOAD

Roles

Set of expectations about appropriate behavior in a position.

ROLE CONFLICT

Occurs when an individual is faced with incompatible or competing demands

ROLE AMBIGUITY

Refers to uncertainty about the behaviors to be exhibited in a role, or the boundaries that define a role

ROLE OVERLOAD

The feeling of being overwhelmed from having too many roles or too many responsibilities within a single role.