ORGANIZATIONAL STRUCTURE

Organizational Structure

defines how job tasks are formally divided, grouped, and coordinated

work specialization or division of labor

describes the degree to which activities in the org are divided into separate jobs

departmentalization

the basis by which jobs in an org are grouped together

functions

advantage is efficiencies gained from putting specialists that focus on similar areas together (e.g., engineering, accounting, manufacturing, HR, and supply chain departments)

product or service

advantage is increased accountability for performance because all activities related to a specific product or service are under the direction of a single manager

geography

valuable if customers are scattered over a large geographic area and have similar needs within their locations

process

works for processing customers as well as products (e.g., you’ll go through several departments before receiving your driver’s license)

customer

specific customers’ needs and problems can be addressed

chain of command

an unbroken line of authority that extends from the top of the org to the lowest and clarifies who reports to whom

authority

refers to the rights inherent in a managerial position to give orders and expect them to be obeyed

unity of command

a person should have one and only one superior to whom he or she is directly responsible

span of control

describes the number of levels and managers in an org

centralization

degree to which decision making is concentrated at a single point in the org

formalization

degree to which jobs within the org are standardized

Simple Structure

low degree of departmentalization, wide spans of control, authority centralized in a single person

Bureaucracy

characterized by highly routine operating tasks achieved through specialization, strictly formalized rules and regulations, tasks grouped into units, centralized authority, narrow spans of control, and decision making that follows the chain of command

functional structure

groups employees by their similar specialties, roles, or tasks

divisional structure

groups employees into units by product, service, customer, or geographical market area

matrix structure

combines the functional and product structures

Team Structure

seeks to eliminate the chain of command and replace departments with empowered teams

Virtual Structure

a small, core organization that outsources major business functions

Mechanistic

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

Organic

structure is flat, uses cross-hierarchical and cross-functional team, has low formalization, possesses a comprehensive info network, and relies on participative decision making

Innovation Strategy

strives to achieve meaningful and unique innovations

Cost-minimization Strategy

controls costs tightly, refrains from incurring unnecessary expenses, and cuts prices selling basic product

Imitation Strategy

seeks to move into new products or new markets only after their viability has already been proven

organization size

orgs employing 2,000 or more people tend to have more specialization, more departmentalization, more vertical levels, and more rules and regulations

technology

describes way an org transfers inputs to outputs

environment

includes outside institutions or forces that can affect its structure (suppliers, customers, competitors, and public pressure groups)

capacity

degree to which environment can support growth

volatility

degree of instability in the environment

complexity

degree of heterogeneity and concentration among environmental elements

work specialization (effect)

contributes to higher employee productivity but at the price of job satisfaction

span of control (effect)

large spans of control are related to more unsafe behaviors and accidents in the workplace

centralization (effect)

less centralized orgs have a greater amount of autonomy

job formalization across culture

level of job satisfaction of employees from high power distance cultures is dependent on the congruence between the degree of formalization and cultural norms