Lecture 7: Organizational Structure, and Design

Organizing

The function of management that determines what needs to be done, how it will be done, and who will do it.

Organization Design

When managers develop or change the organization’s structure.

Six Basic Elements of Organizational Structure

Work Specialization

Departmentalization

Authority and Responsibility

Span of Control

Centralization vs. Decentralization

Formalization

Work Specialization

Dividing work activities into separate job tasks; also called division of labor.

Departmentalization

Grouping jobs together based on shared characteristics.

Types of Departmentalization

Functional
Product
Customer
Geographic
Process

Unity of Command

A structure where each employee reports to only one manager.

Authority and Responsibility

Chain of Command
Responsibility
Line Authority
Staff Authority

Span of Control

The number of employees a manager can effectively supervise.

Authority

The right to give orders and expect obedience.

Power

The ability to influence decisions.

Types of Power

Coercive Power
Reward Power
Legitimate Power
Expert Power
Referent Power

Centralization

Decision-making at upper levels.

Decentralization

Decision-making spread across lower levels.

Formalization

The degree to which jobs are standardized with rules and procedures.

Mechanistic Organizations

Rigid, tightly controlled structure.

Organic Organizations

Flexible, adaptive structure.

Contingency Variables that Affect Structural Choice

Organizational Strategy
Size of the Organization
Technology Used in the Organization
Environment

Strategy and Structure

Certain structural designs work best with different organizational strategies.

Unit Production

The production of items in units or small batches.

Mass Production

Large-batch manufacturing.

Process Production

Continuous flow or process production.

Traditional Organizational Designs

Simple Structure
Functional Structure
Divisional Structure

Simple Structure

Low departmentalization, centralized control.

Functional Structure

Groups similar job functions.

Divisional Structure

Separate business units or product divisions.

Contemporary Organizational Designs

Team Structure
Matrix Structure
Project Structure
Boundaryless Structure

Internal Boundaries

Breaking down departmental silos.

External Boundaries

Reducing separation between the organization and its stakeholders.

Virtual Organization

A small core of full-time employees relying on external specialists.

Network Organization (Modular Organization)

Uses external suppliers for product components or services.

Challenges in Organizational Design

Keeping employees connected
Managing global operations
Creating a learning organization
Designing flexible work arrangements

Learning Organizations

An organization where employees continually acquire and share new knowledge.

Flexible Work Arrangements

Remote work
Telecommuting
Compressed workweek
Felxtime
Job Sharing
Contingent workers