Organizational Structure and Coordination

Flashcards about organizational structure and coordination, its dimensions, and strategies.

Organizational Structure

The way an organization divides its labor into specific tasks and achieves coordination among these tasks; the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals.

Main purpose of organizational structure

To control the coordination of people’s actions in pursuit of organizational goals and controlling the means used to motivate people to achieve these goals.

Why has labor to be divided?

Individuals have physical and intellectual limitations

Two basic dimensions to the division of labour

A vertical dimension and a horizontal dimension

Horizontal division

An activity is decomposed into simpler tasks that can be assigned to different people

Horizontal differentiation

Establishes the division of labour, which enables people in the organization to become more specialized and productive and increases the organization´s ability to create value.

Vertical division

Those who are responsible for these tasks (superior or boss role) and Those who do tasks (subordinate role)

Vertical division refers

The way an organization designs its hierarchy of authority and creates reporting relationships to like organizational roles and subunits. What means that established the distribution of authority between levels to give the organization more control over its activities and increase its ability to create value.

Organisational Design

Is the discipline that studies the creation and change of the more formal aspects of organisational structure. Its objective is to determine the most appropriate configuration, how the organisation will function, how it will process information and how the necessary coordination and control will be carried out in order to fulfil the proposed objectives.

Three essential dimensions in the definition and design of structure

Complexity, formalisation and organisational centralisation

Complexity

Refers to the extent to which organizations divide labour. The essential characteristic of complexity is variety, and as an organization grows in complexity it has more kinds of people performing more kinds of tasks in more places, whether these places are departments or geographic territories

Formalization

Refers to the extent to which work roles are highly defined by the organization. A very formalized organization tolerates little variability in the way members perform their tasks. Detailed, written job descriptions, thick procedure manuals, and the requirement to “put everything into documents” are evidence of formalization that stems from rules, regulations, and procedures.

Centralization

Refers to the extent to which decision-making power is localized in a particular part of the organization. In the most centralized organization, the power for all key decisions would rest in a single individual, (i.e., CEO). In a more decentralized organization, decision- making power would be dispersed down through the hierarchy and across departments.

Key instruments for achieving and maintaining organisational viability

Rules and regulations, Objectives channelled into budgets, Values set out in institutional declarations, Decisions that are translated into orders and instructions

External conditions that most influence the design of the organisation

The business environment, The production, technology or service delivery, The aging of the organization, The way in which corporate power is exercised.

Role of top managers in designing the structure

Interpret the environment, Choose the basic activities to develop, Choose appropriate instruments and how those instruments should be used.

Coordination strategies

Forms of coordination used to assign powers of decision, and hence integrate the division of labour needed to cover in a given environment, the tasks necessary to meet the organization’s purpose.

Coordination strategies

Mutual adjustment, Hierarchy, Standarization

Mutual adjustment

Achieves coordination by the simple process of informal communication between two or more operating employees.

Hierarchy

Direct supervisor is responsible for other employees’ work (i.e., when a boss tells others what has to be done, and the steps to follow).

Standarization

This mechanism aims to reduce the communication problems that arise when a manager or supervisor has to give orders repeatedly - and it would be sufficient to give them in writing -, has to teach a certain process or when an adequate selection of personnel would have sufficed.

Standardisation can take place

(1) before starting the process of production or service provision (skills standardisation), (2) during the process of producing the product or service (work process standardisation), (3) considering the final stage of the output (result standardisation) and (4) throughout the whole process (value standardisation).

Standardization of work processes

Achieves coordination by specifying the contents and steps in the realization of a work.

Standardization of output

Achieves coordination by specifying the expected results of different work (sales, shape, size, colour, dimension…).

Standardization of skills

The needed skills are specified.Different work is coordinated by virtue of the related training that co-workers have received (as in medical specialists responding almost automatically to each other’s standardized procedures).

Standardization of values

The core organizational values that the employees should embrace and identify with are specified.

Two types of division

Internal division: which is made within the organization (intra – organizational design) and External division: which is made outside the organization (inter – organizational design)

Outsourcing

Contract out certain tasks or functions, such as manufacturing, human resources, or credit processing to other companies.

How many organizational areas are there?

Five

Division of Labour

Distribution of the various tasks necessary to undertake the activity or activities that are the object of the organisation - horizontal dimension - and the attribution of the appropriate responsibilities - vertical dimension - is what we understand by division of labour.

Five basic organisational areas

Operating core, Strategic apex (top managers), Middle line (middle management), Technostructure (analysts that design systems, processes), Support staff (support outside of operating workflow)

Operating core

This area represents the basis of the organization, where people do the basic work, the core business: making the products or delivering services (shop floor).

Strategic apex (top managers)

Is charged with ensuring that the organization executes its mission. They are responsible to the owners, government agencies, unions, communities…

Middle line (middle management)

Which transmits authority from the top to the bottom and it represents a hierarchy of authorities between apex and core.

Technostructure (analysts that design systems, processes)

The primary responsibility of the managers is to figure out how work should be done by the workers.

Support staff (support outside of operating workflow)

There are certain organisational functions, activities and tasks that can be incorporated into the day-to-day running of the organisation, although their relationship with the main activity is of an indirect nature. The jobs that carry out these support activities make up the support staff.

Staff positions

Technostructure and support staff

Line positions

Apex, middle line and operating core

Line

People that work directly on the main products of the company or manage the people who do the work

Staff

People who construct and maintain the company´s infrastructure