Week 8: Organizational Structure and Coordination

What is the definition of organisational structure?

It is how tasks in an organisation are divided, grouped, and coordinated.

What are the four key factors that affect an organisation's design choice?

1. Size

2. Environment

3. Strategy

4. Technology

What is meant by structure–environment fit?

An organization’s structure should support its strategy and match the demands of its environment.

What happens when the environment changes for an organization?

Organizations often need to redesign or remodel their structure to respond effectively.

According to Robbins and Judge (2007), what are the five key concepts in organisational design?

1. Work specialisation

2. Centralisation/Decentralisation

3. Formalisation

4. Span of control

5. Departmentalisation.

What is work specialization (division of labor)?

The degree to which tasks are broken down into separate jobs.

What is low work specialization?

Jobs are broad and people perform multiple tasks (e.g. startups, artisanal work).

What is high work specialization?

Jobs are broken into small, standardized tasks.

What is a benefit of high work specialization?

Greater efficiency and higher productivity.

What is a drawback of too much work specialization?

• Boredom

• Fatigue

• Stress

• Absenteeism

• High turnover

How can managers reduce the negative effects of high specialization?

Job enlargement or allowing workers to rotate between tasks.

What does centralization mean in organizational design?

Decision-making authority is concentrated at the top of the hierarchy.

What does decentralization mean in organizational design?

Decision-making authority is given to employees closer to the work and context.

What is an advantage of decentralization?

Faster decision-making and better responsiveness to local conditions.

When can centralization be effective?

In stable environments where efficiency and consistency are important.

What is formalization in organizational design?

The degree to which rules, procedures, and job descriptions are written and standardized.

What is a benefit of high formalization?

Consistent and uniform output.

What is span of control?

The number of employees a manager can efficiently and effectively supervise.

What is a narrow span of control?

Few subordinates per manager, resulting in many levels of hierarchy.

What is a wide span of control?

Many subordinates per manager, resulting in fewer hierarchical levels.

Why have organizations moved toward wider spans of control?

To reduce costs, increase flexibility, and empower employees.

Can organizations function without managers or hierarchy?

Fully flat structures often fail; some hierarchy is needed to balance reliability and adaptability.

What is the name for a self-managing organisational system where decision-making power is given to fluid teams called 'circles'?

Holocracy

What is departmentalization?

The way jobs are grouped within an organization.

What are common bases for departmentalization?

Function, product, customer group, geography, or a mix.

What are the three generic organisational structures?

1. Functional structure

2. Divisional structure

3. Matrix structure

What is a functional organizational structure?

A structure where the organization is grouped by functional skills (e.g. marketing, finance, production).

What are advantages of a functional structure?

Specialization, knowledge sharing, and economies of scale.

What are disadvantages of a functional structure?

It can lead to poor horizontal communication across departments, creating silos.

When is a functional structure most appropriate?

When organizations have limited product diversity and operate in stable environments.

What is a divisional organizational structure?

A structure organized around outputs such as products, customers, or geographic regions.

What problem did the divisional structure originally solve?

It clarified responsibility for profits when firms diversified.

What are advantages of a divisional structure?

Faster decision-making, clearer accountability, and better adaptability.

What are disadvantages of a divisional structure?

Duplication of work, loss of economies of scale, and coordination difficulties across divisions.

When is a divisional structure most appropriate?

For diversified organizations operating in dynamic environments with high information processing needs. (High information processing needs means the organization has to handle a lot of information and make many decisions quickly. A divisional structure helps because each division handles its own information, making decisions faster and more manageable instead of everything going to the top.)

What is a matrix organizational structure?

A structure that combines functional and divisional forms, where employees report to two bosses.

What is the main advantage of a matrix structure?

High information-processing capacity and flexibility in uncertain environments.

What is the main disadvantage of a matrix structure?

Multiple reporting relationships can get confusing and stressful, increasing the likelihood of conflict.

What skills are required to work effectively in a matrix structure?

• Manage priorities (juggle different tasks and demands from more than one boss)

• Communicate with multiple stakeholders (keep everyone informed and aligned)

• Lead without formal authority (influence and collaborate with others even when you’re not their manager)

What is a modular (or network) organization?

An organization that outsources many activities and relies on networks of external partners.

What is the main principle behind modular organizations?

Borrow or contract resources rather than owning them to increase flexibility and reduce costs.

What factors led to the rise of modular organizations?

Global competition, technological advances, and shorter product life cycles.

What is an example of a modular organization?

Instant Pot, which outsources production, marketing, and distribution.

What are strategic alliances in organizational design?

Collaborations between organizations to share resources and capabilities (e.g. Pfizer and BioNTech to produce a COVID-19 vaccine ).

How are industries like film production organized today?

As temporary, project-based networks of specialists.

Why is coordination difficult in temporary, modular organizations?

There is no stable hierarchy or long-term relationships.

What enables coordination in temporary, modular organizations?

Roles and role structures.

(This means people know:

• What their job is

• What others are responsible for

• How different roles fit together)

What is role-based coordination?

Coordination based on shared expectations about tasks and behavior tied to roles.

Why are roles important in temporary organizations?

They allow specialists to coordinate without relying on personal relationships or hierarchy.

What is a key takeaway from organizational structure and coordination?

Formal structures matter, but informal networks and roles also play a crucial role in how work gets done.