BUS206: Chapter 8 Organizational Structure and Design

define organizing

the function of management in which the organization’s structure is created

define organization design

when managers develop or change the organization’s structure

what are the six key elements in organizational design?

work specialization, departmentalization, chain of command, span of control, centralization/decentralization, and formalization

define work specialization

dividing work activities into separate job tasks; also called a division of labor

define departmentalization

how jobs are grouped together

what are the five types of departmentalization?

functional, product, customer, geographic, and process departmentalization

define functional departmentalization

grouping activities by functions performed

define product departmentalization

grouping activities by major product areas

define customer departmentalization

grouping activities by customer

define geographic departmentalization

grouping activities on the basis of geography or territory

define process departmentalization

grouping activities on the basis of work or customer flow

define cross-functional teams

teams made up of individuals from various departments and that cross traditional departmental lines

define chain of command

the line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom

define span of control

the number of employees a manager can efficiently and effectively supervise

what is a wide span of control?

when a manager supervises a larger number of employees

what is a narrow span of control?

when a manager supervises a small number of employees that directly report to them

why are organizations making an effort to increase span of control?

to save time in making decisions, clearer communication, and more flexible organizational structure

what is centralization?

the degree to which decision making takes place at upper levels of the organization

what is decentralization?

the degree to which lower-level managers provide input or actually make decisions

define formalization

how standardized an organization’s jobs are and the extent to which employees behavior is guided by rules and procedures

what are characteristics of a highly formalized organization?

explicit job descriptions, numerous organizational rules, clearly defined procedures covering work processes, and employees have little say

what are characteristics of low formalized organizations?

adaptable, fewer rules and procedures, and employees have more discretion in how they do their work

define unity of command

each employee reports to only one manager

what are the two organizational structures?

mechanistic and organic

what are the characteristics of a mechanistic organization (bureaucracy)?

high specialization, rigid departmentalization, clear chain of command, narrow spans of control, centralization, and high formalization

what are the characteristics of an organic organization?

highly adaptive/flexible, collaborative, few rules, loose structure, informal communication, decentralized, wider spans of control

what happens to an organizations structure as it grows?

it becomes more mechanistic and bureaucratic

what are the four contingency variables?

strategy, size, technology, and environment

define authority

the rights inherent in a managerial position to give orders and expect the orders to be obeyed, a type of power

define responsibility

an obligation to perform assigned duties

define power

an individual’s capacity to influence decisions

what are the five types of power?

coercive, reward, legitimate, expert, and referent power

define coercive power

power base on fear

define reward power

power based on the ability to distribute something that others value

define legitimate power

power based on one’s position in the formal hierarchy

define expert power (desired for many organizations)

power based on one’s expertise, special skill, or knowledge

define referent power

power based on identification with a person who has desirable resources or personal traits

what are the four traditional organizational designs managers can use?

simple structure, functional structure, divisonal structure, and hybrid structure

define simple structure

an organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization

define functional structure

an organizational design that groups similar or related occupational specialities together

define divisional structure

an organizational structure made up of separate business units or divisions

what is a major disadvantage of the divisional structure?

the duplication of activities and resources which increases costs and reduces effieciency

define a hybrid structure

an organizational structure that combines elements of functional and divisional models aiming to benefit from strengths of each, removes duplication and is cheaper but slows down decision-making

what are the four contemporary organizational designs?

team structure, matrix-project structure, boundaryless structure, and learning structure

define team structure

the entire organization is made up of work teams

define matrix-project structure

when specialists from different functional departments are assigned to work on projects led by a project manager and employees continuously work on projects

define boundaryless organization

when design is not defined by or limited to boundaries imposed by a predefined structure

define learning structure

when learning is continuous and ongoing, sharing of experiences