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Copyright ©2014 Pearson Education, Inc. 15-1 Chapter 15 Foundations of Organizational Structure Essentials of Organizational Behavior 12e Stephen P. Robbins.

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Presentation on theme: "Copyright ©2014 Pearson Education, Inc. 15-1 Chapter 15 Foundations of Organizational Structure Essentials of Organizational Behavior 12e Stephen P. Robbins."— Presentation transcript:

1 Copyright ©2014 Pearson Education, Inc Chapter 15 Foundations of Organizational Structure Essentials of Organizational Behavior 12e Stephen P. Robbins & Timothy A. Judge

2 Copyright ©2014 Pearson Education, Inc. After studying this chapter, you should be able to: 1.Identify the six elements of an organization’s structure. 2.Describe the common organizational designs. 3.Compare and contrast the virtual and boundary-less organizations. 4.Demonstrate how organizational structures differ. 5.Analyze the behavioral implications of different organizational designs. 15-2

3 Copyright ©2014 Pearson Education, Inc. What Is Organization Structure?  It defines how job tasks are formally divided, grouped, and coordinated  Key elements to be addressed  Work specialization  Departmentalization  Chain of command  Span of control  Centralization  Decentralization  Formalization 15-3

4 Copyright ©2014 Pearson Education, Inc. Element 1: Work Specialization  Work specialization: Describes the degree to which activities in the organization are subdivided into separate jobs  Also known as division of labor  Benefits  Greater efficiency and lower costs  Costs  Human costs when carried too far  Job enlargement as a solution 15-4 Modern times

5 Copyright ©2014 Pearson Education, Inc. Element 2: Departmentalization  Departmentalization: Basis by which jobs are grouped together so that common tasks can be coordinated  Common bases:  Function  Product  Geography  Process  Customer 15-5

6 Copyright ©2014 Pearson Education, Inc. Element 3: Chain of Command  Chain of command: Unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom  Authority: positional rights  Unity of command principle: one boss  Fewer organizations find this is relevant 15-6

7 Copyright ©2014 Pearson Education, Inc. Element 4: Span of Control  Span of control: The number of employees a manager is expected to effectively and efficiently direct  Determines the number of levels and managers an organization has  Trend is toward wider spans of control  Wider span depends on knowledgeable employees  Affects speed of communication and decision making 15-7

8 Copyright ©2014 Pearson Education, Inc. Contrasting Spans of Control 15-8

9 Copyright ©2014 Pearson Education, Inc. Element 5: Centralization and Decentralization  Centralization : Degree to which decision making is concentrated at a single point in the organization  Only includes formal authority: positional rights  Highly centralized when top managers make all the decisions  Decentralized when front line employees and supervisors make decisions  Trend is toward increased decentralization 15-9

10 Copyright ©2014 Pearson Education, Inc. Element 6: Formalization  Formalization: Degree to which jobs within the organization are standardized  Formal - minimum discretion over what is to be done, when it is done, and how  Informal - freedom to act is necessary 15-10

11 Copyright ©2014 Pearson Education, Inc. WHAT IS ORGANIZATIONAL STRUCTURE KEY DESIGN QUESTIONS AND ANSWER FOR DESIGNING ORGANIZATION STRUCTURE THE KEY QUESTIONTHE ANSWER IS PROVIDED BY 1.1.To what degree are activities subdivided into separate jobs? 2.2.On what basis will jobs be grouped together? 3.3.To whom do individuals and groups report? 4.4.How many individuals can a manager efficiently and effectively direct? 5.5.Where does decision-making authority lie? 6.6.To what degree will there be rules and regulations to direct employees and managers? Work specialization Departamentalization Chain of command Span of control Centralization and decentralization Formalization

12 Copyright ©2014 Pearson Education, Inc. WHAT IS ORGANIZATIONAL STRUCTURE Prod ucti vity Work specialization (High) (Low) (High)

13 Copyright ©2014 Pearson Education, Inc. Common Organizational Designs  Simple structure  Bureaucracy  Matrix structure 15-13

14 Copyright ©2014 Pearson Education, Inc. Simple Structure  Low degree of departmentalization  Wide spans of control  Authority centralized in a single person  Little formalization  Difficult to maintain in anything other than small organizations 15-14

15 Copyright ©2014 Pearson Education, Inc. Bureaucracy  Highly routine operating tasks achieved through specialization  Formal rules and regulations  Centralized authority  Narrow spans of control  Tasks grouped by functional departments  Decision making follows the chain of command Hudsucker 1.03,17— 1.08

16 The matrix structure The matrix structure combines different structural dimensions simultaneously, for example product divisions and geographical territories or product divisions and functional specialisms.

17 Copyright ©2014 Pearson Education, Inc. Matrix Structure  Combines two forms of departmentalization  Functional  Product  Dual chain of command  Advantages  Facilitates coordination and efficient allocation of specialists  Disadvantages  Possible confusion, fosters power struggles, stress 15-17

18 Matrix structures (1) Figure 13.4 Two examples of matrix structures

19 Matrix structures (2) Figure 13.4 Two examples of matrix structures (Continued)

20 Matrix structures Advantages Integrated knowledge. Flexible. Allows for dual dimensions. Disadvantages Length of time to take decisions. Unclear job and task responsibilities. Unclear cost and profit responsibilities. High degrees of conflict.

21 Copyright ©2014 Pearson Education, Inc. Matrix Structure for a College of Business Administration 15-21

22 Copyright ©2014 Pearson Education, Inc. Structural types FunctionalMultidivisional Matrix Multinational/ Transnational Project-based

23 Copyright ©2014 Pearson Education, Inc. The functional structure The functional structure divides responsibilities according to the organisation’s primary specialist roles such as production, research and sales.

24 Copyright ©2014 Pearson Education, Inc. A functional structure

25 Copyright ©2014 Pearson Education, Inc. Functional structures Advantages Chief executive in touch with all operations. Reduces/simplifies control mechanisms. Clear definition of responsibilities. Specialists at senior and middle management levels. Disadvantages Senior managers overburdened with routine matters. Senior managers neglect strategic issues. Difficult to cope with diversity. Coordination between functions is difficult. Failure to adapt.

26 Copyright ©2014 Pearson Education, Inc. The multidivisional structure The multidivisional structure is built up of separate divisions on the basis of products, services or geographical areas.

27 Copyright ©2014 Pearson Education, Inc. A multidivisional structure

28 Copyright ©2014 Pearson Education, Inc. Multidivisional structures Advantages Flexible (add or divest divisions). Control by performance. Ownership of strategy. Specialisation of competences. Training in strategic view. Disadvantages Duplication of central and divisional functions. Fragmentation and non-cooperation. Danger of loss of central control.

29 Copyright ©2014 Pearson Education, Inc. New Design Options: Virtual  Virtual: A small core organization that outsources its major business functions  Highly centralized with little or no departmentalization  Provides maximum flexibility while concentrating on what the organization does best  Reduced control over key parts of the business 15-29

30 Copyright ©2014 Pearson Education, Inc. The Boundaryless Organization  Boundaryless organization:  Eliminates the chain of command  Has limitless spans of control  Replaces departments with empowered teams  Breaks down geographical barriers 15-30

31 The Boundaryless Organization o An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams.  Ex. «Indiana Heart Hospital in Indianapolis, 650 networked computers allow employees to share patient information. The information is entered in the computer when patients check in and digitally recorded on wristbands they wear during their stay. Digital records have eliminated nurses’ stations, chart racks, and the medical-records department. Now, Doctors use wireless laptop computers to check patient records anywhere, working from his home.

32 Transnational structures The transnational structure combines local responsiveness with high global coordination. Key Advantages include:  Knowledge-sharing.  Specialisation.  Network management.

33 Project-based structures A project-based structure is one where teams are created, undertake the work (e.g. internal or external contracts) and are then dissolved.

34 Copyright ©2014 Pearson Education, Inc. Two Models of Organizational Design The deep dive

35 Copyright ©2014 Pearson Education, Inc. Forces Influencing Structure  Strategy  Innovation – introduce new offerings - organic  Cost-minimization – cost control - mechanistic  Imitation – minimal risk and maximum profit - both  Organization Size  Bigger becomes mechanistic  Technology  Routine equals mechanistic, non-routine is organic  Environment  Dynamic environments lead to organic structures 15-35

36 Copyright ©2014 Pearson Education, Inc. Organizational Designs and Employee Behavior  Cannot generalize any link between structure and performance  Too much individual variance  Consider employee preferences for  Work specialization  Span of control  Centralization 15-36

37 Copyright ©2014 Pearson Education, Inc. Global Implications  National culture influences organizational structure  High power distance cultures accept mechanistic structures 15-37

38 Copyright ©2014 Pearson Education, Inc. Implications for Managers  Structural relationships impact attitude and behavior  Structure constrains employee behaviors 15-38

39 Copyright ©2014 Pearson Education, Inc. The Leaner Organization: Downsizing  Downsizing: A systematic effort to make an organization leaner by selling off business units, closing locations or reducing staff  Controversial because of the negative impact on employees  Impact on organizational performance has been very controversial

40 Copyright ©2014 Pearson Education, Inc. Keep in Mind…  As tasks become more complex and required skills more diverse, more use of cross- functional teams  Simple structures are easy to create but difficult to grow  External boundaries can be reduced through globalization, strategic alliances, customer- organizational links, and telecommuting 15-40

41 Copyright ©2014 Pearson Education, Inc. Summary Identified the six elements of an organization’s structure. 2.Described the common organizational designs. 3.Compared and contrasted the virtual and boundaryless organizations. 4.Demonstrated how organizational structures differed. 5.Analyzed the behavioral implications of different organizational designs.

42 Copyright ©2014 Pearson Education, Inc All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

43 Copyright ©2014 Pearson Education, Inc. Personality  Personality - the sum total of ways in which an individual reacts to and interacts with others  Most often described in terms of measurable traits that a person exhibits such as shy, aggressive, submissive, lazy, ambitious, loyal, and timid 5-43

44 Copyright ©2014 Pearson Education, Inc. Measuring Personality  Self-report surveys  Most common  Prone to error  Evaluate on a series of factors 5-44

45 Copyright ©2014 Pearson Education, Inc. Personality Determinants  Personality reflects heredity and environment  Heredity is the most dominant factor  Twin studies: genetics more influential than parents  Environmental factors do have some influence  Aging influences levels of ability  Basic personality is constant 5-45

46 Copyright ©2014 Pearson Education, Inc. Measuring Personality Traits: Myers-Briggs Type Indicator  Most widely used personality-assessment instrument in the world  Individuals are classified as:  Extroverted or Introverted (E/I)  Sensing or Intuitive (S/N)  Thinking or Feeling (T/F)  Judging or Perceiving (J/P)  Classifications combined into 16 personality types (i.e. INTJ or ESTJ)  Unrelated to job performance 5-46

47 Copyright ©2014 Pearson Education, Inc. Measuring Personality Traits: The Big-Five Model  Five Traits:  Extraversion  Agreeableness  Conscientiousness  Emotional Stability  Openness to Experience  Strongly supported relationship to job performance (especially Conscientiousness) 5-47

48 Copyright ©2014 Pearson Education, Inc. Big Five Traits and OB 5-48

49 Copyright ©2014 Pearson Education, Inc. Other Personality Traits  Core Self-Evaluation  People with positive core self-evaluation like themselves and see themselves as capable and effective in the workplace  Machiavellianism  High machs tend to be pragmatic, emotionally distant and believe the ends justify the means  Narcissism  A person with a grandiose view of self, requires excessive admiration, has a sense of self-entitlement and is arrogant 5-49


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