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Chapter Learning Objectives

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0 Robbins & Judge Organizational Behavior 13th Edition
Chapter 16: Foundations of Organization Structure Student Study Slideshow Bob Stretch Southwestern College © 2009 Prentice-Hall Inc. All rights reserved.

1 Chapter Learning Objectives
After studying this chapter, you should be able to: Identify the six elements of an organization’s structure. Identify the characteristics of a bureaucracy. Describe a matrix organization. Identify the characteristics of a virtual organization. Show why managers want to create boundaryless organizations. Demonstrate how organizational structures differ, and contrast mechanistic and organic structural models. Analyze the behavioral implications of different organizational designs. Show how globalization affects organizational structure. © 2009 Prentice-Hall Inc. All rights reserved.

2 What Is Organizational Structure?
How job tasks are formally divided, grouped, and coordinated Key Elements: Work specialization Departmentalization Chain of command Span of control Centralization and decentralization Formalization © 2009 Prentice-Hall Inc. All rights reserved.

3 1. Work Specialization The degree to which tasks in the organization are subdivided into separate jobs Division of Labor Makes efficient use of employee skills Increases employee skills through repetition Less between-job downtime increases productivity Specialized training is more efficient Allows use of specialized equipment Can create greater economies and efficiencies – but not always… Exhibit 16-1 © 2009 Prentice-Hall Inc. All rights reserved.

4 Work Specialization Economies and Diseconomies
Specialization can reach a point of diminishing returns Then job enlargement gives greater efficiencies than does specialization Exhibit 16-2 © 2009 Prentice-Hall Inc. All rights reserved.

5 2. Departmentalization The basis by which jobs are grouped together
Grouping Activities by: Function Product Geography Process Customer © 2009 Prentice-Hall Inc. All rights reserved.

6 3. Chain of Command Authority Chain of Command Unity of Command
The rights inherent in a managerial position to give orders and to expect the orders to be obeyed Chain of Command The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom Unity of Command A subordinate should have only one superior to whom he or she is directly responsible © 2009 Prentice-Hall Inc. All rights reserved.

7 4. Span of Control The number of subordinates a manager can efficiently and effectively direct Wider spans of management increase organizational efficiency Narrow span drawbacks: Expense of additional layers of management Increased complexity of vertical communication Encouragement of overly tight supervision and discouragement of employee autonomy Exhibit 16-3 © 2009 Prentice-Hall Inc. All rights reserved.

8 5. Centralization and Decentralization
The degree to which decision making is concentrated at a single point in the organization. Decentralization The degree to which decision making is spread throughout the organization. © 2009 Prentice-Hall Inc. All rights reserved.

9 6. Formalization The degree to which jobs within the organization are standardized. High formalization Minimum worker discretion in how to get the job done Many rules and procedures to follow Low formalization Job behaviors are nonprogrammed Employees have maximum discretion © 2009 Prentice-Hall Inc. All rights reserved.

10 Common Organization Designs: Simple Structure
A structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization Exhibit 16-4 © 2009 Prentice-Hall Inc. All rights reserved.

11 Common Organizational Designs: Bureaucracy
A structure of highly operating routine tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command © 2009 Prentice-Hall Inc. All rights reserved.

12 An Assessment of Bureaucracies
Strengths Weaknesses Functional economies of scale Minimum duplication of personnel and equipment Enhanced communication Centralized decision making Subunit conflicts with organizational goals Obsessive concern with rules and regulations Lack of employee discretion to deal with problems © 2009 Prentice-Hall Inc. All rights reserved.

13 Common Organizational Designs: Matrix
Matrix Structure A structure that creates dual lines of authority and combines functional and product departmentalization Key Elements Gains the advantages of functional and product departmentalization while avoiding their weaknesses Facilitates coordination of complex and interdependent activities Breaks down unity-of-command concept Exhibit 16-5 © 2009 Prentice-Hall Inc. All rights reserved.

14 New Design Options: Virtual Organization
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 Exhibit 16-6 © 2009 Prentice-Hall Inc. All rights reserved.

15 New Design Options: Boundaryless Organization
An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams T-form Concepts Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries Break down external barriers to customers and suppliers © 2009 Prentice-Hall Inc. All rights reserved.

16 Four Reasons Structures Differ
Two extreme forms of organization (Exhibit 16-7) Strategy Innovation Strategy A strategy that emphasizes the introduction of major new products and services Organic structure best Cost-minimization Strategy A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting Mechanistic model best Imitation Strategy A strategy that seeks to move into new products or new markets only after their viability has already been proven Mixture of the two types of structure Exhibit 16-8 © 2009 Prentice-Hall Inc. All rights reserved.

17 Why Structures Differ Organizational Size Technology Environment
As organizations grow, they become more mechanistic, more specialized, with more rules and regulations Technology How an organization transfers its inputs into outputs The more routine the activities, the more mechanistic the structure with greater formalization Custom activities need an organic structure Environment Institutions or forces outside the organization that potentially affect the organization’s performance Three key dimensions: capacity, volatility, and complexity © 2009 Prentice-Hall Inc. All rights reserved.

18 Three-Dimensional Environment Model
Capacity The degree to which an environment can support growth Volatility The degree of instability in the environment Complexity The degree of heterogeneity and concentration among environmental elements Exhibit 16-9 © 2009 Prentice-Hall Inc. All rights reserved.

19 Organizational Designs and Employee Behavior
Impossible to generalize due to individual differences in the employees Research Findings Work specialization contributes to higher employee productivity, but it reduces job satisfaction. The benefits of specialization have decreased rapidly as employees seek more intrinsically rewarding jobs. The effect of span of control on employee performance is contingent upon individual differences and abilities, task structures, and other organizational factors. Participative decision making in decentralized organizations is positively related to job satisfaction. People seek and stay at organizations that match their needs. © 2009 Prentice-Hall Inc. All rights reserved.

20 Global Implications Culture and Organizational Structure
Many countries follow the U.S. model U.S. management may be too individualistic Culture and Employee Structure Preferences Cultures with high-power distance may prefer mechanistic structures Culture and the Boundaryless Organization May be a solution to regional differences in global firms Breaks down cultural barriers, especially in strategic alliances Telecommuting also blurs organizational boundaries © 2009 Prentice-Hall Inc. All rights reserved.

21 Summary and Managerial Implications
Structure impacts both the attitudes and behaviors of the people within it Impact of Technology Makes it easier to change structure to fit employee and organizational needs Exhibit 16-10 © 2009 Prentice-Hall Inc. All rights reserved.

22 Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall
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. Copyright ©2009 Pearson Education, Inc.  Publishing as Prentice Hall

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