1. Departmentalization by simple numbers
Definition: group people who are to perform same duties under the supervision of a manager

2. Advantages:
useful when it is the number of people that is critical to finish a task
Disadvantages:
Low specialization
Low efficiency

3. Departmentalization by time
Group people based on time

4. Advantages
Extended services
Suitable when certain processes can’t be interrupted or certain expensive equipment can be used more than 8 hours a day
Disadvantages:
Lacks supervision during the night shift
Fatigue
Affects coordination and communication among different shifts

5. Organizational Forms Mechanistic Organic Rigid Hierarchy Fixed Duties
Many Rules
Formal Communication
Centralized Decisions
Taller Structures
Collaboration
Adaptable Duties
Few Rules
Informal Communication
Decentralized Decisions
Flatter Structures
Rigid and tightly controlled, the mechanistic organization is characterized by high specialization, extensive departmentalization, narrow spans of control, high formalization, downward communication, high centralization, and little participation by low-level members in decision making. Jobs are standardized, simple, and routine. There is also strict adherence to the chain of command. In its ideal form, the mechanistic organization is an “efficiency machine,” well lubricated by rules, regulations, and routines.
The organic organization is a direct contrast to the mechanistic form. It is characterized by a flat structure, flexibility, use of cross-functional teams, adaptability, comprehensive information networking, and decentralization. Rather than having standardized jobs and regulations, the organic structure’s flexibility allows it to change rapidly as needs require. While there is a division of labor, jobs are not standardized, and employees are well-trained and empowered to make job-related decisions. The net effect is that workers need a minimal degree of formal rules and little direct supervision.
With these two models in mind, we are now prepared to address the question: Why are some organizations structured along more mechanistic lines while others lean toward organic characteristics?

6. Simple structure Characteristics: A low degree of departmentalization
Wide span of control
Centralized authority
Little formalization
A flat structure
Inexpensive to maintain the structure
A clear accountability
Popular in small business owned and managed by same person
Risky as the organization grows
Placing organizations into only two categories--mechanistic and organic--does not capture the nuances and realities of modern organizations. The following slides present a number of practical organization design options. We will start with the simple structure--the form that almost all new organizations begin with and that continues to be used by managers of small businesses.
Popular in small businesses owned and managed by same person, the simple structure has several characteristics: a low degree of departmentalization, wide spans of control, centralized authority, little formalization, and a flat structure. This fast, flexible structure is inexpensive to maintain and promotes clear accountability. However, as the organization grows, low formalization and high centralization can cause information over-load at the top. And, this structure is risky because everything depends on one person.

7. Bureaucracy Characteristics: High specialized operating task
Formalized rules and regulations
A clearly defined hierarchy
Level of managers are created to coordinate activities
The paradigm of business structures 30 years ago, a bureaucracy has the following characteristics: highly specialized operating tasks, formalized rules and regulations, tasks grouped into functional departments, centralized authority, narrow spans of control, and chain-of-command decision making.
This structure expedites the efficient performance of standardized activities. Furthermore, rules and regulations allow bureaucracies to substitute less-talented (less-costly) managers for creative, experienced decision makers. This structure does have several drawbacks. Specialization can create jurisdictional disputes or “turf-wars” as functional unit goals override the goals of the organization. Plus, bureaucrats resist change and avoid outcome accountability. Given environmental volatility, however, many bureaucracies have become less rigid and more entrepreneurial through decentralizing decision making, designing work around teams, and developing strategic alliances.

8. Divisional structure
An organization is made up of self-contained units
Characteristics:
Each division is generally autonomous
Central headquarters provide financial and legal services to the divisions
Central headquarters coordinate and control various divisions
Focuses on end results
Headquarters concentrate on long-term and strategic issues
Duplications of personnel and equipment

9. Design engineering Manufacturing Accounting Manufacturing group
Alpha project
Design
group
Accounting
group
Manufacturing
group
Beta project
Design
group
Construction industry, building an apartment
Gamma
project
Design
group
Manufacturing
group
Accounting
group

10. Matrix organization
Definition: assign people from functional departments to work on one or more projects led by a project manager

11. Conflict in organization authority exists
Advantages
Is oriented toward end results
Professional identification is maintained
Pinpoints product-profit responsibility
Cross-functional coordination
Disadvantages:
Conflict in organization authority exists
Possibility of disunity of command exists
Requires managers effective in human relations

12. Team-based structure
Definition: the entire organization consists of work groups or team that perform the organization’s work
Characteristics:
No rigid chain of command
Team member has authority to make decisions

13. Advantages:
Is flexible
Empower workers
Encourages cooperation
Oriented toward end results
Disadvantages:
Lack of responsibility
Central control may be difficult
Requires managers effective in human relations

14. The Boundaryless Organization
An organization that is not defined or limited by boundaries or categories imposed by traditional structures
Characteristics:
Minimize the chain of command
Replaces departments with empowered team
Participative decision-making
Coordination among occupational specialties
The boundaryless organization is made possible by networked computers that expedite communication across intra-organizational and inter-organizational boundaries. The elimination of boundaries in contemporary organizations is being driven by global markets and competitors, innovative technology, and volatile business environments. This method minimizes the chain of command, limits spans of control, and replaces departments with empowered teams. Cross-hierarchical teams, participative decision making, and 360 degree performance appraisals dismantle vertical boundaries. Cross-functional teams, project-driven activities, lateral transfers, and job rotation minimize horizontal boundaries. Globalization, strategic alliances, customer-organization linkages, and telecommuting overcome external boundaries.

15. Functional structure
An organization in which similar and related occupational specialties are grouped together
Characteristics:
Work specialization
Minimizes duplication of personnel and equipment
Follows principle of occupational specializing
Simplifies training
Furnishes means of tight control at top

16. Factors that affect structure
Organizational factors
Strategy (structure should fit organizational strategy)
Growth strategy
Stability strategy
Retrenchment strategy
Size and age
Larger organizations tended to be more specialized and standardized, and formalized but less centralized than smaller organizations
Culture (i.e., a system of shared meaning within an organization that determines, to a large degree, how employees act)
Strong culture substitute for the rules and regulations that formally guide employees
Nortel networks Corp. cut about 49,500 jobs.
724 solutions Inc. slashed 350 jobs, half its staff.
Motorola Inc. dismissed 7000 workers
Technology: make decentralization becomes more effectively; change/create individual roles or responsibilities; affects relationship among departments. How technology fits organizational structure?

17. Environmental factors
Technology (i.e., the sequence of physical techniques, knowledge, and equipment used to turn organization inputs into outputs)
Define organizational structure
Define new roles (e.g., CIOs)
Economic situation
Strong/weak economy
Dynamic/static economy
Social/political situation

18. Building an effective organization design
Align with organizational goals
Make clear individual roles
Make clear sub-goals and policies
Be flexible
Make staff work effective
Make line listen staff
Keep staff informed
Recognize the importance of informal organization and grapevine

19. Evaluating effective organizational structure
Effective two-way communication
Align with organizational goals
Clarify authority and responsibility
Respond to environmental changes promptly

20. Why do we need organizational design?
Achieve goals
Make the best use of people’s experiences, knowledge, skills, and expertise, etc.
Provide a smooth communication channel
Reduce uncertainty
Encourage cooperation