An Organizational Perspective on Work

Organization A consciously coordinated social unit, composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals. Groups of people who work interdependently toward some purpose. A managed system designed and operated to achieve a specific set of objectives.

Organizational Structure Defines how job tasks are formally divided, grouped and coordinated. The division of labor as well as the patterns of coordination, communication, work flow, and formal power that direct organizational activities. Reflects its culture and power relationships (McShane & Glinow, 2000).

Fundamental requirements of organizational structures The division of labor into distinct tasks. The coordination of that labor so employees are able to accomplish common goals.

Fundamental Concepts Differentiation Integration

Differentiation Internal environment created by job specialization and the division of labor. the work of the organization is subdivided into smaller tasks. different people or groups often perform specific parts of the entire task.

Integration Differentiated units are put back together so that work is coordinated into an overall product. Coordination would link the various parts of the organization to achieve the organization’s overall mission.

Elements of Organizational Structure Vertical Structure authority in organizations hierarchical levels span of control delegation decentralization

Elements of Organizational Structure Horizontal structure (departmentalization) functional divisional matrix organizations

The vertical structure Authority in organizations The legitimate right to make decisions and to tell other people what to do. Authority resides in positions rather than in people Top to bottom

The vertical structure Span of control Number of people reporting directly to the next level in the hierarchy Narrow spans build a tall organization Wide spans create a flat organization

The vertical structure Delegation Assignment of authority and responsibility to a subordinate at a lower level. Responsibility means the assignment of a task that an employee is supposed to carry out Accountability means the expectation that employees perform a job, take corrective action when necessary, and report upward on the status and quality of their performance.

The vertical structure Decentralization The delegation of responsibility and authority In a centralized organization, important decisions usually are made at the top. In decentralized organizations, more decisions are made at lower levels.

The horizontal structure As the tasks of organizations become increasingly complex, the organization inevitably must be subdivided or departmentalized. Departmentalization specifies how employees and their activities are grouped together, such as by function, product, geographic location, or some combination.

The horizontal structure Functional structure Jobs and departments are specialized and grouped according to business functions and the skills they require : production, marketing, human resources, research and development, finance, accounting and so forth. Organizations with functional structures are typically centralized to coordinate their activities effectively.

The Functional Structure General manager Sales and Marketing Production Finance Internal Accounts Collections

The horizontal structure Divisional structure Type of departmentalization that groups employees around outputs, clients or geographic areas. Divisional structures are sometimes called strategic business units because they are normally more autonomous than functional structures and may operate as subsidiaries rather than as departments of the enterprise. Organizations typically reorganize around divisional structures as they expand into distinct products, services, and domains of operation, because coordinating functional units become too unwieldy with increasing diversity.

The Divisional Structure IPS Industries Detergents Cosmetics Food and Beverages Household Industrial

The horizontal structure Matrix Structure Matrix structures usually optimize the use of resources and expertise, making them ideal for project-based organizations with fluctuating workloads. Matrix structures focus technical specialists on the goals of serving clients and creating marketable products. When organizations adopt a functional structure, employees develop strong expertise but tend to be less responsive to product and customer needs. When organizations adopt a divisionalized structure, employees apply their knowledge more effectively around products and clients. However, this structure creates silos of knowledge and often results in wasteful duplication.

The Matrix Structure President Finance Marketing Production Central Southern Northern