Chapter 6 Organizational Design 1

Organization Structure Organization Design The framework for dividing, assigning, and coordinating work Developments in or changes to the structure of an organization 4

Key Elements of Organization Structure Work Specialization Authority and Responsibility Chain of Command Centralization vs. Decentralization Span of Control Departmentalization 5

Authority vs. Responsibility Rights inherent in managerial position to give orders and expect them to be followed Related to one’s position--not the characteristics of person Obligation to perform Goes hand-in-hand with authority 9

The Concept of Authority Chief Executive Officer Finance Accounting Marketing Production Research and Development Human Resources 10

The Concept of Power The Power Core Authority Level Finance Human Resources Accounting Research and Development Marketing Production Function 12

Coercive Referent Reward Power Expert Legitimate 13

Five Ways to Departmentalize Functional Product Customer Geographic Process 15

Contingency Variables Affecting Structure MECHANISTIC Rigid hierarchical relationships Fixed duties Formal communication channels Centralized authority ORGANIC Collaboration (both vertical and horizontal) Adaptable duties Information communication Decentralized authorized 16

Contingency Factors and Organization Design Strategy Size Environmental Uncertainty Technology 17

WHAT IS ORGANIZATIONAL CULTURE? System of shared meaning within an organization that determines to a large extent how employees behave and act 25

Dimensions of Organizational Culture Member identity Group emphasis People focus Unit integration Control Risk tolerance Reward Conflict tolerance Means-end orientation Open-systems focus 26

Cultural Effects on Managers Constrains what managers can and cannot do Constraints are rarely explicit Culture has a link between values and managerial behaviour--what is acceptable and not

Strong vs. Weak Cultures Predictability Orderliness Consistency Internal guidelines 27