Division of Labour & Coordination Subdivision of work into separate jobs assigned to different people Coordination of work Informal communication Formal hierarchy Standardization Formalization Goals/outputs Training/skills J. Player, New York Times

Writing topics How is your organization structured? Who reports to whom? Why do you think it is structured in this way? What works? What doesn’t work? What would help the organization function better given the contingencies of org structure.

Organizational Structure and Design Chapter 16

DIVISION OF LABOUR: A SUMMARY Dimension Low High Degree of specialization General tasks Highly specialized tasks Typical organizational size Small Large Economic efficiency Inefficient Highly efficient

Elements of Organizational Structure Department- alization Span of Control Organizational Structure Elements Formalization Centralization

Span of Control Number of people directly reporting to the next level Assumes coordination through direct supervision Wider span of control possible when: with other coordinating methods employees perform similar tasks tasks are routine

Tall versus Flat Organizations: Comparison Chief Executive Tall hierarchy Relatively narrow span of control Chief Executive Flat hierarchy Relatively wide span of control

Forces for (De)centralization Organizational crises Management desire for control Increase consistency, reduce costs Centralization Complexity — size, diversity Desire for empowerment Decentralization

DECENTRALIZATION: BENEFITS WHEN LOW AND WHEN HIGH Low Decentralization High decentralization (High centralization) (low centralization) Eliminates the additional respon- Can eliminate levels of management, sibility not desired by people making a leaner organization performing routine jobs Permits crucial decisions to be Promotes greater opportunities for made by individuals who have decisions to be made by people closest the “big picture” to problems

Formalization The degree to which organizations standardize behaviour through rules, procedures, formal training and related mechanisms. Strengths and limits?

Mechanistic vs. Organic Structures High formalization Narrow span of control High centralization Organic Low formalization Wide span of control Low centralization

MECHANISTIC VERSUS ORGANIC DESIGNS: A bird’s eye view Structure Dimension Mechanistic Organic Stability Change unlikely Change likely Specialization Many specialists Many generalists Formal rules Rigid rules Considerable flexibility Authority Centralized in Decentralized, diffused few top people throughout the organization

Effects of Departmentalization How are employees and their activities grouped together? Areas of common supervision Establishes work teams and supervision structure Creates common resources, measures of performance, etc Encourages informal communication among people and subunits 5 pure types of departmentalization…

Simple Few employees reporting directly to one person (owner) Owner

Functional Organizational Structure Organizes employees around skills or other resources (marketing, production) Create subordinate goals President Finance Production Marketing

Divisionalized Structure Organizes employees around outputs, clients, or geographic areas President Enterprise Systems Laserjet Solutions Consumer Products

Project-Based Matrix Structure Employees are temporarily assigned to a specific project team and have a permanent functional unit President Engineering Manager Marketing Manager Software Manager Project A Manager Project B Manager Project C Manager

HYBRID structures Parts are combined to maintain balance of power and effectiveness across functional, product, geographic and client focused units

Features of Team-Based Structures Structure is built around Self-directed work teams rather than individuals Teams organized around work processes Very flat span of control Very little formalization Most supervisory activities are delegated to the team Usually found within divisionalized structure Very responsive and flexible; empowerment is high; reduced need for managers; time consuming; ambiquity

Network/Virtual Organizational Structure Product Development Firm (France) Marketing Firm (U.K.) Core Firm (Canada) Customer Service Firm (U.S.A.) Production Firm (China) Accounting Firm (Canada)

Contingencies Organizational size Technology External environment Organizational strategy

Types of Organizational Technology Assembly Line Engineering Projects High Analyzability Skilled Trades Scientific Research Low Analyzability Low Variety High Variety

Org. Environment & Structure Dynamic • High rate of change • Use team-based, network, or other organic structure Stable • Steady conditions, predictable change • Use mechanistic structure Complex • Many elements (such as stakeholders) • Decentralize Simple • Few environmental elements • Less need to decentralize

Org. Environment & Structure (con’t) Diverse • Variety of products, clients, locations • Divisional form aligned with the diversity Integrated • Single product, client, location • Don’t need divisional form Hostile • Competition and resource scarcity • Use organic structure for responsiveness Munificant • Plenty of resources and product demand • Less need for organic structure