1. Ch. 10 Organization Structure and Design

2. Learning Objectives Organization structure and design
Work specialization – traditional and contemporary views
Five types of departmentalization
Cross-functional teams
Chain of command, authority, responsibility, unity of command
Span of control
Centralization vs. decentralization
Formalization
Mechanistic vs. organic designs
Relationship between strategy and structure
Organizational size and structure
Technology and structure
Environmental uncertainty and structure
Simple, functional, divisional, matrix, team-based structures 2

3. What Type of Organizational Structure Do You Prefer?
1 = Strongly disagree 2 = Inclined to disagree 3 = Neither agree or disagree 4 = Inclined to agree 5 = Strongly agree
I prefer to work in an organization where:
Goals are defined by those at higher levels.
Clear job descriptions exist for every job.
Top management makes important decisions.
Promotions and pay increases are based as much on length of service as on level of performance.
Clear lines of authority and responsibility are established.
My career is pretty well planned out for me.
1 have a great deal of job security.
I can specialize.
My boss is readily available.
Organization rules and regulations are clearly specified.
Information rigidly follows the chain of command.
There is a minimal number of new tasks for me to learn.
Work groups incur little turnover in members.
People accept authority of a leader's position.
I am part of a group whose training and skills are similar to mine.

4. What Type of Organizational Structure Do You Prefer?
60 – you prefer a mechanistic design
Below 45 – you prefer organic design
Between 45 and 60 – no clear preference
Remember which you prefer!

5. Organization Structure Organization Design
The formal arrangement of jobs within an organization
The process of developing or changing an organization’s structure

6. Elements of Organizational Design
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization

7. Specialization
To what degree are activities divided into separate jobs?
Traditional vs. contemporary views

8. Departmentalization – Five Types

9. Line Authority: The Chain of Command
Chief Executive
Officer
President
Vice
Region 3
District D
Executive
Vice President 1 2 4 5 B E F G C
Vice
President
District A

10. Contrasting Spans of Control
Members at Each Level
(Highest)
Assuming Span of 4
Assuming Span of 8 1 1 1 2 4 8 16 64 3
Organization Level 64
512 4
256
4,096 5 6
1,024 7
4,096
(Lowest)
Span of 4:
Operatives:
Managers (levels 1-6)
Span of 8:
Operatives:
Managers (levels 1-4)
= 4,096
= 1,365
= 4,096
= 585

11. Centralized vs. Decentralized Structures

12. Formalization How standardized are the jobs?
How much discretion do employees have?
How “rule-bound” are people?

13. What Type of Organizational Structure Do You Prefer? Scoring
Scores above 60 suggest that you prefer a mechanistic design (stable, rule-oriented, more bureaucratic organizations).
Scores below 45 indicate a preference for an organic design (small, innovative, flexible, team-oriented organizations.
Scores between 45 and 60 suggest no clear preference.
Recent trend has been toward more organic designs.
But, are few pure organic structures. Many organizations are somewhat bureaucratic.
Very low score – you may be frustrated by overly rigid structures of rules, regulations, and boss-centered leadership
Very high score – you may be frustrated by loose, informal, vague, boss-less organization

14. Mechanistic vs. Organic Organizations
High specialization
Rigid departmentalization
Clear chains of command
Narrow spans of control
Highly centralized
Highly formalized
“Bureaucracy”
“Well-oiled machine”
Cross-functional teams
Cross-hierarchical teams
Free flow of information
Wide spans of control
Decentralized
Low formalization
“Adhocracy”
Adaptable “amoeba”

15. Contingency Factors and Organization Design
Strategy
Environmental
Uncertainty
Size
Technology 7

16. Strategy and Structure
Cost minimizers
Differentiation (innovation)
Imitator
Mechanistic
Organic
Both

17. Size and Structure Structure 10 300 500 2000 2500 Size Mechanistic
Organic 10
300
500
2000
2500
Size

18. Environmental Uncertainty and Structure
Stable, simple environment
Unstable, complex environment
Mechanistic structure
Organic structure

19. Technology and Structure
Italian suits, furniture restoration, high-tech
Organic
Oil, chemicals, beer, water filtration
Structure
Mechanistic
Autos, computers
Process
Unit
Mass
Technology

20. Design Your Restaurant (the one that will make you rich and famous)
Environment – stable vs. uncertain (Who is your clientele? How stable are their tastes?
Strategy? – cost, differentiator, both?
Technology? Mass, batch?
Size? – how many employees?
Span of control? How many employees per manager?
Specialization? What job titles? How many? How narrow/specialized will each job title be?
Chain of command? – Who will report to who? How many bosses
Centralization/decentralization – Who will make decisions? What decisions will they make?
Formalization? How strict/rule-bound will the organization be? What will the rules be?
Overall - Organic or mechanistic?

21. Some Popular Types of Structures
Simple
Functional
Divisional
Team
Matrix
Project

22. Simple Structure Low departmentalization Wide spans of control
Commonly used by small businesses
Strengths
Fast, flexible, inexpensive, clear accountability
Weaknesses
Impractical as organizational grows
Reliance on one person risky

23. Functional Structure
Groups occupational specialties (functions) together
Strengths
Economies of scale
Weaknesses
Formation of functional “silos” that lose sight of what’s best for organization overall

24. Divisional Structure Separate business units or divisions
All functions under one roof
Each has P/L responsibility
Strengths
Focused on results
Weaknesses
Duplication of activities and resources

25. Team Structure Entire organization made up of work teams
Employee empowerment crucial
Authority rests in team, not chain of command
Strengths:
Employees more involved and empowered
Reduced barriers among functional areas
Weaknesses
No clear chain of command
Pressure on teams to perform
Can take YEARS to develop!

26. Matrix Structure Matrix Structures
Specialists from functions work on projects as needed
Dual chain of command – two managers!
Strengths
Better use of resources
Fluid and flexible
Weaknesses
Complexity of having two bosses

27. Project Structures No formal departments
Employees jump from project to project!
Fluid and flexible

28. Santa Clara Division RestructuringGM GM
R&D
Mktg.
Manuf.
Lasers
Clocks
Counters
R&D
Mktg.
Manuf.
Before
After