Presentation on theme: "Departmentalization by simple numbers"— Presentation transcript:
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 taskDisadvantages:Low specializationLow efficiency
3 Departmentalization by time Group people based on time
4 AdvantagesExtended servicesSuitable when certain processes can’t be interrupted or certain expensive equipment can be used more than 8 hours a dayDisadvantages:Lacks supervision during the night shiftFatigueAffects coordination and communication among different shifts
5 Organizational Forms Mechanistic Organic Rigid Hierarchy Fixed Duties Many RulesFormal CommunicationCentralized DecisionsTaller StructuresCollaborationAdaptable DutiesFew RulesInformal CommunicationDecentralized DecisionsFlatter StructuresRigid 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 controlCentralized authorityLittle formalizationA flat structureInexpensive to maintain the structureA clear accountabilityPopular in small business owned and managed by same personRisky as the organization growsPlacing 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 regulationsA clearly defined hierarchyLevel of managers are created to coordinate activitiesThe 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 structureAn organization is made up of self-contained unitsCharacteristics:Each division is generally autonomousCentral headquarters provide financial and legal services to the divisionsCentral headquarters coordinate and control various divisionsFocuses on end resultsHeadquarters concentrate on long-term and strategic issuesDuplications of personnel and equipment
9 Design engineering Manufacturing Accounting Manufacturing group Alpha projectDesigngroupAccountinggroupManufacturinggroupBeta projectDesigngroupConstruction industry, building an apartmentGammaprojectDesigngroupManufacturinggroupAccountinggroup
10 Matrix organizationDefinition: assign people from functional departments to work on one or more projects led by a project manager
11 Conflict in organization authority exists AdvantagesIs oriented toward end resultsProfessional identification is maintainedPinpoints product-profit responsibilityCross-functional coordinationDisadvantages:Conflict in organization authority existsPossibility of disunity of command existsRequires managers effective in human relations
12 Team-based structureDefinition: the entire organization consists of work groups or team that perform the organization’s workCharacteristics:No rigid chain of commandTeam member has authority to make decisions
13 Advantages:Is flexibleEmpower workersEncourages cooperationOriented toward end resultsDisadvantages:Lack of responsibilityCentral control may be difficultRequires managers effective in human relations
14 The Boundaryless Organization An organization that is not defined or limited by boundaries or categories imposed by traditional structuresCharacteristics:Minimize the chain of commandReplaces departments with empowered teamParticipative decision-makingCoordination among occupational specialtiesThe 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 structureAn organization in which similar and related occupational specialties are grouped togetherCharacteristics:Work specializationMinimizes duplication of personnel and equipmentFollows principle of occupational specializingSimplifies trainingFurnishes means of tight control at top
16 Factors that affect structure Organizational factorsStrategy (structure should fit organizational strategy)Growth strategyStability strategyRetrenchment strategySize and ageLarger organizations tended to be more specialized and standardized, and formalized but less centralized than smaller organizationsCulture (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 employeesNortel networks Corp. cut about 49,500 jobs.724 solutions Inc. slashed 350 jobs, half its staff.Motorola Inc. dismissed 7000 workersTechnology: 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 structureDefine new roles (e.g., CIOs)Economic situationStrong/weak economyDynamic/static economySocial/political situation
18 Building an effective organization design Align with organizational goalsMake clear individual rolesMake clear sub-goals and policiesBe flexibleMake staff work effectiveMake line listen staffKeep staff informedRecognize the importance of informal organization and grapevine
19 Evaluating effective organizational structure Effective two-way communicationAlign with organizational goalsClarify authority and responsibilityRespond to environmental changes promptly
20 Why do we need organizational design? Achieve goalsMake the best use of people’s experiences, knowledge, skills, and expertise, etc.Provide a smooth communication channelReduce uncertaintyEncourage cooperation