Presentation on theme: "Chapter 14 Foundations of Organization Structure"— Presentation transcript:
1 Chapter 14 Foundations of Organization Structure
2 Organization Structure: How jobs, tasks and people are formally divided, grouped, and coordinated throughout a company.
3 Elements of Structure Specialization (of work duties) Standardization (or formalization)Centralization (of decision making)Chain of commandSpan of controlDepartmentalization
4 To what degree are activities subdivided into separate jobs? Work SpecializationTo what degree are activities subdivided into separate jobs?Also called Division of LaborDegree to which work and other activities are partitioned into separate, individual tasks, duties and assignments for each employee.
5 Standardization (Formalization) To what degree will there be rules and regulations to direct employees and managers?Degree to which jobs are managed using highly specified and rigid rules, policies, procedures, etc. (see: micromanagement !)
6 Centralization (of Decisions) Where will organizational decision making authority reside?Centralization: Degree to which decision making is concentrated at a single point in the organization (usually higher up and in the center of the org. chart/hierarchy).Decentralization: Degree to which lower-level employees provide input and have actual authority or discretion to make decisions for the organization.
7 To whom do individuals and groups report? Chain of CommandTo whom do individuals and groups report?Refers to the line of authority (or command) from the top of the organization to the lowest “ranks”; clarifies who reports to whom.Should (ideally) follow the “unity of command” principle.
8 Span of Control Number of levels of managerial hierarchy: How many direct reports can a manager effectively and efficiently direct?Number of levels of managerial hierarchy:Current trend is toward wider/larger spans of control (by using teams, etc.)Wider spans are consistent with efforts to:reduce costscut overheadspeed up decision makingincrease flexibilityget closer to customersempower employees
10 On what basis will organizational entities be grouped? DepartmentalizationOn what basis will organizational entities be grouped?Basis on which units are “grouped” together:by Function?by Product?by Geography?by Process?by Customer?other?
11 Common Organization Structures 1. Simple Structures (are characterized by):low formalizationcentralized authority in a single personlow departmentalizationwider spans of controlA Simple Structure: Gold’s Appliance Store
12 Common Structures (cont.) 2. Bureaucratic (Mechanistic) Structures:high specializationhighly centralized decision makinghighly standardized policies, procedures, rules & regulationsextensive departmentalization, typically by functionnarrow spans of controldecision making that follows tight chain of command
13 Why Don’t Bureaucracies Die? Weaknesses:Increased subunit conflictsMore rigid and inflexible:Obsessive concern for enforcing rules and regulationsLack of employee discretion to deal with problemsIncreased time to actEncourages autocratic leadership stylesFosters Q1/Q2 culturesStrengths:Gives you more control! (especially with bigger size)Centrally coordinated decision making preferredEconomies of scaleEnvironmental turbulence can be largely managedEnhanced management of communication & info.Technology can mitigate
14 Common Structures (cont.) 3. Matrix: A “hybrid” of departmentalization.Combines (usually) the following approaches to departmentalization:FunctionalProduct
15 Example: A Matrix Structure Approach for a College of Business M. Stevens
16 Common Structures (cont.) 4. Team Structures: Use of teams as the central device to manage and coordinate work activities (a “simpler” structure for large organizations).Characteristics:Breaks down departmental barriers.Decentralizes decision making to the team level.Requires employees to be generalists as well as specialists.Creates a “flexible bureaucracy.”
17 Common Structures (cont.) Team (Organic, Empowered) Structures:low specification (formalization)low specialization (lots of cross-training)highly decentralized, participative decision-making based on genuinely empowered employeesuses cross-functional and cross-hierarchical teamsflatter hierarchies and reporting structurescomprehensive sharing of information networks
18 The Two Extremes of Structure E X H I B I T 14 – 6
19 Newer Approaches to Structure Virtual OrganizationsBoundaryless Organizations
20 Which Structure Is Best? What is the organization’s size?What technology is being used?How much environmental uncertainty?What is the firm’s business strategy:Creativity and Innovation?Cost-Minimization?Imitation?What is the organization’s culture?