chapter 07 organizational structure and design 07-1

Chapter 07

ORGANIZATIONALSTRUCTURE AND DESIGN

07-07-11

Learning Objectives (cont.)

You should learn to:

1,Define organizational structure and organizational design

2, Describe the six key elements of organizational structure

3, Differentiate mechanistic and organic organizational design

4, Identify the four contingency factors that influence organizational design

07-07-22

Learning Objectives

You should learn to:5,Describe a simple structure, a functional

structure, and a divisional structure6,Explain team-based structures and why

organizations are using them7,Describe matrix structures, project

structures, autonomous internal units, and boundaryless organizations

8,Explain the concept of a learning organization and how it influences organizational design

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Defining Organizational Structure1,Define organizational structure and

organizational design– organizing - the process of creating an

organization’s structure

– organizational structure - the formal framework by which job tasks are divided, grouped, and coordinated

– organizational design - process of developing or changing an organization’s structure

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2,Describe the six key elements of organizational structure

2.1Work Specialization

– the degree to which tasks in an organization are divided into separate jobs

• individuals specialize in doing part of an activity rather than the entire activity

– an important organizing mechanism, though not a source of ever-increasing productivity

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2.2 Departmentalization– the basis by which jobs are grouped together

• functional - groups jobs by functions performed

• product - groups jobs by product line• geographical - groups jobs on the basis of

territory or geography• process - groups jobs on the basis of product

or customer flow• customer - groups jobs on the basis of

common customers

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Departmentalization (cont.)– large organizations combine most or all forms of

departmentalization– trends

• customer departmentalization is increasingly being used

– better able to monitor and respond to customer needs

– cross-functional teams 跨职能团队 are becoming popular

» groups of individuals who are experts in various specialties

» involved in all aspects of bringing a new product to market 10-10-77

Functional Departmentalization

Manager,

EngineeringManager,

ManufacturingManager,

Human ResourcesManager,

Purchasing

Plant Manager

Manager,Accounting

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Product Departmentalization

Mass TransitDivision 大宗运输事业部

Bombardier-Rotax(Vienna)

Mass Transit Sector

Recreational ProductsDivision

Logistic EquipmentDivision

Industrial EquipmentDivision

Bombadier-Rotax(Gunskirchen)

Recreational and UtilityVehicles Sector

Rail ProductsSector

Bombardier, Ltd.

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Geographical Departmentalization

Sales Director,Western Region

Sales Director,Southern Region

Sales Director,Eastern Region

Vice Presidentfor Sales

Sales Director,Midwestern Region

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Process Departmentalization

SawingDepartment

Manager

Planning andMilling 压边Department

Manager

AssemblingDepartment

Manager

Lacquering andSanding 漆涂和打磨

DepartmentManager

Finishing 抛光

DepartmentManager

Plant Superintendent工厂主管

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Inspection and Shipping

Department Manager

Customer Departmentalization

Manager,Retail Accounts

Directorof Sales

Manager,Government Accounts

Manager,Wholesale Accounts

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2.3Chain of Command (cont.)

– continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom

• unity of command - a person should report to only one manager

3.4 authority & responsibility

authority - the inherent rights in a managerial position to tell people what to do and to expect them to do it

responsibility - the obligation to perform any assigned duties

– these concepts are less relevantly important today due to information technology and employee empowerment 被授权

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2.5 Span of Control 管理跨度

– number of employees that a manager can efficiently and effectively manage

– determines the number of levels and managers in an organization

– the wider the span, the more efficient the organization

– appropriate span influenced by:• the skills and abilities of employees• the complexity of tasks performed• availability of standardized procedures• sophistication of organization’s information

system 10-10-1414

2.5 Contrasting Spans Of Control

1

2

3

4

5

6

7

Org

aniz

atio

nal L

evel

Members at Each Level

Span of 4Operatives 作业人员 = 4,096Managers (levels 1-6) = 1,365

Span of 8Operatives = 4,096Managers (levels 1-4) = 585

1

4

16

64

256

1,024

4,096

1

8

64

512

4,096

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2.6 Centralization & DecentralizationCentralization

– the degree to which decision making is concentrated at a single point in the organization• top-level managers make decisions with little

input from subordinates in a centralized organization

Decentralization– the degree to which decisions are made by lower-

level employees– distinct trend toward decentralized decision

making

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Factors That Influence the Amount of Centralization and Decentralization

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Defining Organization Structure (cont.)

Formalization– the degree to which jobs within the organization

are standardized• standardization - provides the need for

employees to consider alternatives – extent to which employee behavior is guided by

rules and procedures• employee allowed minimal discretion 判断力 in

highly formalized jobs– explicit job descriptions– clearly defined procedures

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3,Differentiate mechanistic and organic organizational design

Mechanistic Organization– rigidly and tightly controlled structure– tries to minimize the impact of human traits– most large organizations have some mechanistic

characteristicsOrganic Organization

– highly adaptive and flexible structure– permits organization to change when the need

arises– employees are highly trained and empowered to

handle diverse job activities– minimal formal rules and little direct supervision

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3,Differentiate mechanistic and organic organizational design

• High Specialization• Rigid Departmentalization• Clear Chain of Command• Narrow Spans of Control• Centralization• High Formalization

• Cross-Hierarchical Teams 跨职能团队

• Free Flow of Information• Wide Spans of Control• Decentralization• Low Formalization

MechanisticOrganic

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4,Identify the four contingency factors that influence organizational design

Contingency Factors4.1 Strategy and Structure - structure should

facilitate the achievement of goals• strategy and structure should be closely linked• strategy focuses on:

– innovation - need the flexibility and free flow of information of the organic structure

– cost minimization - seek efficiency, stability, and tight controls of mechanistic structure

– imitation - use structural characteristics of both mechanistic and organic structures

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Contingency Factors (cont.)4.2 Size and Structure - size affects structure at a

decreasing rate4.3 Technology and Structure

• technology - converts inputs into outputs– unit production 单件生产 - production of items

in units or small batches 批

– mass production 大批量生产 - large-batch manufacturing

– process production 连续生产 - continuous-process production

• mechanistic structure supports routine 常规化technology

• organic structure supports nonroutine technology10-10-2222

Woodward’s Findings On Technology, Structure, And Effectiveness

MassProduction

Moderate vertical differentiationHigh horizontal differentiationHigh formalization

ProcessProduction

High vertical differentiationLow horizontal differentiationLow formalization

UnitProduction

Low vertical 纵向分化

differentiationLow horizontal differentiationLow formalization

Str

uctu

ral

Cha

ract

eris

tics

Most effectivestructure

Organic Mechanistic Organic

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Contingency Factors (cont.)4.4 Environmental Uncertainty and Structure

• one way to reduce environmental uncertainty is to adjust the organization’s structure

– with greater stability, mechanistic structures are more effective

» mechanistic structures are not equipped to respond to rapid environmental change

– the greater the uncertainty, the greater the need for an organic structure

» organizations are being designed to be more organic nowadays 10-10-2424

5,Describe a simple structure, a functional structure, and a divisional structure

Traditional Organizational Designs

5.1 Simple Structure - low departmentalization, wide spans of control, authority centralized in a single person, and little formalization• commonly used by small businesses• as organizations increase in size, the structure

tends to become more specialized and formalized

5.2 Functional Structure - groups similar or related occupational specialists together

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5,Describe a simple structure, a functional structure, and a divisional structure

Traditional Organizational Designs (cont.)

5.3 Divisional Structure - composed of separate divisions

• each division has relatively large autonomy

• parent corporation acts as an external overseer to coordinate and control the divisions

–provides support services

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Strengths and Weakness of Common Traditional Organizational Designs

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6,Explain team-based structures and why organizations are using them

Contemporary Organizational Designs– Team-Based Structures - entire organization is

made up of work teams • employee empowerment is crucial• teams responsible for all work activity and

performance• complements functional or divisional structures

in large organizations– allows efficiency of a bureaucracy 行政式机构

– provides flexibility of teams

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7,Describe matrix structures, project structures, autonomous internal units, and boundaryless organizations

Contemporary Organizational Designs (cont.)– Matrix Structure - assigns specialists from

different functional departments to work on projects led by project managers• adds vertical dimension to the traditional

horizontal functional departments• creates a dual chain of command

– violates unity of command– project managers have authority in areas

relative to the project’s goals– functional managers retain authority over

human resource decisions (e.g., promotions) 10-10-2929

A Matrix Organization in an Aerospace Firm

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Common Organizational Designs (cont.)

Contemporary Organizational Designs (cont.)– Project Structure - employees work continuously

on projects 在项目中员工持续地变换工作

• employees do not return to a functional department at the conclusion of a project

• all work performed by teams comprised of employees with appropriate skills and abilities

• tends to be very fluid and flexible– no rigid departmentalization or organization

hierarchy– managers serve as facilitators and mentors 促

进者、导师

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Contemporary Organizational Designs (cont.)

– Autonomous Internal Units – independent, decentralized business units

• each has its own products, clients, competitors, and profit goals

• business units are autonomous

–there is no centralized control or resource allocation

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Contemporary Organizational Designs (cont.)– Boundaryless Organization - design is not defined by,

or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure• strategic alliances break down barriers between the

company and its customers and suppliers • seeks to eliminate the chain of command, to have

limitless spans of control, and to replace departments with empowered teams

• flattens the hierarchy by removing vertical boundaries

• horizontal boundaries removed by organizing work around processes instead of functional departments

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8,Explain the concept of a learning organization and how it influences organizational design

Contemporary Organizational Designs (cont.)– Learning Organization - an organizational mind-set 理

念 rather than a specific organizational design• has developed the capacity to continuously adapt• all members take an active role in identifying and

resolving work-related issues• practice knowledge management by continually

acquiring and sharing new knowledge• environment is conducive to 有益于 open

communication• empowered teams are important• leadership creates a shared vision for the future• organizational culture provides sense of community10-10-3434

Characteristics Of A Learning Organization

Organizational Design• Boundaryless• Teams• Empowerment

Organizational Culture• Strong Mutual Relationships• Sense of Community• Caring• Trust

Information Sharing• Open• Timely• Accurate

Leadership• Shared Vision• Collaboration

TheLearning

Organization

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chapter 07 organizational structure and design 07-1

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