Organization

An Organizational Perspective on Work

Organization

A consciously coordinated social unit, composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals.

Groups of people who work interdependently toward some purpose.

A managed system designed and operated to achieve a specific set of objectives.

Organizational Structure

Defines how job tasks are formally divided, grouped and coordinated.

The division of labor as well as the patterns of coordination, communication, work flow, and formal power that direct organizational activities.

Reflects its culture and power relationships (McShane & Glinow, 2000).

Fundamental requirements of

organizational structures The division of labor into distinct

tasks. The coordination of that labor so

employees are able to accomplish common goals.

Fundamental Concepts

Differentiation Integration

Differentiation

Internal environment created by job specialization and the division of labor.– the work of the organization is subdivided into

smaller tasks. – different people or groups often perform

specific parts of the entire task.

Integration

Differentiated units are put back together so that work is coordinated into an overall product.

Coordination would link the various parts of the organization to achieve the organization’s overall mission.

Elements of Organizational Structure

Vertical Structure

authority in organizations

hierarchical levels

span of control

delegation

decentralization

Elements of Organizational Structure

Horizontal structure (departmentalization)

functional

divisional

matrix organizations

The vertical structure

Authority in organizationsThe legitimate right to make decisions and to tell other people

what to do. Authority resides in positions rather than in people Top to bottom

The vertical structure

Span of control Number of people reporting directly to the

next level in the hierarchy Narrow spans build a tall organization Wide spans create a flat organization

The vertical structure

Delegation Assignment of authority and responsibility to a

subordinate at a lower level. Responsibility means the assignment of a task that

an employee is supposed to carry out Accountability means the expectation that

employees perform a job, take corrective action when necessary, and report upward on the status and quality of their performance.

The vertical structure

Decentralization The delegation of responsibility and

authority In a centralized organization,

important decisions usually are made at the top.

In decentralized organizations, more decisions are made at lower levels.

The horizontal structure

As the tasks of organizations become increasingly complex, the organization inevitably must be subdivided or departmentalized.

Departmentalization specifies how employees and their activities are grouped together, such as by function, product, geographic location, or some combination.

The horizontal structure

Functional structure Jobs and departments are specialized

and grouped according to business functions and the skills they require : production, marketing, human resources, research and development, finance, accounting and so forth.

Organizations with functional structures are typically centralized to coordinate their activities effectively.

The Functional Structure

General manager

FinanceSales and Marketing Production

InternalAccounts

Collections

The horizontal structure

Divisional structure Type of departmentalization that groups

employees around outputs, clients or geographic areas.

Divisional structures are sometimes called strategic business units because they are normally more autonomous than functional structures and may operate as subsidiaries rather than as departments of the enterprise.

The Divisional Structure

IPS Industries

Food andBeverages

Detergents Cosmetics

Household Industrial

The horizontal structure

Matrix Structure Matrix structures usually optimize the use

of resources and expertise, making them ideal for project-based organizations with fluctuating workloads.

Matrix structures focus technical specialists on the goals of serving clients and creating marketable products.

The Matrix Structure

President

Finance Marketing Production

Central

Southern

Northern

Max Weber Bureaucracy

1. A formal hierarchical structure Formal hierarchy as the basis of central planning and centralized decision making.

2. Management by rules Ensuring decisions made at high levels are executed consistently at lower levels.

3. Organization by functional specialtyDifferentiation of work

4. An "up-focused" or "in-focused" mission Up-focused mission serves stockholders, the board, or empowering agency. In-focused mission set to meet organizational goals

5. Purposely impersonalEqual treatment of employees and clients

6. Employment based on technical qualifications Work done by suitably competent personnelProtection from arbitrary dismissal