organizational behaviour chapter 12 - organizational structure
TRANSCRIPT
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Organizational Structure
Toqeer Ahmed
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Organizational Structure
Organizational Structuredefines how job tasks are
formally divided, grouped and coordinated
The organization structure determines reporting relationships and
helps to clarify individuals responsibilities
When designing an organization structure, managers
consider 6 elements Work specialization
Departmentalization
Chain of command
Span of control Centralization/decentralization
formalization
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Work Specialization
Work can be performed more efficiently if employees are allowed to
specialize
Henry Ford was the first to really explore specialization, allowing him
to turn out many new cars a day from it
Specialization is the degree to which tasks are subdivided into separate
jobs (the task of assembling an engine)
Allows employees to improve through repetition
Pay scales often reflect the degree of skills required for a job.
Employees acquire new skills to earn more
Specialization also encourages the development of specialized tools to
further drive efficiency
Specialization can lead to boredom, fatigue, stress, and lower
productivity and quality
Building teams of interchangeable skills can help to reduce boredom
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Departmentalization
Departmentalizationis a basis on which jobs re grouped to
coordinate common or linked tasks
5 Key Types of Departmentalization
Functionalorienting groups by similar task (engineering dept)
Productoperating a group oriented around a complete product(Business Units are similar when the group owns the P&L)
GeographicCommon in Sales organizations, organizing byterritory
ProcessOrienting around a portion of a process (most common ina manufacturing firm, such as finishing dept, procurement dept)
CustomerOrienting around types of customers (Corel organizes
around retail, small business, corporate, government, legal)
You can have more than one type of departmentalization ina business Sales by territory, Marketing by product, Manufacturing by process
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Chain of Command
Chain of commandthe unbroken line of authority from
the top to the bottom of the organization
Defines who has the right to give out orders and expect
them to be obeyed
Currently, this element of structuring organizations is used
less
Teams have been empowered to carry out specific tasks
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Span of Control
Span of Controlrefers to the number of levels and
managers an organization has
All things equal, generally, the wider or larger the span, the
more efficient. Wider spans also encourage more
employee empowerment
However, managers cannot manage an infinite number of
employees effectively (general rule is 6 to 18 employees)
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Centralization/decentralization
Centralizationthe degree to which decision making is
concentrated at a single point in the organization
The more decisions made by top brass without consulting
employees, the more centralized
Decentralization is a growing trend to leverage front line
employees proximity to the action.
Increases empowerment and job satisfaction
Improves quality of decision making
Allows senior management to concentrate on more strategic
matters
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Formalization
Formalizationthe degree to which jobs within the
organization are standardized
Formalization provides structure and can build quality but
takes away control and decision making
Formalization is used most often in the food, airline,
automotive industries
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Common Organization Structures
Now that we know the elements that are considered when
designing an organization, what are the 3 most common
structures used
3 Most commonly used structures are
The Simple Structure (for small businesses)
The Bureaucracy (for large or government organizations)
The Matrix (for agile companies)
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The Simple Structure
Most commonly used in small structures, it is almost the
default structure when no specific thought is put into it
Characterized by
low degree of departmentalization,
wide spans of control,
authority centralized to one person (the owner),
with little formalization
The outcome is a flat structure, fast, simple, clear, flexible
This structure gives a small company that small company
feel. But it is very difficult to maintain once the company grows and
owners cannot directly impact every decision
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The Bureaucracy
Characterized by
Standardization of tasks and processes (filling out forms, you
guessed it, paper forms!!!, aaahhh)
Highly routine tasks, specialization with formalized rules
Centralized authority and clear vertical communication lines
This structure strives for efficiency, economies, minimumduplication of tasks
It does well when individual employees leave the
organization as it is easy to train new staff on established
processes
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A very popular organization structure in the high-tech
world Combines the benefits of functional and product
departmentalization forms
Functional specialists are grouped together to forma pool
of resources (developers, testers, documentationspecialists)
Product departments (or Business Units), responsible forthe complete product, draft individuals from their poolsonto product teams
Employees end up with 2 bosses
Ads: Promotes product ownership and specialization
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Structural Designs of the 21st Century
The Team
Usually cross-functional teams with a specific set of goals, helps tobreak down barriers and decentralizes decision making to the teamlevel
The Modular Organization
A small core organization which outsources major business
functions, relying on a network at the organizational level Teams are assembled for a finite period, then disband
Ex: an ad agency which outsources its printing, accounting,purchasing to concentrate on creative design
The Virtual Organization
Similar to a modular organization, except that in this case, businesspartners also seek to share skills, costs and tap into each othersmarkets
Akin to developing alliances to provide full service solutions
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Why do Organization Structures differ?
Strategystructures are a means through which
organizations try to achieve their goals
It is also a means through which they respond to environmental
change
Organization SizeAs organizations grow, different
stresses are placed on the organization, as a result it mightrespond with a reorganization of resources
EnvironmentThe organizational environment is made up
of institutions or forces outside the organization that affect
its ability to perform
Chapter 13
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