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Chapter 13

BUS 272 Chapter Notes - Chapter 13: Departmentalization, Job Satisfaction, Decision-Making


Department
Business Administration
Course Code
BUS 272
Professor
Christopher Zatzick
Chapter
13

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Chp 13: Organizational Structure
What Is Organizational Structure?
Organizational Structure - How job tasks are formally divided, grouped, and coordinated
Pyramidal Structure vs. Flat Structure
Restructuring - Changing structures from time to time, often involving layoffs
Six Key Elements of Designing Organizational Structure:
1. Work Specialization - The degree to which tasks in the organization are subdivided into separate
jobs
o Individuals specialize in doing part of an activity rather than entire activity
o Specialization can be efficient as skills improve through repetition
o Less costly to find and train workers for specific tasks
o Specialization can lead to boredom, low productivity, poor quality, higher turnover, etc.
o Induces higher productivity at the price of lower job satisfaction
2. Departmentalization - The basis on which jobs are grouped together
o Functional Departmentalization: Efficiencies from putting people with common skills and
orientations together in common units
o Product Departmentalization: Increased accountability for product performance
o Geographic Departmentalization: Valuable if organization's customers are scattered
everywhere and have similar needs based on location
o Process Departmentalization: Specialization in one specific phase of production, offering
homogeneous categorizing of activities
o Customer Departmentalization: Specialization on the basis that customers of each
department have a common set of problems and needs
Two trends of departmentalization:
1. Greater emphasis on customer departmentalization
2. Rigid, functional departmentalization increasingly complemented by teams that cross over
traditional departmental lines
Chain of Command - The continuous line of authority that extends from upper organizational levels
to the lowest level and clarifies who reports to whom
o Delegation - Assignment of authority to another person to carry out specific duties, allowing
the employee to make some of the decisions
Managers ensure right people are taking part in decision making, while employees are
being empowered
o Self-managed and cross-functional teams have decreased relevance of chain of command
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Span of Control - The number of employees that report to a manager
o The wider or larger the span, the more efficient an organization (in terms of cost)
When it becomes too large, managers cannot allocate time to provide necessary
leadership and support
Investments in employee training to reduce negative effects on performance
o Narrow spans have three major drawbacks:
Expensive with extra levels
Vertical communication more complex
Encourage tight supervision and discourage autonomy
o No evidence to support correlation between span of control and employee performance
Centralization and Decentralization
o Centralization - The degree to which decision making is concentrated at a single point in the
organization
o Decentralization - The degree to which decision making is distributed to lower-level
employees
Action is taken more quickly, more people provide input, employees feel less
alienation
Lower-level managers have more detailed knowledge about problems
Less centralization allows for participative decision making, that causes job
satisfaction
Formalization - The degree to which jobs within the organization are standardized
o High formalization means explicit job descriptions, organizational rules, defined procedures,
resulting in consistent output
o Standardization removes need for employees to consider alternatives
Mechanistic Model - A structure characterized by high specialization, rigid departmentalization, a
clear chain of command, narrow spans of control, a limited information network, and centralization
Organic Model - A structure that is flat, uses cross-functional and cross-hierarchical teams,
possesses a comprehensive information network, has wide spans of control, and has low
formalization
Traditional Organizational Designs
Simple Structure - An organizational design characterized by:
a. a low degree of departmentalization
b. wide spans of control
c. authority centralized in a single person
d. little formalization
o Widely practised in small businesses
o Strengths
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