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Chapter 13

OB Chapter 13 - Organizational Structure.docx

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Business Administration
BUS 272
Christopher Zatzick

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 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  Fast, flexible, inexpensive to maintain, accountability is clear o Weaknesses  Difficult to maintain in anything larger than small organizations  Risky as everything depends on one person Bureaucracy - An organizational design with highly routine operating tasks achieved through: a. Specialization b. Formalized rules and regulations, c. Tasks that are grouped into functional departments d. Centralized authority e. Narrow spans of co
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