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Chapter 14

Management and Organizational Studies 2181A/B Chapter 14: MOS 2181 CHAPTER 14


Department
Management and Organizational Studies
Course Code
MOS 2181A/B
Professor
Sarah Ross
Chapter
14

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CHAPTER 14: ORGANIZATIONAL STRUCTURE
CHEESECAKE FACTORY
-wants each location to give same experience
-mystery guests rate restaurant periodically
-turnover rate less that 15% bc of its good structure
ORGANIZATIONAL STRUCTURE
Formally dictates how jobs and tasks are divided and coordinated between individuals and
groups within the company
Organizational chart: a drawing that represents every job in the organization and the formal
reporting relationships between those jobs
ELEMENTS OF ORGANIZATIONAL STRUCTURE
organizational
structure dimension
definition
Work specialization
degree to which tasks in an org are divided into separate jobs
Chain of command
who reports to who and signifies formal authority relationships
Span of control
how many employees each manager in the org has responsibility
for
Centralization
where decisions are formally made in orgs
Formalization
degree to which rules and procedures are used to standardize
behaviours and decisions in an org
Work specialization:
-division of labour
-trade off for productivity, flexibility and worker motivation (undermine employees flexibility,
doesn’t allow them to practice other skills)
-high level of specialization is ok in large firms but in small firms employees have to be more
versatile
-no job satisfaction when jobs are highly specialized (no variety)
chain of command:
-common to have positions that report to 2 or more managers now
ex. Intel placed 2 people in charge of the two largest positions
span of control:
-leading 2 employees= narrow span (directive leadership, close relationships, good if manager
has more skill or expertise)
-leading 10 employees= wide span
-early management thought narrower the span, the more productive employees are (however,
very costly bc org would need a lot of managers and they will be watched like hawks)
-current research: moderate span of control is best for productivity

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-up to a pt managers don’t have the ability to coordinate and supervise employees
-spans of control have increased significantly in recent yrs (cocacola VPS have 90 ppl reporting
to them)
-span of control affects how tall or flat org chart becomes (many levels= taller)
-taller= more management salaries, communication becomes more complex, decision making
becomes slower
-1990s-2000s orgs wanted to be flatter to reduce costs (ex. Intel flattening to improve cost and
communication by 1000 employees)
centralization:
-highly centralized= only top managers have authority to make final decisions
^tend to concentrate power in tight group
-decentralized= lower level have authority
^necessary as a company becomes larger
-orgs are moving toward decentralized
formalization:
-high when there are a lot of rules and procedures
-cant see it in org chart but has big impact
-formalization= coordination mechanism that creates standardized products/services
elements in combination:
-wide span of control is associated with decentralization in decision making
-high level of specialization brings high level of formalization
-many elements show struggle between efficiency and flexibility
-mechanistic organizations: efficient, rigid, predictable, and standardized organizations that
thrive in stable environments

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-organic organizations: flexible, adaptive, outward-focused organizations that thrive in dynamic
environments
Mechanistic
organic
high levels of formalization
Low levels of formalization
hierarchical chain of command
weak or multiple chains of command
high specialization
low specialization
centralization of decision making
decentralized
narrow spans of control
wide spans of control
-organic structures allow transformational leadership to have positive effect on employees
-structure has effects on types of employee practices: selection, training, recruitment,
compensation, performance systems
-being mechanistic is the only way for orgs to survive
ORGANIZATIONAL DESIGN
The process of creating, selecting, or changing the structure of an org.
Business environment: the outside environment, including customers, competitors, suppliers,
distributors, and other factors external to the firm, which all affect org. design
-Stable or dynamic environment? (stable environments don’t change, dynamic requires
employees to be adaptive)
ex. Sony was unable to adjust to changing biz environment bc of org structure. Apple
dominated with ipods
Company strategy: an orgs objectives and goals and how it tries to capitalize on its assets to
make money
-low cost producer: selling products at lowest possible cost (efficiency=key, take mechanistic
approach
-differentiation: ppl will pay more for a product that’s unique (quality, adjusts to changing
environments, organic approach)
Technology: the method by which an org transforms its inputs to outputs
-early studies though tech created structure
-mechanistic: more routine technology (if company makes the same thing, they should focus on
efficiency by high specialization, formalization, and centralization)
-organic: technology changes to fit needs (decentralized, and rules and procedures need to be
more flexible)
Company size: the number of employees in a company
-relationship between size structure and number of employees is impt
-companies become more mechanistic when they expand
-when orgs get bigger they create smaller units to get the feeling of smallness
COMMON ORGANIZATIONAL FORMS
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