Organizing is arranging and structuring work to accomplish the organization’s goals.
Organizational structure is the formal arrangement of jobs within an organization.
ORGANIZATION DESIGN is developing or changing an organization’s structure. This process
involves decisions about six key elements: work specialization, departmentalization, chain of
command, span of control, centralization/decentralization, and formalization.
A. Work Specialization
Work specialization is dividing work activities into separate job tasks.
Most of today’s managers regard work specialization as an important organizing mechanism but not as a source of ever increasing productivity.
Human diseconomies from division of labor boredom, fatigue, stress, low productivity, poor
quality, increased absenteeism, and high turnover eventually exceed the economic advantages created by work specialization.
B. Departmentalization
When work tasks have been defined, they must be arranged in order to accomplish organizational goals. This process, known as departmentalization, is the basis by which jobs are grouped.
There are five major ways to departmentalize
1.Functional departmentalization groups jobs by functions performed.
2.Product departmentalization groups jobs by product line.
3.Geographical departmentalization groups jobs on the basis of geographical region.
4.Process departmentalization groups jobs on the basis of product or customer flow.
5.Customer departmentalization groups jobs on the basis of specific and unique customers who have common needs
C.Chain of Command
The chain of command is the line of authority extending from upper organizational levels to the lowest levels, which clarifies who reports to whom.Three concepts related to chain of command are authority,responsibility, and unity of command
1.Authority is the right inherent in a managerial position to tell people what to do and to expect them to do it.
a.The acceptance theory of authority says that authority comes from the willingness of subordinates to accept it.Subordinates will accept orders only if the following conditions are satisfied:
They understand the order.
They feel the order is consistent with the organization’s purpose.
The order does not conflict with their personal beliefs.
They are able to perform the task as directed.
b.Line authority entitles a manager to direct the work of an employee. It is the employer employee authority relationship that extends from the top of the organization to the lowest echelon
c.Staff authority functions to support, assist, advise, and generally reduce some of their informational burdens.
2.Responsibility is the obligation to perform any assigned duties
3.Unity of command is the management principle that each person should report to only one manager.
D. Span of Control
Span of control is the number of employees a manager can efficiently and effectively manage.
1.The span of control concept is important because it determines how many levels and managers an organization will have.
What determines the “ideal” span of control?
Contingency factors such as the skills and abilities of the manager and the employees,the characteristics of the work being done, similarity and complexity of employee tasks,the physical proximity of subordinates, the degree to which standardized procedures are in place, the sophistication of the organization’s information system, the strength of the organization’s culture, and the preferred style of the manager influence the ideal number of subordinates.
E. Centralization and Decentralization
The concepts of centralization and decentralization address who, where, and how decisions are made in organizations.
- Centralization is the degree to which decision making is concentrated at upper levels of the organization.
- Decentralization is the degree to which lower level employees provide input or actually make decisions.
- The current trend is toward decentralizing decision making in order to make organizations more flexible and responsive.
- Employee empowerment is giving employees more authority (power) to make decisions.
F. Formalization refers to the degree to which jobs within an organization are standardized and the extent to which employee behavior is guided by rules and procedures.
- In a highly formalized organization, employees have little discretion, and a high level of consistent and uniform output exists. Formalized organizations have explicit job descriptions, many organizational rules, and clearly defined procedures.
- In a less formalized organization, employees have much freedom and can exercise discretion in the way they do their work.
- Formalization not only fosters relatively unstructured job behaviors, but also eliminates the need for employees to consider alternatives.
- The degree of formalization can vary widely between organizations and even within organizations.
MECHANISTIC AND ORGANIC STRUCTURES
Organizations do not have identical structures. Even companies of comparable size do not necessarily have similar structures.
Mechanistic organization is an organizational design that is rigid and tightly controlled. It is characterized by high specialization, rigid departmentalization, narrow spans of control, high formalization, a limited information network, and little participation in decision making by lower-level employees.
An organic organization is an organizational design that is highly adaptive and flexible. It is characterized by little work specialization, minimal formalization, and little direct supervision of employees.
Under what circumstances is each design favored?
It “depends”on contingency variables.
Appropriate organizational structure depends upon four contingency variables:
A.Strategy and structure
The organization’s strategy is one of the contingency variables that influences organizational
design.Organizations change their strategies, they must change their structure to support that strategy.
Most current strategy structure frameworks focus on three strategy dimensions:
a)Innovation needs the flexibility and free flow of information present in the organic organization
b)Cost minimization needs the efficiency, stability, and tight controls of the mechanistic organization
B.Size and structure
Larger organizations tend to have more specialization, departmentalization, centralization, and formalization ,although the size-structure relationship is not linear.
C.Technology
D.Environmental uncertainty and structure
The more uncertain the environment, the more flexible and responsive the organization needs to be.
TRADITIONAL ORGANIZATIONAL DESIGNS
Simple structure is an organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization.
Functional structure is an organizational design that groups similar or related occupational specialties together.
Divisional structure is an organizational structure made up of separate, semiautonomous units or divisions.
ORGANIZING FOR FLEXIBILITY
Team Structure is an organizational structure in which the entire organization is made up of work teams. Matrix Structure is an organizational structure that assigns specialists from different functional departments to work on one or more projects.
Project Structure is an organizational structure in which employees continuously work on projects.
Boundaryless organization is an organization whose design is not defined by, or limited to , the horizontal, vertical, or external boundaries imposed by a predefined structure.