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Part 3.B - Organizational Structures

The document discusses the structural building blocks that managers use to design organizations, including division of labor, departmentalization, centralization, and delegation. It covers traditional and contemporary structures like line and staff structures as well as teams. Factors that influence structure design are also examined, such as the advantages and disadvantages of centralization vs decentralization and narrow vs wide spans of control. Emerging trends in organizational design are also highlighted.

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9 views

Part 3.B - Organizational Structures

The document discusses the structural building blocks that managers use to design organizations, including division of labor, departmentalization, centralization, and delegation. It covers traditional and contemporary structures like line and staff structures as well as teams. Factors that influence structure design are also examined, such as the advantages and disadvantages of centralization vs decentralization and narrow vs wide spans of control. Emerging trends in organizational design are also highlighted.

Uploaded by

zhengcunzhang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Part 3.

B: Creating a Flexible Organization


Learning Outcomes

• Identify the structural building blocks that managers


use to design organizations.
• Discuss the traditional and contemporary
organizational structures companies are using.
• Understand how centralization and decentralization
affect efficiency, control, responsiveness, and
empowerment.
• Examine some of the trends that are influencing the
way businesses organize.
Questions

Why is structure important?

• Ability to respond:
• To external opportunities and threats
• To changing customer needs
• Formalizes leadership
• Improves efficiency
• Codifies control and decision making
• Empowers employees and influences culture
Building Organizational Structures

Division of Labor: determining


work activities and dividing up
tasks.
Departmentalization: grouping
jobs and employees.
Centralization: the degree to
which authority in centralized
Delegation: assigning authority
and responsibilities.
Corporate Culture and Empowerment

Corporate Culture: the inner customs, traditions, and values of an


organization.

Employee Empowerment: the process of giving employees


increased autonomy and discretion to
make decisions and control over the
resources needed to implement those
decisions.
Reasons for Empowerment

oIt leads to better decisions made by those closest to the


customer
oFewer, busier managers
oPredominance of knowledge workers
oLeads to more valuable and experienced employees
oBut… workers need to be enabled to be empowered!
oWhat does this mean?
Job Design

• Job Design: Structuring the tasks and activities required


to accomplish a business’s objectives into specific jobs so
as to foster productivity and employee satisfaction.
• Job Specialization: Separation of all organizational
activities into distinct tasks and assignment of tasks to
different people.
• Job Rotation: Systematic shifting of employees from one
job to another
Five Types of Departmentalization
Degree of Centralization

Centralization: the degree


to which formal authority is
concentrated in one area or
level of the organization.

Decentralization: the
process of pushing
decision-making authority
down the organizational
hierarchy.
Advantages and Disadvantages of Centralization

Advantages Disadvantages

• Increased uniformity • Less responsive to


• Less duplication customer
• More efficiency • Less empowerment
• Maximum control • Lots of policies and
• Stronger corporate procedures
image • Many layers/slower
Advantages and Disadvantages of Decentralization

Advantages Disadvantages
• Faster decision
making • Loss of control
• Ability to adapt to • Complex
customers distribution
• Worker responsibility • Possible
(empowerment) duplication
• Innovative • Less efficient
Span of Control

• Chain of Command - The line of authority


• Extends from one level to the next
• Top to bottom
• Makes clear who reports to whom
• Span of Control - The number of employees a manager
directly supervises
• Narrow Span (More levels) vs. Wide Span (Fewer levels)
• Determined by:
• Nature of tasks
• Location of workers
• Amount of interaction and feedback required
• Level of skill and motivation
Advantages Narrow and Wide Span of Control

Narrow Span of Wide Span of


Control Control

• Fewer levels of management


• High degree of control
means increased efficiency and
• Fewer subordinates may
reduced costs
mean manager is more
• Increased subordinate autonomy
familiar with each
leads to quicker decision making
individual
• Greater organizational flexibility
• Close supervision can
• Higher levels of job satisfaction
provide immediate
because of employee
feedback
empowerment
Disadvantages Narrow and Wide Span of Control

Narrow Span of Wide Span of


Control Control
• Discouragement if employee
autonomy
• Less control
• More levels of management, • Possible lack of familiarity
therefore more expensive because of large number of
• Slower decision making subordinates
because of vertical layers • Managers spread so thinly that
• Isolation of top management they can provide necessary
leadership or support
• Lack of coordination or
synchronization
Form of Organizational Structure

• Organization chart: A visual representation of the structured


relationships among tasks, responsibilities, and the people
given the authority to do those tasks
• Helps interpret organizational height, type of departmentalization, chain
of command and span of management
• Provides strong hints about the company’s objectives and its degree of
centralization
Line and Staff Structures

Line Structure: An organizational structure in


which the chain of command goes directly
form person to person throughout the
organization.

Staff Position: individuals who provide


administrative and support services that the
line employees need to achieve the firm’s
goals.
Teams

Teams: using a team-based structure can increase individual and


group motivation and performance.

Cross-Functional Team: A team of individuals with varying


specialties, expertise, and skills that are brought together to achieve
a common task. Agile and collaborative but can be confusing.
The Informal Organization

The network of connections and channels of communication based on


the informal relationships of individuals inside the organization.

• Source of friendships and social contact


• Helps employees feel informed and connected
• Provides informal status and recognition
• Aids the socialization of new employees
• The “grapevine” or “rumor mill”

Many upper level managers are unaware of its existence or importance


Future of Designing Organizational Structures

• Re-engineering organizational structure.


• The virtual corporation.
• Virtual teams.
• Outsourcing.
• Structuring for global mergers.
• Managing in diverse cultural environments.

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