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Management - ASSTMT - Chapter (9) - Organizational Structure

Brief OD & OT Explanation

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26 views

Management - ASSTMT - Chapter (9) - Organizational Structure

Brief OD & OT Explanation

Uploaded by

ahmedgelix
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Chapter (9): Organizational Structure & Design

Organizing involves arranging and structuring work to accomplish an organization’s goals.

Organizational Structure refers to the formal arrangement of jobs within an organization.

Organizational Design is the process involving decisions about six key elements:
1) Work specialization.
2) Departmentalization.
3) Chain of command.
4) Span of control.
5) Centralization and decentralization.
6) Formalization.

Purposes of Organizing

•Divides work to be done into specific jobs and departments.


•Assigns tasks and responsibilities associated with individual jobs.
•Coordinates diverse organizational tasks.
•Clusters jobs into units.
•Establishes relationships among individuals, groups, and departments.
•Establishes formal lines of authority.
•Allocates and deploys organizational resources.
• Work Specialization refers to the degree to which tasks in the organization are divided into separate jobs with each step completed by a different
person.
N.B.: Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.

Departmentalization by Type
1) Functional, which involves grouping jobs by functions performed.
2) Geographical, which involves grouping jobs on the basis of territory or geography.
3) Product, which involves grouping jobs by product line.
4) Process, which involves grouping jobs on the basis of product or customer flow.
5) Customer, which involves grouping jobs by type of customer and needs.

• Chain of Command refers to the continuous line of authority that extends from upper levels of an organization to the lowest levels of the
organization and clarifies who reports to whom.
• Authority refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it.
• Responsibility refers to the obligation or expectation to perform.
• Unity of Command refers to that a person should have one boss and should report only to him.
Matrix Structures:
 Specialists from different functional departments are assigned to work on projects led by project managers but who
return to their areas when project is completed.
Composed of two managers: functional area manager and their project or product manager

To work effectively, both managers have to communicate regularly, coordinate work demands on employees, and
resolve conflicts together.
• Span of Control refers to the number of employees who can be effectively and efficiently supervised by a
manager. The width of the span is affected by:
o Skills and abilities of the manager.

o Employee characteristics.

o Characteristics of the work being done.

o Similarity and complexity of tasks.

o Physical proximity of subordinates.

o Standardization of tasks.

o Sophistication of the organization’s information system.

o Strength of the organization’s culture.

o Preferred style of the manager .


 Centralization refers to the degree to which decision making is concentrated at upper levels in the
organization, where top managers make all the decisions and lower-level employees simply carry out those orders.
 Decentralization involves organizations in which decision making is pushed down to the managers who are
closest to the action (First-Line / Functional / Operational Managers).
 Employee Empowerment refers to increasing the decision-making authority (power) of employees.

More Centralization More Decentralization


• Environment is stable. • Environment is complex, uncertain.
•Lower-level managers are not capable or experienced at • Lower-level managers are capable and experienced at
making decisions. making decisions.
• Lower-level managers do not want to have a say in • Lower-level managers want a voice in decisions.
decisions. • Decisions are significant.
• Decisions are relatively minor. • Corporate culture is open to allowing managers to have a
• Organization is facing a crisis or the risk of company say in what happens.
failure. • Company is geographically dispersed.
• Company is large. • Effective implementation of company strategies depends
• Effective implementation of company strategies depends on managers having involvement and flexibility to make
on managers retaining say over what happens. decisions.
• Formalization refers to the degree to which jobs within the organization are standardized and the extent to
which employee behavior is guided by rules and procedures.
N.B.: Highly formalized jobs offer little discretion over what is to be done, whereas low formalization means fewer
constraints on how employees do their work.

• High specialization • Cross-functional teams


• Rigid departmentalization • Cross-hierarchical teams
• Clear chain of command • Free flow of information
• Narrow spans of control • Wide spans of control
• Centralization • Decentralization
• High formalization • Low formalization
Contingency Factors
 Strategyand Structure, where organizational structure follows strategy, where the achievement of strategic goals is facilitated
by changes in organizational structure that accommodate and support change.
 Size and Structure, where as an organization grows larger, its structure tends to change from organic to mechanistic with
increased specialization, departmentalization, centralization, and rules and regulations.

 Innovation, where pursuing competitive advantage through meaningful and unique innovations favors an organic structure.

 Cost minimization, where focusing on tightly controlling costs requires a mechanistic structure for the organization.

Technology and Structure, where organizations adapt their structures to their technology, where (Woodward’s classification):
 Unit production of single units or small batches= Organic
 Mass production of large batches of output=mechanistic
 Process production in continuous process of outputs= organic
• Routine technology = mechanistic organizations
• Non-routine technology = organic organizations

•Environmental Uncertainty and Structure, where mechanistic structures tend to be most effective in stable and simple
environments, whereas the organic structures are suited for dynamic and complex environments.
Contemporary Organizational Designs
• Boundaryless Organization, which is a flexible and unstructured organizational design that is intended to break down external
barriers between the organization and its customers and suppliers. It is a structure that is not defined by or limited to artificial
horizontal, vertical, or external boundaries; includes virtual and network types of organizations.

 It has the following advantages: highly flexible and responsive and depends on talent wherever it’s found.
 It has the following disadvantages: L=lack of control and communication difficulties.

 It removes the internal (horizontal) boundaries, so it:


a) Eliminates the chain of command.
b) Has limitless spans of control.
c) Uses empowered teams rather than departments.

 It also removes the external boundaries through the use of virtual, network, and modular organizational structures to get
closer to stakeholders.

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