Organizational Behavior - Session7

Foundations of
Organizational
Structure

Lecturer: Do Tien Long
09 04 51 54 46
dotienlong_mc@yahoo.com.vn

Organisational Behavior, Do Tien Long

What Is Organizational Structure?
What Is Organizational Structure?
Organizational Structure
How job tasks are formally
divided, grouped, and Key Elements:
Key Elements:
coordinated. • • Work specialization
Work specialization
• • Departmentalization
Departmentalization
• • Chain of command
Chain of command
• • Span of control
Span of control
• • Centralization and
Centralization and
decentralization
decentralization
• • Formalization
Formalization


Key Design Questions and Answers for
Key Design Questions and Answers for
Designing the Proper Organization Structure
Designing the Proper Organization Structure
The Key Question The Answer Is Provided By
1. To what degree are articles Work specialization
subdivided into separate jobs?
2. On what basis will jobs be grouped Departmentalization
together?
3. To whom do individuals and groups Chain of command
report?
4. How many individuals can a manager Span of control
efficiently and effectively direct?
5. Where does decision-making Centralization
authority lie? and decentralization
6. To what degree will there be rules Formalization
and regulations to direct employees
and managers?
E X H I B I T 16–1
E X H I B I T 16–1


What Is Organizational Structure? (cont’d)
Work Specialization
The degree to which tasks in the organization are
subdivided into separate jobs.

Division of labor:
Division of labor:
• • Makes efficient use of employee skills
Makes efficient use of employee skills
• • Increases employee skills through repetition
Increases employee skills through repetition
• • Less between-job downtime increases productivity
Less between-job downtime increases productivity
• • Specialized training is more efficient
Specialized training is more efficient
• • Allows use of specialized equipment
Allows use of specialized equipment


Economies and Diseconomies of Work
Economies and Diseconomies of Work
Specialization
Specialization

E X H I B I T 16–2
E X H I B I T 16–2


Departmentalization
The basis by which jobs are grouped together.

Grouping Activities By:
Grouping Activities By:
•• Function
Function
•• Product
Product
•• Geography
Geography
•• Process
Process
•• Customer
Customer


Authority
The rights inherent in a managerial position to give
orders and to expect the orders to be obeyed.

Chain of Command
The unbroken line of authority that extends from the top
of the organization to the lowest echelon and clarifies
who reports to whom.

Unity of Command
A subordinate should have only one superior to whom he
or she is directly responsible.

Span of Control
The number of subordinates a manager can efficiently and
effectively direct.

Concept:
Concept:
Wider spans of management increase organizational
Wider spans of management increase organizational
efficiency.
efficiency.

Narrow Span Drawbacks:
Narrow Span Drawbacks:
• •Expense of additional layers of management.
Expense of additional layers of management.
• •Increased complexity of vertical communication.
Increased complexity of vertical communication.
• •Encouragement of overly tight supervision and
Encouragement of overly tight supervision and
discouragement of employee autonomy.
discouragement of employee autonomy.

Contrasting Spans of Control
Contrasting Spans of Control

E X H I B I T 16–3
E X H I B I T 16–3


Centralization
The degree to which decision making is concentrated at
a single point in the organization.

Decentralization
The degree to which decision making is spread
throughout the organization.

Formalization
The degree to which jobs within the
organization are standardized.


Common Organization Designs
Common Organization Designs
Simple Structure
A structure characterized by a low degree of
departmentalization, wide spans of control, authority
centralized in a single person, and little formalization.

E X H I B I T 16–5
E X H I B I T 16–5


Common Organization Designs (cont’d)
Bureaucracy
A structure of highly operating
routine tasks achieved through
specialization, very formalized rules
and regulations, tasks that are
grouped into functional
departments, centralized authority,
narrow spans of control, and
decision making that follows the
chain of command.


The Bureaucracy
The Bureaucracy
Strengths Weaknesses
– Functional economies – Subunit conflicts with
of scale organizational goals
– Minimum duplication of – Obsessive concern with
personnel and rules and regulations
equipment – Lack of employee
– Enhanced discretion to deal with
communication problems
– Centralized decision
making


Matrix Structure
A structure that creates dual lines of authority and
combines functional and product departmentalization.

Key Elements:
Key Elements:
+ Gains the advantages of functional and product
+ Gains the advantages of functional and product
departmentalization while avoiding their weaknesses.
departmentalization while avoiding their weaknesses.
+ Facilitates coordination of complex and interdependent
+ Facilitates coordination of complex and interdependent
activities.
activities.
– Breaks down unity-of-command concept.
– Breaks down unity-of-command concept.


Matrix Structure (College of Business
Matrix Structure (College of Business
Administration)
Administration)

(Director)

(Dean) Employee

E X H I B I T 16–6
E X H I B I T 16–6


New Design Options
New Design Options
Team Structure
The use of teams as the central device to coordinate
work activities.

Characteristics:
Characteristics:
• •Breaks down departmental barriers.
Breaks down departmental barriers.
• •Decentralizes decision making to the team level.
Decentralizes decision making to the team level.
• •Requires employees to be generalists as well as
Requires employees to be generalists as well as
specialists.
specialists.
• •Creates aa“flexible bureaucracy.”
Creates “flexible bureaucracy.”


New Design Options (cont’d)
Virtual Organization
A small, core organization that outsources its major
business functions.
Highly centralized with little or no departmentalization.

Concepts:
Concepts:
Advantage: Provides maximum flexibility while
Advantage: Provides maximum flexibility while
concentrating on what the organization does best.
concentrating on what the organization does best.
Disadvantage: Reduced control over key parts of the
Disadvantage: Reduced control over key parts of the
business.
business.


A Virtual Organization
A Virtual Organization

E X H I B I T 16–7
E X H I B I T 16–7


Boundaryless Organization
An organization that seeks to eliminate the chain of
command, have limitless spans of control, and replace
departments with empowered teams.

T-form Concepts:
T-form Concepts:
Eliminate vertical (hierarchical) and horizontal
Eliminate vertical (hierarchical) and horizontal
(departmental) internal boundaries.
(departmental) internal boundaries.
Breakdown external barriers to customers and
Breakdown external barriers to customers and
suppliers.
suppliers.


Chapter Check-Up: Structure
If someone has a high need for affiliation,
would a virtual organization be a good fit for
him or her? Why or why not?

Discuss with a classmate whether or not an organic organization would
be a good fit for this same person.


Why Do Structures Differ?
Mechanistic Model
A structure characterized by extensive
departmentalization, high formalization, a
limited information network, and
centralization.


Organic Model
A structure that is flat, uses cross-hierarchical and cross-
functional teams, has low formalization, possesses a
comprehensive information network, and relies on
participative decision making.


Mechanistic Versus Organic Models
Mechanistic Versus Organic Models

E X H I B I T 16–8
E X H I B I T 16–8


Why Do Structures Differ? – Strategy
Why Do Structures Differ? – Strategy
Innovation Strategy
A strategy that emphasizes the introduction of major
new products and services.

Cost-minimization Strategy
A strategy that emphasizes tight cost controls, avoidance
of unnecessary innovation or marketing expenses, and
price cutting.

Imitation Strategy
A strategy that seeks to move into new products or new
markets only after their viability has already been
proven.

The Strategy-Structure Relationship
The Strategy-Structure Relationship
Strategy Structural Option

Innovation Organic: A loose structure; low
specialization, low formalization,
decentralized

Cost minimization Mechanistic: Tight control; extensive work
specialization, high formalization, high
centralization

Imitation Mechanistic and organic: Mix of loose with
tight properties; tight controls over current
activities and looser controls for new
undertakings

E X H I B I T 16–9
E X H I B I T 16–9


Why Do Structures Differ? – Size
Why Do Structures Differ? – Size
Size
How the size of an organization affects its structure. As an
organization grows larger, it becomes more mechanistic.

Characteristics of large organizations:
Characteristics of large organizations:
• •More specialization
More specialization
• •More vertical levels
More vertical levels
• •More rules and regulations
More rules and regulations


Why Do Structures Differ? – Technology
Why Do Structures Differ? – Technology
Technology
How an organization transfers its
inputs into outputs.

Characteristics of routineness (standardized or
Characteristics of routineness (standardized or
customized) in activities:
customized) in activities:
• •Routine technologies are associated with tall,
Routine technologies are associated with tall,
departmentalized structures and formalization in
departmentalized structures and formalization in
organizations.
organizations.
• •Routine technologies lead to centralization when
Routine technologies lead to centralization when
formalization is low.
formalization is low.
• •Nonroutine technologies are associated with
Nonroutine technologies are associated with
delegated decision authority.
delegated decision authority.


Why Do Structures Differ? – Environment
Why Do Structures Differ? – Environment
Environment
Institutions or forces outside the organization that
potentially affect the organization’s performance.

Key Dimensions-
Key Dimensions-
• • Capacity: the degree to which an environment can support
Capacity: the degree to which an environment can support
growth.
growth.
• • Volatility: the degree of instability in the environment.
Volatility: the degree of instability in the environment.
• • Complexity: the degree of heterogeneity and concentration
Complexity: the degree of heterogeneity and concentration
among environmental elements.
among environmental elements.


The Three Dimensional Model of the
The Three Dimensional Model of the
Environment
Environment
Volatility

Capacity

Complexity

E X H I B I T 16–10
E X H I B I T 16–10


“Bureaucracy Is Dead”
“Bureaucracy Is Dead”
Characteristics of Why Bureaucracy Survives
Bureaucracies – Large size prevails
– Specialization – Environmental turbulence
– Formalization can be largely managed
– Departmentalization – Standardization achieved
– Centralization through hiring people who
– Narrow spans of control have undergone extensive
educational training
– Adherence to a chain of
command – Technology maintains
control


Organizational Designs and Employee
Organizational Designs and Employee
Behavior
Behavior

Research Findings:
Research Findings:
• • Work specialization contributes to higher employee
Work specialization contributes to higher employee
productivity, but it reduces job satisfaction.
productivity, but it reduces job satisfaction.
• • The benefits of specialization have decreased rapidly as
The benefits of specialization have decreased rapidly as
employees seek more intrinsically rewarding jobs.
employees seek more intrinsically rewarding jobs.
• • The effect of span of control on employee performance is
The effect of span of control on employee performance is
contingent upon individual differences and abilities, task
contingent upon individual differences and abilities, task
structures, and other organizational factors.
structures, and other organizational factors.
• • Participative decision making in decentralized organizations is
Participative decision making in decentralized organizations is
positively related to job satisfaction.
positively related to job satisfaction.


Organization Structure: Its
Organization Structure: Its
Determinants and Outcomes
Determinants and Outcomes
Associated
with

Implicit Models of Organizational
Structure
Perceptions that people hold regarding
structural variables formed by
observing things around them in an
unscientific fashion.
E X H I B I T 16–11
E X H I B I T 16–11


Job Design
Job Design

Specification of (1) a job’s content, (2) the work
method to be used in its performance, (3) how it
relates to other jobs in the company
Allows employees to control various aspects of their work
Making more effective use of employee potentials to
enhance quality of work life and improve company
performance


Job Specialization
Job Specialization
Job specialisation – the
result of the division of
labour
Division of labour – the
successive division of an
activity into smaller and
smaller elements


Division of Labor and Specialization
Division of Labor and Specialization

Division of Labor

Assemble
Assemble only
Test only
Test

Package
Package
only

Complete activity Separate tasks
Assigned to Individual
Specialists


Advantages and Disadvantages of Job
Advantages and Disadvantages of Job
Specialization
Specialization
Advantages Disadvantages
Less skilled employees can be Diminished motivation
hired, simple assignments Poor-quality output
Reducing training cost Diminished job satisfaction
Repetition lead to expertise High turnover
and increase productivity High absenteeism
Work is perform more quickly Sabotage and strikes
Minimize dependence on
particular employees or
special skills


Job Enlargement and Job Enrichment

Job Enlargement – extension of job’s scope, so that
number of different actives an employee performs is
increased, also known as Horizontal loading
– Job scope – number of tasks an employee performs
in a particular job
Job Enrichment – extension of job’s dept so that
employee discretion or control over a job is
increased, also known as Vertical loading
– Job dept – degree to which individuals can plan and
control work involved in their jobs



Job Enlargement

1 activities
2 activities Job 1
from the
from the preceding 5 Activities following

Horizontal Loading

Job Enrichment
Added Responsibilities

Vertical Loading
Job 2
Basic Activities


Core Dimensions for Enrichment
Core Dimensions for Enrichment

1. Skill variety – extent to which the job entails a
number of activities requiring different skills
2. Task identity – degree to which the job allows
completion of a major identifiable piece of work,
rather than just a fragment
3. Task significant – extent to which a worker sees job
output as having an important impact on other
4. Autonomy – amount of discretion allowed in
determined schedules and work method to achieve
required output
5. Feedback – degree to which job provides for clear,
timely information about performance results


Implementing Job Enrichment
Combine tasks – increase skill variety and take identity
by combining several jobs into a larger job
Assign whole pieces of work – increase task identity
and task significance by giving a “whole” piece of
work so that they can accomplish a meaningful task
Establish client relationships – increase skill variety,
autonomy, and performance feedback bay allowing
employees to deal directly with consumers, suppliers,
peers performing related jobs
Grant additional authority – allowing employees more
authority for quality control and self-determination of
work procedures
Open feedback channels – providing open feedback
channels so that employees can monitor and self-
correct their work behavior



Implementing Method Core Job Dimensions

1.Combine Tasks 1.Skill Variety

2.Assign Whole Piece 2.Task Identity
of Work
3.Task Significant
3.Establish Client
Relationship 4.Autonomy

4.Grant Additional 5.Performance Feedback
Authority

5.Open Feedback
Channels

Attention to Job Design
Attention to Job Design
Managers determine the quantity and quality of
different core dimensions
Well-devised program can bring four beneficial
effects:
1. High work motivation
2. High quality performance
3. High job satisfaction
4. Low absenteeism and turnover
Not all employees desire enriched jobs


Job Analysis
Job Analysis

Job Analysis – the process of collecting and
studying information pertaining to a job
Job Description – a written statement of the tasks to
be performed on a particular job
Job Speciation – the qualifications for adequate job
performance


Chapter Check-Up: Structure

With which type of structure do you think
trust is most necessary? Why? Are the
“substitutes for trust” that are potentially
built into some structures? If so, which
ones?


GROUP WORKS
GROUP WORKS
QUESTIONS: 2, 3, 4 (P. 439)
CASE: Motorola – What went wrong? (P. 441)


Organizational Behavior - Session7

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