ORGANIZATIONAL STRUCTURE

• Pros of Functional Organizational Structure

  • Promotes skill specialization
  • Reduces duplication of scarce resources and uses resources full time
  • Enhances career development for specialists within large departments
  • Facilitates communication and performance because superiors share expertise with their subordinates
  • Exposes specialists to others within the same specialty
• Cons of Functional Organizational Structure

  • Emphasizes routine tasks, which encourages short-time horizons
  • Fosters parochial perspectives by managers, which limit their capabilities for top-management positions
  • Reduces communication and cooperation between departments
  • Multiplies the interdepartmental dependencies, which can make coordination and scheduling difficult
• Pros of Multidimensional/Divisional Organizational Structure

  • Easily expand products or services merely by adding new division
  • Each division operates as a separate entity, thus greater accountability
  • Growth relatively easily
  • Outcome-focused
  • Direct employee attention to customers and products rather than to their own specialized knowledge
  • Recognizes sources of interdepartmental dependencies
  • Foster an orientation toward overall outcomes and clients
  • Allows diversification and expansion of skills and training
  • Ensures accountability by departmental managers and so promotes delegation of authority and responsibility
  • Heightens departmental cohesion and involvement in work
• Cons of Multidimensional/Divisional Organizational Structure

  • Duplication of areas of expertise
  • Workers with similar skills and expertise may not be able to benefit from professional interaction with each other because they are housed in different divisions
  • Expertise is spread across several autonomous business units, which reduces the ability and perhaps motivation of the people in one division to share their knowledge with other counterparts in other divisions
  • May use skills and resources inefficiently
  • Limits career advancement by specialists to movements out of their departments
  • Impedes specialists' exposure to others within the same specialties
  • Puts multiple-role demands on people and so creates stress
  • May promote departmental objectives, as opposed to overall organizational objectives
• Pros of Simple Organizational Structure

  • Minimal hierarchy
  • Highly flexible and minimizes the walls that form between employees
• Cons of Simple Organizational Structure

  • Insufficient economies of scale to assign them to specialized jobs
  • Difficult to operate as the company grows and become more complex
• Pros of Flat/Process Organizational Structure

  • Greater interaction between top and bottom of the organization
  • Focuses resources on customer satisfaction
  • Improves speed and efficiency
  • Adapts to environmental change rapidly
  • Increases ability to see total workflow
  • Enhances employee involvement
  • Lower costs because of less overhead structure
• Cons of Flat/Process Organizational Structure

  • Offer few promotional opportunities
  • Supervision may not always be adequate since many workers report to the same supervisor
  • Can threaten middle managers and staff specialists
  • Requires changes in command-and-control mindsets
  • Duplicate scarce resources
  • Requires new skills and knowledge to manage lateral relationships and teams
  • May take longer to make decisions in teams
  • Can be ineffective if wrong processes are identified
• Pros of Tall Organizational Structure

  • May offer lower-level employees many different promotional opportunities throughout their careers
  • Adequate supervision since each supervisor is only responsible for a few employees
• Cons of Tall Organizational Structure

  • Workers at the bottom level may feel cut-off from those who are above because they are separated by many levels
  • Can become "top heavy" with administrators and managers, because the ratio of line workers to supervisors is very low
  • Executives tend to receive lower-quality and less-timely information
  • High overhead costs – necessarily have more people administering the company
  • Employees feel less empowered and engaged in their work
• Pros of Matrix Organizational Structure

  • Highly flexible and adaptable
  • High levels of performance in dealing with complex, creative work products
  • Greater work communication and job satisfaction
  • Makes very good use of resources and expertise
  • Improves communication efficiency, project flexibility, and innovation
  • Makes specialized, functional knowledge available to all projects
  • Uses people flexibly, because departments maintain reservoirs of specialists
  • Maintains consistency between different departments and projects by forcing communication between managers
  • Recognizes and provides mechanisms for dealing with legitimate, multiple sources of power in the organization
  • Can adapt to environmental changes by shifting emphasis between project and functional aspects
• Cons of Matrix Organizational Structure

  • Do not work well with all types of tasks or workers
  • Best suited for projects and products that requires creativity and innovation but less suited for routine tasks
  • Report to two bosses simultaneously can cause confusion and conflict
  • Increases conflict among managers who share equal power
  • Can be very difficult to introduce without a preexisting supportive management climate
  • Increases role ambiguity, stress, and anxiety by assigning people to more than one department
  • Without power balancing between product and functional forms, lowers overall performance
  • Makes inconsistent demands, which may result in unproductive conflicts and short-term crisis management
  • May reward political skills as opposed to technical skills
• Pros of Team Organization/Team-Based Organizational Structure

  • Collaborate with other workers to get the job done
  • Each worker is viewed as knowledgeable and skilled
  • Team members have considerable input into organizational decision making
  • Less emphasis on organizational status
  • More flexible and responsive in turbulent environments
  • Reduce costs
  • Allows quicker and more informed decision-making
• Cons of Team Organization/Team-Based Organizational Structure

  • Intragroup conflict arises but it could turn into productive, functional outcome
  • Costly to maintain due to the need for ongoing interpersonal skills training
• Pros of Project Task Force/Network Organizational Structure

  • Offer flexibility to realign their structure with changing environmental requirements
  • Enable flexible and adaptive response to dynamic environments
  • Creates best of the best organization to focus resources on customer and market needs
  • Enables each organization to leverage a distinctive competency
  • Permits rapid global expansion
  • Can produce synergistic results
• Cons of Project Task Force/Network Organizational Structure

  • They expose the core firm to market forces
  • Managing lateral relations across autonomous organizations is difficult
  • Motivating members to relinquish autonomy to join the network is troublesome
  • Sustaining membership and benefits can be problematic
  • May give partners access to proprietary knowledge/technology
• Pros of Centralized Organizational Structure

  • Uniformity, each department should operate with some average level of quality and efficiency
  • More efficient operations
• Cons of Centralized Organizational Structure

  • May limit individuals to adjust to special circumstances
  • Inefficiencies in decision-making
• Pros of Decentralized Organizational Structure

  • Can make their own decisions
  • Decision making and problems are solved at lower levels, more authority to lower-level employees (sense of empowerment)
  • Quicker decisions, greater level of procedural fairness
• Cons of Decentralized Organizational Structure

  • Poor decision making could backfire
• Pros of Mechanistic Organizational Structure


  • More flexible and responsive to the changes
  • Formal communications channel
• Cons of Mechanistic Organizational Structure

  • Limited decision making at lower levels
  • Tasks are rigidly defined and are altered only by higher authorities
  • Limited autonomy and self-determination which could lower intrinsic motivation of workers
• Pros of Organic Organizational Structure

  • Emphasize information sharing and an empowered workforce rather than hierarchy and status
  • Communication decentralized down to teams and individuals
  • Opportunities for creativity
  • More open communications
  • Better employee satisfaction
• Cons of Organic Organizational Structure

  • Fewer formal procedures
  • Deeper employee relationships
  • May lower productivity
  • Too many ideas
  • Slower decision-making
  • Less-regulated work
  • Slower adaptation for new employees
• Job Design


  Developing new jobs or adding responsibilities to existing jobs
• Job Design


  1. Interview questions

  2. Training plans

  3. Development plans

  4. Career implications

  5. Performance reviews

  6. Compensation
• Job Specialization


  Work required is subdivided into separate jobs assigned to different people to improve work efficiency
• Job Enrichment


  An employee assumes more responsibility over the tasks
• Job Enrichment


  1. Combining highly interdependent tasks into one job (Natural Grouping)

  2. Putting employees in direct contact with their clients rather than using another group or the supervisor as the liaison between employee and the customer (Establishing Client Relationships)
• Job Rotation


  Workers are rotated among variety of jobs, spending certain length of time at each
• Job Enlargement


  Adding tasks to an existing job
• Re-engineering


  Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as costs, quality, service, and speed
• Duty Allocation


  Company creates a team or group of departments, with each having a specific role
• Job Crafting


  Informal changes that an employee makes in their jobs
• Organizational Citizenship Behaviors


  Motivated to help the organization and colleagues by doing little things they are not required to do
• Hackman and Oldham's Job Characteristics Theory/Model


  Employees desire jobs that are meaningful, provide them opportunity to be personally responsible for the outcome of their work, and provide them with feedback of the results of their efforts
• Core Job Characteristics


  • Skill Variety
  • Task Identity
  • Task Significance
  • Autonomy
  • Feedback
• Departmentalization


  Specifies how employees and their activities are grouped together
• Types of Departmentalization


  • Simple
  • Functional
  • Divisional
  • Team Based
  • Matrix
  • Network
• Delegation (of Authority)


  Supervisors, rather than doing everything by themselves, assign particular tasks to separate employees and hold them responsible for completing tasks