Wk 7

• Organizational Structure


  The way in which job tasks are formally divided, grouped, and coordinated
• Organizational Design


  A process involving decisions about six key elements: Work specialization, Departmentalization, Chain of command, Span of control, Centralization and decentralization, Formalization
• Work Specialization (Division of Labor)


  • The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person
  • Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover
  • Makes efficient use of employee skills
  • Increases employee skills through repetition
  • Less between-job downtime increases productivity
  • Specialized training is more efficient
  • Allows use of specialized equipment
• Types of Departmentalization


  • Functional
  • Product
  • Geographical
  • Process
  • Customer
• Product Departmentalization


  • Bombardier Annual Report
• Chain of Command


  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


  The rights inherent in a managerial position to tell people what to do and to expect them to do it
• Responsibility


  The obligation or expectation to perform. Responsibility brings with it accountability (the need to report and justify work to manager's superiors)
• Unity of Command


  The concept that a person should have one boss and should report only to that person
• Delegation


  The assignment of authority to another person to carry out specific duties
• Line and Staff Authority


  • Line managers are responsible for the essential activities of the organization, including production and sales. Line managers have the authority to issue orders to those in the chain of command
  • Staff managers have advisory authority, and cannot issue orders to those in the chain of command (except those in their own department)
• Span of Control


  • The number of employees who can be effectively and efficiently supervised by a manager
  • Width of span is affected by: Skills and abilities of the manager and the employees, Characteristics of the work being done, Similarity of tasks, Complexity of tasks, Physical proximity of subordinates, Standardization of tasks, Sophistication of the organization's information system, Strength of the organization's culture, Preferred style of the manager
• Contrasting Spans of Control

  • Assuming Span of 4: Employees = 4096, Managers (level 1-6) = 1365

  Assuming Span of 8: Employees = 4096, Managers (level 1-4) = 585
• Centralization


  The degree to which decision making is concentrated at a single point in the organization
• Decentralization


  The degree to which lower-level employees provide input or actually make decisions
• Employee Empowerment


  Increasing the decision-making discretion of employees
• Factors that Influence the Amount of Centralization

  • Environment is stable
  • Lower-level managers are not as capable or experienced at making decisions as upper-level managers
  • Lower-level managers do not want to have a say in decisions
  • Decisions are significant
  • Organization is facing a crisis or the risk of company failure
  • Company is large
  • Effective implementation of company strategies depends on managers retaining say over what happens
• Factors that Influence the Amount of Decentralization

  • Environment is complex, uncertain
  • Lower-level managers are capable and experienced at making decisions
  • Lower-level managers want a voice in decisions
  • Decisions are relatively minor
  • Corporate culture is open to allowing managers to have a say in what happens
  • Company is geographically dispersed
  • Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions
• Formalization


  The degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures
• Virtual Structure


  • A small, core organization that outsources major business functions
  • Advantage: offers flexibility that allows individuals with an innovative idea and little money to successfully compete against larger, more established organizations. Saves a great deal of money by eliminating permanent offices and hierarchical roles for outsourced functions
  • Disadvantage: In a state of perpetual flux and reorganization, which means roles, goals, and responsibilities are unclear, setting the stage for increased political behavior
• Team Structure


  • An organizational structure that replaces departments with empowered teams and that eliminates most horizontal boundaries and external barriers between customers and suppliers
  • Advantages: Employees are more involved and empowered. Reduced barriers among functional areas
  • Disadvantages: No clear chain of command. Pressure on teams to perform
• Circular Structure


  • An organizational structure in which executives are at the center, spreading their vision outward in rings grouped by function (managers, then specialists, then workers)
• Downsizing


  • A systematic effort to make an organization leaner by closing locations, reducing staff, or selling off business units that do not add value
  • Downsizing might also involve de-layering, or narrowing the span of control by reducing the number of levels in a hierarchy
• Strategies for Effective Downsizing

  • Invest: Companies that downsize to focus on core competencies are more effective when they invest in high-involvement work practices afterward
  • Communicate: When employers make efforts to discuss downsizing with employees early, employees are less worried about the outcomes and feel the company is taking their perspective into account
  • Participate: Employees worry less if they can participate in the process in some way. Voluntary early-retirement programs or severance packages can help achieve leanness without layoffs
  • Assist: Severance, extended health care benefits, and job search assistance demonstrate that a company cares about its employees and honors their contributions
• Characteristics of Mechanistic Organizations

  • High Specialization
  • Rigid Departmentalization
  • Clear Chain of Command
  • Narrow Spans of Control
  • Centralization
  • High Formalization
• Characteristics of Organic Organizations

  • Cross-Functional Teams
  • Cross-Hierarchical Teams
  • Free Flow of Information
  • Wide Spans of Control
  • Decentralization
  • Low Formalization