April 16, 2002

1
April 16, 2002

• If your team is not sending someone to the
  Writing Center session on April 24
• Next Steps memo is due on Thursday, April 18
• If your team is sending someone to the Writing
  Center session on April 24
• Next Steps memo is due by 5 p.m. on Friday, April
  26 (email submission in MSWord format is okay)

2
Ch. 14 Organization Structure

• Six elements of organizational structure
• Mechanistic versus organic structure
• Common Structures
• Behavioral implications of structure (org. design)

3
Six Elements of Structure

• 1. Division of Labor (specialization)
• To what degree are tasks subdivided into separate
  jobs?
• 2. Departmentalization
• On what basis will jobs be grouped together?
• 3. Managerial Hierarchy (chain of command)
• To whom do individuals and groups report?

4
Six Elements of Structure (cont.)

• 4. Span of Control
• How many people can a manager efficiently
  effectively direct?
• 5. Decision-Making (centralized or decentralized)
  
• Where does decision-making authority lie?
• 6. Formalization
• To what degree are there rules regulations to
  direct employees and managers?

5
Division of Labor(Work Specialization)
High
Impact from Human Diseconomies
Impact from Economies of Specialization
Productivity
Low
High
Low
Work Specialization
6
2. Departmentalization(grouping jobs for
coordination purposes)

• 1. Functional
• 2. Product
• 3. Process
• 4. Customer
• 5. Geographic

7
3. Managerial Hierarchy(chain of command)
Top Management
Power
Number of Employees
Middle Management
Supervisory Management
8
3. Chain of Command (cont.)

• Authority (Legitimate power)
• Delegation of authority (p. 421)
• Unity-of-command principle
• Each subordinate has only one boss
• Pros?
• Cons?

9
Factors Determining Span of Control

• 1. Nature of the task
• 2. Location of the workers
• 3. Ability of manager to delegate
• 4. Amount of interaction and feedback between
  manager and workers
• 5. Workers skill and motivation
• 6. Trends

10
5. Decisions Making
Managerial Control
Employee Empowerment
High
High
Decentralized Decision Making
Centralized Decision Making
Employee Empowerment
Managerial Control
Low
Low
11
6. Degree of Formalization
Higher
Lower
Low Formalization
Employee Freedom
Standardization
High Formalization
Higher
Lower
12
Mechanistic vs. Organic Structures
13
Mechanistic Versus Organic Structures
14
Common Organizational Structures (study this, not
text!)

• 1. Line organization - clear chain of command
• 2. Line-and-staff organization staff provides
  support
• 3. Matrix structure no unity of command
• 4. Team structure provides flexibility
• 5. Virtual (Network) organization - outsourcing
• 6. Boundaryless organization

15
The Virtual Organization
Advertising Agency
Independent R D Consulting Firm
Commissioned Sales Representatives
Factories in South Korea
16
Strategy Innovation Cost-minimization Imitation
Organization Size
Why Do Structures Differ?
Technology How we convert inputs to outputs
Environment Suppliers, Customers, Competitors,
Regulators, Public Interest Groups
17
Characteristics of Environmental Uncertainty

• Volatility how stable is the environment?
• Stable -----------------------------------
  Dynamic
• Capacity can environment support growth?
• Abundance ------------------------------
  Scarcity
• Complexity how homogeneous and concentrated is
  the environment?
• Simple --------------------------------------
  - Complex

18
Organization Structure Determinants and Outcomes
Performance and Satisfaction
Causes

• Strategy
• Size
• Technology
• Environment

Structures

• Mechanistic
• Organic

Determines
Moderated by individual differences and cultural
norms