Gao Junshan, UST Beijing

1
Basic Organization Designs
2
Where We Are
Chapter 5 Basic Organization Design
Part 3 Organizing
3
Chapter Guide

• 6 Basic elements of organization structure
• Work specialization, chain of command, span of
  control, authority and power, degree of
  centralization, departmentalization
• 4 Contingency variables affecting structure
• Strategy, size, technology, environment
• 5 Types of organization design
• Simple structure, bureaucracies, matrix
  structure, team based structure, boundaryless
  organization
• Study of Organizational Behavior
• Individual behavior in organizations, concept of
  group, organizational culture

4
Basic elements Overview
Basic Elements of Structure
Work Specialization
Chain of Command
Span of Control
Authority and Responsibility
Departmentalization
Degree of Centralization
5
Economies of Work Specialization
Basic elements Work specialization
Impact from Human Diseconomies
High
Impact from Economies of Specialization
Productivity
Low
High
Low
Work Specialization
6
The Chain of Command
Basic elements Chain of command
Chief Executive Officer
Executive Vice President
Executive Vice President
President
Vice President
Vice President
Vice President
Vice President
Vice President
Region 1
Region 2
Region 3
Region 4
Region 5
District A
District B
District C
District D
District E
District F
District G
7
Basic elements Span of control
The Span of Control
Contingency Variables
Level in the Organization
8
Contingency Variables that Influence the Span of
Control
Basic elements Span of control

• Training and experience employees have
• Similarity and complexity of employees tasks
• Physical proximity of employees
• Presence of standardized procedures
• Capabilities of the information management system
• Strength of the firms value system
• Preferred style of management

9
Basic elements Authority and responsibility
Authority and Responsibility
Authority refers the right inherent in a
managerial position to give orders
Responsibility refers the obligation to perform
assigned activities
10
Line Versus Staff Authority
Basic elements Authority and responsibility
Line Authority
Executive Director
Staff Authority
Assistant to the Executive Director
Other Directors
Director of Purchasing
Director of Human Resources
Director of Operations
Unit 2 Manager
Unit 1 Manager
Other
Human Resources
Operations
Purchasing
Other
Operations
Purchasing
Human Resources
11
Individual and group behavior Group (see Chap 8
p276)
Defining
Authority
Power
The right inherent in a managerial position to
give orders
An individuals capacity to influence decisions
12
Authority vs. Power
Basic elements Authority and responsibility
Authority is a two dimensional concept, while
Power is a three dimensional one.
Authority is a right based one ones position in
an organization, while Power refers to
individuals capacity to influence decisions.
13
Basic elements Authority and responsibility
Coercive
Referent
Reward
Power
Expert
Legitimate
14
Management skills Building a power base
Building a Power Base

• Respect others
• Build power relationships
• Develop associations
• Control important information
• Gain seniority
• Build power in stages

15
The Degree of Centralization
Basic elements Degree of centralization
16
Movement of Decentralization
Basic elements Degree of centralization

• Choose the degree of decentralization that allow
  management to best implement their decisions and
  achieve organizational goals.
• Determine the amount of decentralization
  according to the situation of each organization
  and the units within it.
• Remain financial and product distribution
  decisions in the hand of senior management

17
Five Ways to Departmentalize
Basic elements Departmentalization
Functional
Product
Customer
Process
Geographic
18
Product vs. Customer or Geographic
Departmentalization
Basic elements Departmentalization
19
Functional vs. Process Departmentalization
Basic elements Departmentalization
20
The Contemporary View of Departmentalization
Basic elements Departmentalization

• Most large organization still use most or all of
  the types of departmental groupings
• Competitive environment has refocused the
  attention of managers on monitoring the needs of
  customers and responding to them.
• More and more use of the crossing department team
  as a device to accomplish organizational
  objectives

21
Contingency variables and structure Two types of
organization
Organizational Forms
Organic
Mechanistic

• Collaboration
• Adaptable Duties
• Few Rules
• Informal Communication
• Decentralized Decisions
• Flatter Structures

• Rigid Hierarchy
• Fixed Duties
• Many Rules
• Formal Communication
• Centralized Decisions
• Taller Structures

22
What Determines the Best Structure?
Contingency variables and structure Major
contingency variables

• Strategy
• Size
• Technology
• Environment

23
Types of design

• Simple Structure
• Bureaucracy
• Matrix structures
• Team based
• Boundaryless

Organization Design Applications
24
Types of design Simple structure
Wide Spans of Control
Few Departments
The Simple Structure
Little Formalization
Centralized Authority
25
Types of design the bureaucracy
TheBureaucracy
Divisional Structure
Functional Structure
26
The Matrix Structure
Types of design The matrix
27
Types of design The matrix
The Matrix Structure
Cross-Functional Coordination
Clear Accountability
Allocation of Specialists
Dual Chain of Command
28
Types of design Team based
The Team-BasedStructure
Hold Teams Accountable
Empower Workers
29
Types of design Boundaryless
The Boundaryless Organization
Limited Chain Of Command
Widened Spans Of Control
Empowered Employee Teams
30
Types of design Boundaryless
The Boundaryless Organization
Globalization of Market and Competition
Advances of IT Technologies
Changing and Volatile Business Environment
31
The Organization Iceberg
Individual and group behavior Overview (see Chap
8 p256)
Visible Aspects Strategies Objectives Policies
and procedures Structure Technology Formal
authority Chains of command
Hidden aspects Attitudes Perceptions Group
norms Informal interactions Interpersonal and
inter-group conflicts
32
Organizational Behavior
Individual and group behavior Overview (see Chap
8 p257)
33
Individual and group behavior Individual (see
Chap 8 p257275)
Personality
Attitudes
Individual Behavior
Learning
Perception
34
Individual and group behavior Individual (see
Chap 8 p264)
Emotional Intelligence

• Self-Awareness
• Self-Management
• Self-Motivation
• Empathy
• Social Skills

35
Individual and group behavior Group (see Chap 8
p276)
What Is a Group?
Informal
Formal

• Occur Naturally
• Friendships
• Common Interests

• Formally Established
• Work Assignments
• Specific Tasks

36
Individual and group behavior Group (see Chap 8
p276)
Basic Group Concepts
Group Roles
Group Norms
Acceptable Standards of Behavior Shared by the
Members of a Group
Expected Patterns of Behavior Based on a Given
Position in a Social Unit
37
Individual and group behavior Group (see Chap 8
p276)
Why People Join Groups
38
What is Organizational Culture
Individual and group behavior Organizational
culture
A system of meaning that members share and that
distinguishes the organization from others.
39
Individual and group behavior Organizational
culture
40
Chapter Summary

• Six elements of organization structure
• Pros and cons of work specialization
• Authority vs. power
• Five ways of departmentalization
• Mechanistic vs. organic organizations

41
Chapter Summary

• Factors affect organization structures
• Divisional vs. functional structures
• Strengths of the matrix structure
• Boundaryless organization
• Meaning of organization culture