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Unformatted text preview: Or ganizational Str uctur e D r. Jonelle R oth M ichigan State Univer sity What is Or ganizational Str uctur e?
a D efinition: r elatively stable netw or k of inter connections or inter dependencies among the people and task s that mak e up an or ganization. a Contr ol a Patter ned r egular ity a Pur poseful and goal or iented a 6 things!! Key D esign Questions and Answ er s for D esigning the Pr oper Or ganization Str uctur e
The Key Question 1. To what degree are articles subdivided into separate jobs? 2. On what basis will jobs be grouped together? 3. To whom do individuals and groups report? 4. How many individuals can a manager efficiently and effectively direct? 5. Where does decisionmaking authority lie? 6. To what degree will there be rules and regulations to direct employees and managers? The Answer Is Provided By Work specialization Departmentalization Chain of command Span of control Centralization and decentralization Formalization 1. Wor k Specialization (D ivision of L abor )
a Specialization people only tr ained in one task a Cr oss-tr ain people capable of doing multiple task s w ith 2. D epar tmentalization
a F unction a Pr oduct a Geogr aphy a Pr ocess a Customer 3. Span of Contr ol
D epends on fr equency and intensity of r equir ed inter actions and r elationships. a H igh r equir ed contact = small span of contr ol a H igh specialization = lar ge span of contr ol a H igh ability to communicate = lar ge span of contr ol 4. Chain of Command
a T he unbr ok en line of author ity that extends fr om the top of the or ganization to the low est echelon and clar ifies w ho r epor ts to w hom. a Author ity a U nity of command 5. D ecentr alize vs. Centr alize
a a a a Enables manager s to mak e decisions T r ains them to move up M otivates manager s to compete M or e autonomy a a a M ust tr ain manager s to mak e decisions M anager s may r esist delegating far enough dow n Saves money by r educing r edundancy D ecentr alize vs. Centr alize D ecision Guidelines
a H ow r outine and str aightfor w ar d on decisions? a Ar e individuals competent to mak e decisions? a Ar e individuals motivated to mak e decisions? a D o the benefits outw eigh the costs? 6. F or malization
a T he degr ee to w hich jobs w ithin the or ganization ar e standar dized. Common Or ganizational Str uctur es
Simple a Functional - high efficiency, but possible line/staff problems and siloing. a Divisional - matches market, more flexible, but > redundancy and therefore, > costs. a Matrix - best of both structures, but increased complexity and conflict. a Network - increased flexibility, better communication, hard to coordinate
a Why do str uctur es differ ?
Mechanistic Model a A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization. Organic Model a 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. M echanistic Ver sus Or ganic M odels Why D o Str uctur es D iffer ? Str ategy
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. T he Str ategy-Str uctur e Relationship
Strategy Innovation Structural Option Organic: A loose structure; low specialization, low formalization, decentralized Mechanistic: Tight control; extensive work specialization, high formalization, high centralization Mechanistic and organic: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings Cost minimization Imitation N ew D esign Options
a T eam Str uctur e a Vir tual Or ganization a Boundar yless Or ganization Why D o Str uctur es D iffer ? Size
Size How the size of an organization affects its structure. As an organization grows larger, it becomes more mechanistic. Characteristics of large organizations: More specialization More vertical levels More rules and regulations Why D o Str uctur es D iffer ? T echnology
Technology How an organization transfers its inputs into outputs.
Characteristics of routineness (standardized or customized) in activities: Routine technologies are associated with tall, departmentalized structures and formalization in organizations. Routine technologies lead to centralization when formalization is low. Nonroutine technologies are associated with delegated decision authority. Why D o Str uctur es D iffer ? Envir onment
Environment Institutions or forces outside the organization that potentially affect the organization's performance. Key Dimensions Capacity: the degree to which an environment can support growth. Volatility: the degree of instability in the environment. Complexity: the degree of heterogeneity and concentration among environmental elements. "Bur eaucr acy I s D ead"
a Char acter istics of Bur eaucr acies Specialization F or malization D epar tmentalizat ion Centr alization N ar r ow spans of contr ol Adher ence to a chain of a Why Bur eaucr acy Sur vives L ar ge size pr evails Envir onmental tur bulence can be lar gely managed Standar dization achieved thr ough hir ing people w ho have under gone extensive educational Or ganizational D esigns and Employee Behavior
Research Findings Wor k specialization contr ibutes to higher employee pr oductivity, but it r educes job satisfaction. T he benefits of specialization have decr eased as r apidly as employees seek mor e intr insically r ew ar ding jobs. T he effect of span of contr ol on employee per for mance is contingent upon individual differ ences and abilities, task str uctur es, and ...
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This note was uploaded on 03/18/2008 for the course MGT 325 taught by Professor Roth during the Fall '07 term at Michigan State University.
- Fall '07