Kelli J.

Schutte
William Jewell College
Robbins & Judge
Organizational Behavior
14th Edition
Foundations of Organization
Structure
15-0
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
Chapter Learning Objectives
After studying this chapter, you should be able to:
Identify the six elements of an organizations structure.
Identify the characteristics of a bureaucracy.
Describe a matrix organization.
Identify the characteristics of a virtual organization.
Show why managers want to create boundaryless
organizations.
Demonstrate how organizational structures differ, and
contrast mechanistic and organic structural models.
Analyze the behavioral implications of different
organizational designs.
Show how globalization affects organizational structure.
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
15-1
What Is Organizational Structure?
Organizational Structure
How job tasks are formally divided, grouped, and
coordinated
Key Elements:
1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of control
5. Centralization and decentralization
6. Formalization
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15-2
1. Work Specialization
The degree to which tasks in the organization are
subdivided into separate jobs
Division of Labor
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
Can create greater economies and efficiencies but not
always
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15-3
E X H I B I T 15-1
Work Specialization Economies and Diseconomies
Specialization can reach a point of diminishing returns
Then job enlargement gives greater efficiencies than
does specialization
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15-4
E X H I B I T 15-2
2. Departmentalization
The basis by which jobs are grouped together
Grouping Activities by:
Function
Product
Geography
Process
Customer
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15-5
3. Chain of Command
Authority
The rights inherent in a managerial position to give orders
and to expect the orders to be obeyed
Chain of Command
The unbroken line of authority that extends from the top of
the organization to the lowest echelon and clarifies who
reports to whom
Unity of Command
A subordinate should have only one superior to whom he or
she is directly responsible
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15-6
4. Span of Control
The number of subordinates a manager can efficiently and
effectively direct
Wider spans of management
increase organizational
efficiency
Narrow span drawbacks:
Expense of additional layers of
management
Increased complexity of vertical
communication
Encouragement of overly tight
supervision and discouragement
of employee autonomy
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15-7
Contrasting Spans of Control
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15-8
E X H I B I T 15-3
5. Centralization and Decentralization
Centralization
The degree to which decision making is concentrated at a
single point in the organization.
Decentralization
The degree to which decision making is spread throughout
the organization.
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
15-9
6. Formalization
The degree to which jobs within the organization are
standardized.
High formalization
Minimum worker discretion in how to get the job done
Many rules and procedures to follow
Low formalization
Job behaviors are nonprogrammed
Employees have maximum discretion
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
15-10
Common Organization Designs: Simple Structure
Simple Structure
A structure characterized by a low degree of
departmentalization, wide spans of control, authority
centralized in a single person, and little formalization
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15-11
E X H I B I T 15-4
Common Organizational Designs: Bureaucracy
Bureaucracy
A structure of highly operating
routine tasks achieved through
specialization, very formalized
rules and regulations, tasks that
are grouped into functional
departments, centralized
authority, narrow spans of control,
and decision making that follows
the chain of command
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15-12
An Assessment of Bureaucracies
Strengths
Functional economies of
scale
Minimum duplication of
personnel and equipment
Enhanced communication
Centralized decision
making
Weaknesses
Subunit conflicts with
organizational goals
Obsessive concern with
rules and regulations
Lack of employee
discretion to deal with
problems
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
15-13
Common Organizational Designs: Matrix
Matrix Structure
A structure that creates dual lines of authority and combines
functional and product departmentalization
Key Elements
Gains the advantages of functional and product
departmentalization while avoiding their weaknesses
Facilitates coordination of complex and interdependent
activities
Breaks down unity-of-command concept
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15-14
E X H I B I T 15-5
New Design Options: Virtual Organization
A small, core organization
that outsources its major
business functions
Highly centralized with
little or no
departmentalization
Provides maximum
flexibility while
concentrating on what
the organization does
best
Reduced control over
key parts of the business
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15-15
E X H I B I T 15-6
New Design Options: Boundaryless Organization
An organization that seeks to eliminate the chain of
command, have limitless spans of control, and replace
departments with empowered teams
T-form Concepts
Eliminate vertical (hierarchical) and horizontal (departmental)
internal boundaries
Breakdown external barriers to customers and suppliers
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15-16
Two Extreme Models of Organizational Design
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15-17
E X H I B I T 15-7
Four Reasons Structures Differ
1. Strategy
Innovation Strategy
A strategy that emphasizes the introduction of major new
products and services
Organic structure best
Cost-minimization Strategy
A strategy that emphasizes tight cost controls, avoidance of
unnecessary innovation or marketing expenses, and price
cutting
Mechanistic model best
Imitation Strategy
A strategy that seeks to move into new products or new
markets only after their viability has already been proven
Mixture of the two types of structure
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15-18
E X H I B I T 15-8
Why Structures Differ
2. Organizational Size
As organizations grow, they become more mechanistic,
more specialized, with more rules and regulations
3. Technology
How an organization transfers its inputs into outputs
The more routine the activities, the more mechanistic the
structure with greater formalization
Custom activities need an organic structure
4. Environment
Institutions or forces outside the organization that
potentially affect the organizations performance
Three key dimensions: capacity, volatility, and complexity
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15-19
Three-Dimensional Environment Model
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
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15-20
Complexity
Volatility
Capacity
E X H I B I T 15-9
Organizational Designs and Employee Behavior
Impossible to generalize due to individual differences in
the employees
Research findings
Work specialization contributes to higher employee
productivity, but it reduces job satisfaction.
The benefits of specialization have decreased rapidly as
employees seek more intrinsically rewarding jobs.
The effect of span of control on employee performance is
contingent upon individual differences and abilities, task
structures, and other organizational factors.
Participative decision making in decentralized organizations
is positively related to job satisfaction.
People seek and stay at organizations that match their
needs.
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15-21
Global Implications
Culture and Organizational Structure
Many countries follow the U.S. model
U.S. management may be too individualistic
Culture and Employee Structure Preferences
Cultures with high-power distance may prefer mechanistic
structures
Culture and the Boundaryless Organization
May be a solution to regional differences in global firms
Breaks down cultural barriers, especially in strategic alliances
Telecommuting also blurs organizational boundaries
15-22
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Summary and Managerial Implications
Structure impacts both the attitudes and behaviors of
the people within it
Impact of Technology
Makes it easier to change structure to fit employee and
organizational needs
15-23
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
Associated
with
E X H I B I T 15-10
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Inc. Publishing as Prentice Hall
15-24
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall