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Departmentalization by simple numbers
• Definition: group people who are to perform same duties under the supervision of a manager
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Advantages:• useful when it is the
number of people that is critical to finish a task
Disadvantages:• Low specialization• Low efficiency
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Departmentalization by time
• Group people based on time
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Advantages• Extended services• Suitable when certain
processes can’t be interrupted or certain expensive equipment can be used more than 8 hours a day
Disadvantages:• Lacks supervision
during the night shift• Fatigue• Affects coordination
and communication among different shifts
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OrganicOrganic
Collaboration
Adaptable Duties
Few Rules
Informal Communication
Decentralized Decisions
Flatter Structures
MechanisticMechanistic
Rigid Hierarchy
Fixed Duties
Many Rules
Formal Communication
Centralized Decisions
Taller Structures
Organizational FormsOrganizational Forms
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Simple structure
• Characteristics: – A low degree of departmentalization– Wide span of control– Centralized authority– Little formalization– A flat structure– Inexpensive to maintain the structure– A clear accountability– Popular in small business owned and managed by same
person– Risky as the organization grows
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Bureaucracy
• Characteristics:– High specialized operating task– Formalized rules and regulations– A clearly defined hierarchy– Level of managers are created to coordinate
activities
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• Divisional structure– An organization is made up of self-contained units– Characteristics:
• Each division is generally autonomous• Central headquarters provide financial and legal
services to the divisions• Central headquarters coordinate and control various
divisions• Focuses on end results• Headquarters concentrate on long-term and strategic
issues• Duplications of personnel and equipment
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Alpha project
Beta project
Gamma project
Design engineering Manufacturing Accounting
Design group
Design group
Design group
Manufacturinggroup
Manufacturinggroup
Manufacturinggroup
Accountinggroup
Accountinggroup
Accountinggroup
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Matrix organization
• Definition: assign people from functional departments to work on one or more projects led by a project manager
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Advantages
• Is oriented toward end results
• Professional identification is maintained
• Pinpoints product-profit responsibility
• Cross-functional coordination
Disadvantages:• Conflict in organization
authority exists• Possibility of disunity
of command exists• Requires managers
effective in human relations
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Team-based structure
Definition: the entire organization consists of work groups or team that perform the organization’s work
Characteristics:
1. No rigid chain of command
2. Team member has authority to make decisions
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Advantages:• Is flexible• Empower workers• Encourages
cooperation• Oriented toward end
results
Disadvantages:• Lack of responsibility• Central control may be
difficult• Requires managers
effective in human relations
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The Boundaryless Organization
• An organization that is not defined or limited by boundaries or categories imposed by traditional structures
• Characteristics:– Minimize the chain of command– Replaces departments with empowered team– Participative decision-making– Coordination among occupational specialties
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• Functional structure– An organization in which similar and related
occupational specialties are grouped together– Characteristics:
• Work specialization• Minimizes duplication of personnel and equipment• Follows principle of occupational specializing• Simplifies training• Furnishes means of tight control at top
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Factors that affect structure • Organizational factors
– Strategy (structure should fit organizational strategy)• Growth strategy • Stability strategy• Retrenchment strategy
– Size and ageLarger organizations tended to be more specialized and standardized, and formalized but less centralized than smaller organizations
– Culture (i.e., a system of shared meaning within an organization that determines, to a large degree, how employees act)
• Strong culture substitute for the rules and regulations that formally guide employees
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• Environmental factors– Technology (i.e., the sequence of physical techniques,
knowledge, and equipment used to turn organization inputs into outputs)
• Define organizational structure
• Define new roles (e.g., CIOs)
– Economic situation • Strong/weak economy
• Dynamic/static economy
– Social/political situation
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Building an effective organization design
• Align with organizational goals• Make clear individual roles • Make clear sub-goals and policies• Be flexible • Make staff work effective
– Make line listen staff– Keep staff informed
• Recognize the importance of informal organization and grapevine
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Evaluating effective organizational structure
• Effective two-way communication
• Align with organizational goals
• Clarify authority and responsibility
• Respond to environmental changes promptly
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Why do we need organizational design?
• Achieve goals
• Make the best use of people’s experiences, knowledge, skills, and expertise, etc.
• Provide a smooth communication channel
• Reduce uncertainty
• Encourage cooperation