Foundations of Organisation structure

7/29/2019 Foundations of Organisation structure

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Harold Andrew Patrick

Professor and Coordinator OB & HRM

Christ University

Institute of Management

Foundations ofOrganization Structure


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What Is Organizational

Structure?

Key Elements:

Work specialization

Departmentalization

Chain of command

Span of control

Centralization and

decentralization

Formalization


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What Is Organizational Structure?

(contd)

Division of labor:

Makes efficient use of

employee skills

Increases employee skills

through repetition

Less between-job

downtime increases

productivity

Specialized training is moreefficient

Allows use of specialized

equipment


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Key Design Questions and Answers for Designing the

Proper Organization Structure


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Economies and Diseconomies of

Work Specialization


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(contd)

Grouping Activities By:

Function

Product

Geography

Process

Customer


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(contd)


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(contd)

Narrow Span Drawbacks:

Expense of additionallayers of management.

Increased complexity ofvertical communication.

Encouragement of overlytight supervision anddiscouragement ofemployee autonomy.

Concept:

Wider spans ofmanagement increase

organizational efficiency.


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Contrasting Spans of Control


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(contd)


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Common Organization Designs

A Simple Structure:Jack Golds Mens Store


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(contd)


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The Bureaucracy Strengths

Functional economies

of scale

Minimum duplication

of personnel andequipment

Enhanced

communication

Centralized decisionmaking

Weaknesses Subunit conflicts with

organizational goals

Obsessive concern

with rules andregulations

Lack of employee

discretion to deal with

problems


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(contd)

Key Elements:

+ Gains advantages offunctional and product

departmentalization whileavoiding their weaknesses.

+ Facilitates coordination ofcomplex and interdependent

activities.

Breaks down unity-of-command concept.


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Matrix Structure (College of Business Administration)

(Dean)

(Director)

Employee


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New Design Options

Characteristics:

Breaks down departmentalbarriers.

Decentralizes decisionmaking to the team level.

Requires employees to begeneralists as well asspecialists.

Creates a flexiblebureaucracy.


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New Design Options (contd)

Concepts:

Provides maximum

flexibility while

concentrating on what the

organization does best.

Disadvantage is reduced

control over key parts of the

business.


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A Virtual Organization


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New Design Options (contd)

T-form Concepts:Eliminate vertical

(hierarchical) and horizontal

(departmental) internal

boundaries.

Breakdown external barriers

to customers and suppliers.


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Why Do Structures Differ?


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Mechanistic Versus Organic Models


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Why Do Structures Differ? Strategy


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The Strategy-Structure

Relationship


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Technology

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.


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Environment

Key Dimensions:

Capacity: the degree to

which an environment

can support growth.

Volatility: the degree of

instability in the

environment.

Complexity: the degree ofheterogeneity and

concentration among

environmental elements.


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The Three Dimensional Model of the

Environment

Complexity

Volatility

Capacity


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Organizational Designs and

Employee Behavior

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.


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Organization Structure: Its

Determinants and Outcomes

Foundations of Organisation structure

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