Org Structure & Design

Ch 15

Apr 29, 2008

Structure Basic Dimensions

• Org structure – formal structure betw groups & people of allocation of tasks, responsibilities, authority– View w/org chart– Shows formal lines of authority

• 2 basic requirements of org structure –– Divide labor into distinct tasks– Coordinate tasks so employees can work

Coordination Options

• Can coordinate tasks by:– Using informal communication

• Examples?

– Use formal hierarchy (but…limited)

– Use of standardization• Examples?

Dimensions of Org Structure

• Hierarchy– Tall (many levels) vs flat (few levels)

• Division of Labor– Specialization of tasks

• Span of Control– Number of people reporting to ea manager

• Wide (many people) vs narrow (few people)• What is this linked to?

Dimensions (cont.)

• Line v staff positions– Line = decision making; staff = support

• Decentralization– Level of delegation of power

• Changes over time, as org grows• What is often assumed v. what is best?

Ways to structure orgs

• Departmentalization – how to organize units– Functional orgs – departmentalize by task

• Examples?• Disadvantages?

– Product orgs – departmentalize by output• Examples?• Disadvantages?

Matrix Orgs

• Matrix orgs – employees report to both project/product manager & functional / division manager– Combines function and product forms– Use of dual authority structure – 2 bosses– When does this work well?

Emerging forms of depts.

• Team-based (lateral) structure– Very flat structure using cross-functional teams– Very little formalization w/ empowered teams– Advantages? Disadvantages?

Emerging forms

• Network structure (aka ‘virtual org’)– Cisco Systems – network of suppliers,

manufacturers, other partners– Outsourcing noncritical functions to those

w/expertise, core org coordinates process– Advantages? Disadvantages?

Org Design

• Process of coordinating the structure elements

• Range of theories– Classical org theory – assume one best way

to design/structure org (early 1900s)• What was presumed to be best?

– Neoclassical theory – human relations focus w/goal of ee satisfaction

• What was preferred?

Org Design

• Contingency Approaches – Lawrence& Lorsch (1969); now most accepted org design– Design depends on org’s environment

• Including economy, competitors, geography, suppliers, workforce

– Studies comparing orgs in stable v unstable environments resulted in models of ‘mechanistic’ v ‘organic’ orgs

Org Design– Mechanistic Orgs – stable environments

with little change in product, market, or technology

• What is their strength?

– Organic Orgs – unstable environments• What are their features?

– What is most effective, according to Lawrence & Lorsch?

Mintzberg’s Theory

• Orgs composed of 5 basic elements; which one is dominant determines most effective design for that situation– How are each defined?– Operating Core: – Strategic Apex: – Middle Line:– Technostructure:– Support Staff:

Mintzberg (cont.)

• Mintzberg specifies 5 designs based on which of the 5 groups dominates…– How is each structured?– 1) Simple structure: – 2) Machine bureaucracy:– 3) Professional bureaucracy:– 4) Divisional structure:– 5) Adhocracy: