O r g a n i z a t i o n a l S t r u c t u r e

O r g a n i z a t i o n a l S t r u c t u r e

15–2

Key Elements:

• Work specialization

• Departmentalization

• Chain of command

• Span of control

• Centralization and decentralization

• Formalization

Key Elements:

• Work specialization

• Departmentalization

• Chain of command

• Span of control

• Centralization and decentralization

• Formalization

Organizational Structure

How job tasks are formally divided, grouped, and coordinated. Stephen P Robbins

Organizational Structure can be defined as the framework of tasks reporting and authority relationships within which an organization functions.

15–3

The Key Question The Answer Is Provided By

1. To what degree are articles Work specializationsubdivided into separate jobs?

2. On what basis will jobs be grouped Departmentalizationtogether?

3. To whom do individuals and groups Chain of commandreport?

4. How many individuals can a manager Span of controlefficiently and effectively direct?

5. Where does decision-making Centralizationauthority lie? and decentralization

6. To what degree will there be rules Formalizationand regulations to direct employeesand managers?

15–4

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.

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.

Work Specialization

The degree to which tasks in the organization are subdivided into separate jobs.

15–5

15–6

Grouping Activities By:

• Function

• Product

• Geography

• Process

• Customer

Grouping Activities By:

• Function

• Product

• Geography

• Process

• Customer

Departmentalization

The basis by which jobs are grouped together.

15–7

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.

Authority

The rights inherent in a managerial position to give orders and to expect the orders to be obeyed.

Unity of Command

A subordinate should have only one superior to whom he or she is directly responsible.

15–8

Narrow Span Drawbacks:

• Expense of additional layers of management.

• Increased complexity of vertical communication.

• Encouragement of overly tight supervision and discouragement of employee autonomy.

Narrow Span Drawbacks:

• Expense of additional layers of management.

• Increased complexity of vertical communication.

• Encouragement of overly tight supervision and discouragement of employee autonomy.

Concept:Concept:

Wider spans of management increase organizational Wider spans of management increase organizational efficiency.efficiency.

Concept:Concept:

Wider spans of management increase organizational Wider spans of management increase organizational efficiency.efficiency.

Span of ControlThe number of subordinates a manager can efficiently and effectively direct.

15–9

E X H I B I T 15–3E X H I B I T 15–3

15–

10

Centralization

The degree to which decision making is concentrated at a single point in the organization.

Formalization

The degree to which jobs within the organization are standardized.

Decentralization

The degree to which decision making is spread throughout the organization.

© 2005 Prentice Hall Inc. All rights reserved.15

–11

E X H I B I T 15–4E X H I B I T 15–4Source: S. Adams, Dogbert’s Big Book of Business, DILBERT

reprinted by permission of United Features Syndicate, Inc.

15–

12

Types of Organizational DesignsTypes of Organizational Designs

Simple Structure

The Bureaucracy

The Matrix Organization

15–

13

A Simple Structure:Jack Gold’s Men’s Store

A Simple Structure:Jack Gold’s Men’s Store

Simple Structure

A structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization.

E X H I B I T 15–5E X H I B I T 15–5

15–

14

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.

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

15–

15

15–

16

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.

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.

Matrix Structure

A structure that creates dual lines of authority and combines functional and product departmentalization.

The matrix organization is an attempt to combine the advantages of the pure functional structure and the product organizational structure. This form is identically suited for companies, such as construction, that are “project-driven”. The figure below shows a typical Matrix organization.

In a matrix organization, each project manager reports directly to the vice president and the general manager. Since each project represents a potential profit centre, the power and authority used by the project manager come directly from the general manager.

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18

(Dean)

E X H I B I T 15–6E X H I B I T 15–6

The basis for the matrix organization is an endeavor to create synergism through shared responsibility between project and functional management. Other advantages of a pure matrix organizational form, to project management, include:

Because key people can be shared, the project cost is minimized

Conflicts are minimal, and those requiring hierarchical referrals are more easily resolved

There is a better balance between time, cost and performance

Authority and responsibility are shared

Stress is distributed among the team