Week 8 - Organizational Structure Design by ebh18594

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									 Principles of Management


Week 8 - Organizational
Structure & Design
                            1
    Definitions
   Organizational Structure
       The formal arrangement of jobs within an
        organization
   Work specialization
       The degree to which tasks are divided into
        separate jobs (division of labor)
   Departmenalization
       The basis by which jobs are grouped together
            Geographical, functional, product, process, customer
            Cross-functional teams

                                                                    2
    Definitions
   Chain of command
       The continuous line of authority
   Span of control
       Number of employees a manager can effectively manage
   Centralization
       The degree to which decision making is concentrated at a
        single point in the org
       Decentralization - the degree to which lower-level
        employees provide input or actually make decisions
   Formalization
       The degree to which jobs are standardized
       The degree to which employee behavior is guided by rules
        and procedures

                                                                   3
         Mechanistic vs. Organic Org
                                 Organic Org
   Mechanistic Org                  Low work
       High work                     specialization (use of
        specialization                cross-functional teams)
       Rigid                        Low
        departmentalization           departmentalization
       Long chain of                 Short chain of
        command                       command
       Narrow spans of              Wide spans of control
        control                      Decentralization
       Centralization               Low formalization
       High formalization

                                                                4
When to use the 2 structures
   Strategy
       Cost strategy – mechanistic
       Differentiation strategy – organic
   Size
       Large org – mechanistic
       Small org – organic
   Environmental uncertainty
       Certain – mechanistic
       Uncertain – organic

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Other contemporary structures
   Team structures
       The entire org is made of work groups
   Matrix structure
       Specialists from different functions to form teams
        to work on projects
   Project structure
       Employees continuously work on projects
       But no formal departments

                                                             6
Other contemporary structures
   Boundaryless org
       No predefined structures
   Virtual org
       Consists of a small core of employees and hires
        temporary outside specialists to work on
        opportunities that arise
   Network org
       A small core org that outsources major business
        functions
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