OB11 chapter 15 foundations of organization structure

eleventh edition organizational behavior stephen p robbins Chapter 15 Foundations of Organization Structure ORGANIZATIONAL BEHAVIOR S T E P H E N P R O B B I N S E L E V E N T H © 2005 Prentice Hall Inc All rights reserved E D I T I O N WWW.PRENHALL.COM/ROBBINS PowerPoint Presentation by Charlie Cook OBJECTIVES LEARNING After studying this chapter, you should be able to: Identify the six key elements that define an organization’s structure Explain the characteristics of a bureaucracy Describe a matrix organization Explain the characteristics of a virtual organization Summarize why managers want to create boundaryless organizations © 2005 Prentice Hall Inc All rights reserved 15– O B J E C T I V E S (cont’d) LEARNING After studying this chapter, you should be able to: Contrast mechanistic and organic structural models List the factors that favor different organizational structures Explain the behavioral implications of different organizational designs © 2005 Prentice Hall Inc All rights reserved 15–4 What What Is Is Organizational Organizational Structure? Structure? Organizational Structure How job tasks are formally divided, grouped, and coordinated Key KeyElements: Elements: • • Work Workspecialization specialization • • Departmentalization Departmentalization • • Chain Chainof ofcommand command • • Span Spanof ofcontrol control • • Centralization Centralizationand and decentralization decentralization © 2005 Prentice Hall Inc All rights reserved • • Formalization Formalization 15–5 Key KeyDesign DesignQuestions Questionsand andAnswers Answers for forDesigning Designingthe the Proper ProperOrganization OrganizationStructure Structure The Key Question The Answer Is Provided By To what degree are articles subdivided into separate jobs? Work specialization On what basis will jobs be grouped together? Departmentalization To whom individuals and groups report? Chain of command How many individuals can a manager efficiently and effectively direct? Span of control Where does decision-making authority lie? Centralization and decentralization To what degree will there be rules and regulations to direct employees managers? © and 2005 Prentice Hall Inc Formalization All rights reserved 15– E X H I B I T 15–1 E X H I B I T 15–1 What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Work Specialization The degree to which tasks in the organization are subdivided into separate jobs Division Divisionof oflabor: labor: • • Makes Makesefficient efficientuse useof ofemployee employeeskills skills • • Increases Increasesemployee employeeskills skillsthrough throughrepetition repetition • • Less Lessbetween-job between-jobdowntime downtimeincreases increasesproductivity productivity • • Specialized Specializedtraining trainingisismore moreefficient efficient • • Allows Allowsuse useof ofspecialized specializedequipment equipment © 2005 Prentice Hall Inc All rights reserved 15–7 Economies Economies and and Diseconomies Diseconomies of of Work Work Specialization Specialization © 2005 Prentice Hall Inc All rights reserved E X H I B I T 15–2 E X H I B I T 15–2 15–8 What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Departmentalization The basis by which jobs are grouped together Grouping GroupingActivities ActivitiesBy: By: •• Function Function •• Product Product •• Geography Geography •• Process Process •• Customer Customer © 2005 Prentice Hall Inc All rights reserved 15–9 What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Authority The rights inherent in a managerial position to give orders and to expect the orders to be obeyed 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 Unity of Command A subordinate should have only one superior to he or she directly responsible ©whom 2005 Prentice Hallis Inc All rights reserved 15– 10 New New Design Design Options Options (cont’d) (cont’d) Virtual Organization A small, core organization that outsources its major business functions Highly centralized with little or no departmentalization Concepts: Concepts: Advantage: Advantage:Provides Providesmaximum maximumflexibility flexibilitywhile while concentrating concentratingon onwhat whatthe theorganization organizationdoes doesbest best Disadvantage: Disadvantage:Reduced Reducedcontrol controlover overkey keyparts partsof of the thebusiness business © 2005 Prentice Hall Inc All rights reserved 15– 21 AA Virtual Virtual Organization Organization © 2005 Prentice Hall Inc All rights reserved 15– 22 E X H I B I T 15–7 E X H I B I T 15–7 New New Design Design Options Options (cont’d) (cont’d) Boundaryless Organization An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams T-form T-formConcepts: Concepts: Eliminate Eliminatevertical vertical(hierarchical) (hierarchical)and andhorizontal horizontal (departmental) (departmental)internal internalboundaries boundaries Breakdown Breakdownexternal externalbarriers barriersto tocustomers customersand and suppliers suppliers © 2005 Prentice Hall Inc All rights reserved 15– 23 Why Why Do Do Structures Structures Differ? Differ? Mechanistic Model A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization © 2005 Prentice Hall Inc All rights reserved 15– 24 Why Why Do Do Structures Structures Differ? Differ? Organic Model A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making © 2005 Prentice Hall Inc All rights reserved 15– 25 Mechanistic Mechanistic Versus Versus Organic Organic Models Models © 2005 Prentice Hall Inc All rights reserved 15– 26 E X H I B I T 15–8 E X H I B I T 15–8 Why Why Do Do Structures Structures Differ? Differ? –– Strategy Strategy Innovation Strategy A strategy that emphasizes the introduction of major new products and services Cost-minimization Strategy A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting Imitation Strategy A strategy that seeks to move into new products or new markets only after their viability has already ©been 2005proven Prentice Hall Inc 15– All rights reserved 27 The The Strategy-Structure Strategy-Structure Relationship Relationship Strategy Structural Option Innovation Organic: A loose structure; low specialization, low formalization, decentralized Cost minimization Mechanistic: Tight control; extensive work specialization, high formalization, high centralization Imitation Mechanistic and organic: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings © 2005 Prentice Hall Inc All rights reserved 15– 28 E X H I B I T 15–9 E X H I B I T 15–9 Why Why Do Do Structures Structures Differ? Differ? –– Size Size Size How the size of an organization affects its structure As an organization grows larger, it becomes more mechanistic Characteristics Characteristicsof oflarge largeorganizations: organizations: • •More Morespecialization specialization • •More Morevertical verticallevels levels • •More Morerules rulesand andregulations regulations © 2005 Prentice Hall Inc All rights reserved 15– 29 Why Why Do Do Structures Structures Differ? Differ? –– Technology Technology Technology How an organization transfers its inputs into outputs Characteristics Characteristicsof ofroutineness routineness(standardized (standardizedor or customized) customized)ininactivities: activities: • •Routine Routinetechnologies technologiesare areassociated associatedwith withtall, tall, departmentalized departmentalizedstructures structuresand andformalization formalizationinin organizations organizations • •Routine Routinetechnologies technologieslead leadto tocentralization centralizationwhen when formalization formalizationisislow low • •Nonroutine Nonroutinetechnologies technologiesare areassociated associatedwith withdelegated delegated decision decisionauthority authority © 2005 Prentice Hall Inc All rights reserved 15– 30 Why Why Do Do Structures Structures Differ? Differ? –– Environment Environment Environment Institutions or forces outside the organization that potentially affect the organization’s performance Key KeyDimensionsDimensions• • Capacity: Capacity:the thedegree degreeto towhich whichan anenvironment environmentcan can support supportgrowth growth • • Volatility: Volatility:the thedegree degreeof ofinstability instabilityininthe theenvironment environment • • Complexity: Complexity:the thedegree degreeof ofheterogeneity heterogeneityand and concentration concentrationamong amongenvironmental environmentalelements elements © 2005 Prentice Hall Inc All rights reserved 15– 31 The The Three Three Dimensional Dimensional Model Model of of the the Environment Environment Volatility Capacity Complexity © 2005 Prentice Hall Inc All rights reserved 15– 32 E X H I B I T 15–10 E X H I B I T 15–10 “Bureaucracy “Bureaucracy Is Is Dead” Dead”  Characteristics of Bureaucracies – Specialization – Formalization – Departmentalization – Centralization – Narrow spans of control – Adherence to a chain of command © 2005 Prentice Hall Inc All rights reserved  Why Bureaucracy Survives – Large size prevails – Environmental turbulence can be largely managed – Standardization achieved through hiring people who have undergone extensive educational training – Technology maintains control 15– 33 Organizational Organizational Designs Designs and and Employee Employee Behavior Behavior Research ResearchFindings: Findings: • • Work Workspecialization specializationcontributes contributesto tohigher higheremployee employee productivity, productivity,but butititreduces reducesjob jobsatisfaction satisfaction • • The Thebenefits benefitsof ofspecialization specializationhave havedecreased decreasedrapidly rapidlyas as employees employeesseek seekmore moreintrinsically intrinsicallyrewarding rewardingjobs jobs • • The Theeffect effectof ofspan spanof ofcontrol controlon onemployee employeeperformance performanceisis contingent contingentupon uponindividual individualdifferences differencesand andabilities, abilities,task task structures, structures,and andother otherorganizational organizationalfactors factors • • Participative Participativedecision decisionmaking makinginindecentralized decentralized organizations organizationsisispositively positivelyrelated relatedto tojob jobsatisfaction satisfaction © 2005 Prentice Hall Inc All rights reserved 15– 34 Organization Organization Structure: Structure: Its Its Determinants Determinants and and Outcomes Outcomes Implicit Models of Organizational Structure Perceptions that people hold regarding structural variables formed by observing things around them in an unscientific fashion © 2005 Prentice Hall Inc All rights reserved 15– 35 E X H I B I T 15–11 E X H I B I T 15–11 [...]... Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Span of Control The number of subordinates a manager can efficiently and effectively direct Concept: Concept: Wider Widerspans spansof ofmanagement managementincrease increaseorganizational organizational efficiency efficiency Narrow NarrowSpan SpanDrawbacks: Drawbacks: • •Expense Expenseof ofadditional additionallayers layersof... All rights reserved 15 13 © 2005 Prentice Hall Inc All rights reserved Source: S Adams, Dogbert’s Big Book of Business, DILBERT reprinted by permission of United Features Syndicate, Inc 15 14 E X H I B I T 15 4 E X H I B I T 15 4 Common Common Organization Organization Designs Designs Simple Structure A structure characterized by a low degree of departmentalization, wide spans of control, authority... keyparts partsof of the thebusiness business © 2005 Prentice Hall Inc All rights reserved 15 21 AA Virtual Virtual Organization Organization © 2005 Prentice Hall Inc All rights reserved 15 22 E X H I B I T 15 7 E X H I B I T 15 7 New New Design Design Options Options (cont’d) (cont’d) Boundaryless Organization An organization that seeks to eliminate the chain of command, have limitless spans of control,... coordinationof ofcomplex complexand and interdependent interdependentactivities activities ––Breaks Breaksdown downunity -of- command unity -of- commandconcept concept © 2005 Prentice Hall Inc All rights reserved 15 18 Matrix MatrixStructure Structure( College (Collegeof ofBusiness BusinessAdministration) Administration) (Director) (Dean) © 2005 Prentice Hall Inc All rights reserved Employee 15 19 E X H I B I T 15 6... rights reserved 15 34 Organization Organization Structure: Structure: Its Its Determinants Determinants and and Outcomes Outcomes Implicit Models of Organizational Structure Perceptions that people hold regarding structural variables formed by observing things around them in an unscientific fashion © 2005 Prentice Hall Inc All rights reserved 15 35 E X H I B I T 15 11 E X H I B I T 15 11 ... rights reserved 15 12 E X H I B I T 15 3 E X H I B I T 15 3 What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Centralization The degree to which decision making is concentrated at a single point in the organization Decentralization The degree to which decision making is spread throughout the organization Formalization The degree to which jobs within the organization. .. additionallayers layersof ofmanagement management • •Increased Increasedcomplexity complexityof ofvertical verticalcommunication communication • •Encouragement Encouragementof ofoverly overlytight tightsupervision supervisionand and discouragement of ofemployee employeeautonomy autonomy 2005discouragement Prentice Hall Inc © All rights reserved 15 11 Contrasting Contrasting Spans Spans of of Control Control... Imitation Mechanistic and organic: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings © 2005 Prentice Hall Inc All rights reserved 15 28 E X H I B I T 15 9 E X H I B I T 15 9 Why Why Do Do Structures Structures Differ? Differ? –– Size Size Size How the size of an organization affects its structure As an organization grows larger, it becomes... effectof ofspan spanof ofcontrol controlon onemployee employeeperformance performanceisis contingent contingentupon uponindividual individualdifferences differencesand andabilities, abilities,task task structures, structures,and andother otherorganizational organizationalfactors factors • • Participative Participativedecision decisionmaking makinginindecentralized decentralized organizations organizationsisispositively... authority centralized in a single person, and little formalization AASimple SimpleStructure: Structure: Jack JackGold’s Gold’sMen’s Men’sStore Store © 2005 Prentice Hall Inc All rights reserved 15 15 E X H I B I T 15 5 E X H I B I T 15 5 Common Common Organization Organization Designs Designs (cont’d) (cont’d) Bureaucracy A structure of highly operating routine tasks achieved through specialization, very formalized