Fundamentals of organizational behavior 2e by dubrin ch12

Chapter 12 Organization Structure and Design Fundamentals of Organizational Behavior 2e Andrew J DuBrin PowerPoint Presentation by Charlie Cook Learning Objectives Identify and define the foundation concepts of organization structure, including the informal structure Specify the basic features of the bureaucratic form of organization, including how it is divided into departments Describe key modifications of a bureaucratic structure: matrix, flat, and outsourcing Describe the two contemporary organizational designs referred to as horizontal organizations and network organizations Understand why a new type of organization chart called an organigraph can contribute to understanding organization structure A J DuBrin, Fundamentals of Organizational 12–2 Organizations Organization  Is a collection of people working together to achieve a common purpose (or simply a big group) Organization structure  Is the arrangement of people and tasks to accomplish organizational goals Organizational design  Is the process of creating a structure that best fits a purpose, strategy, and environment A J DuBrin, Fundamentals of Organizational 12–3 Foundation Concepts of Organizational Structure Mechanistic versus Organic  Mechanistic organizations are hierarchical bureaucracies with an emphasis on specialization, control, and vertical communications They rely heavily on rules, policies, and procedures  Organic structures are laid out as networks and emphasize horizontal specialization, personal coordination, and extensive informal communications They have loose rules, policies, and procedures that allow for rapid responses to changes in the environment A J DuBrin, Fundamentals of Organizational 12–4 Foundation Concepts of Organizational Structure Formal versus Informal Structure  Formal organizational structure  Is an official statement of the reporting relationships, rules, and regulations that guide and govern the conduct of business by the organization  Informal organizational structure   Is a set of unofficial working relationships providing the flexibility that take care of events and transactions not covered by the formal structure Is revealed using social network analysis to trace informal social relationships and communication channels A J DuBrin, Fundamentals of Organizational 12–5 Foundation Concepts of Organizational Structure Formalization  Is the degree to which expectations regarding the methods of work are specified, written down, and enforced  Produces an organization with highly specialized labor and high delegation of authority  Is associated with mechanistic (bureaucratic) organizations A J DuBrin, Fundamentals of Organizational 12–6 Foundation Concepts of Organizational Structure Centralization  Is the extent to which executives delegate authority to lower organizational units Less delegation = more centralization  Strategic decisions are more likely to be centralized than operational decisions  The use of functional units is a feature of centralization A J DuBrin, Fundamentals of Organizational 12–7 Foundation Concepts of Organizational Structure Complexity  Refers to the number of different job titles and organizational units in an organization  Increases the difficulty of managing an organization  Typically increases with the size of the organization Differentiation  A horizontally differentiated organization has many different job titles  A vertically differentiated organization has many different levels A J DuBrin, Fundamentals of Organizational 12–8 Foundation Concepts of Organizational Structure Tight versus Loose Coupling  Coupling is the extent to which organizational parts are interdependent  Tight coupling between parts is indicated if a minor change in one part produces a large change in an associated part  The degree of coupling in businesses has increased due to the increasing interdependence of the parts or subsystems of organizations today  Organizational design is influenced by coupling and the increased necessity for flexibility to meet changing market conditions A J DuBrin, Fundamentals of Organizational 12–9 Weber’s Ideal Organization: Bureaucracy Rules and procedures controlling the organizational structure A high degree of differentiation among organizational functions A high degree of job specialization An organization of offices determined by hierarchy, with each unit reporting to a higher unit A heavy emphasis on rules and norms to regulate behavior Interpersonal relations characterized by impersonality in place of favoritism Selection and promotion based on merit All administrative actions recorded in writing A J DuBrin, Fundamentals of Organizational 12–10 The Bureaucratic Form of Organization The Contribution of Bureaucracy  Makes possible large-scale accomplishments and accountability for results  Bureaucratic layers contain managers with precious skills and expertise If eliminated, the organization may suffer  Restructuring may destroy valuable organizational memory Potential Dysfunctions of a Bureaucracy  Carrying bureaucratic characteristics to extremes suppresses innovation and decision making, lowers productivity, and creates inconvenience and inefficiency  Workers experience high frustration and low satisfaction A J DuBrin, Fundamentals of Organizational 12–13 Sources of Individual and Subunit Power Departmentalization  Is advantageous in that it gives major attention to enhancing product growth or service to customers  Is the process of subdividing work into specialized departments  Functional Departmentalization  Is grouping people according to their expertise  Territorial Departmentalization   Is grouping subunits according to the geographic areas that they serve Internationalization of business has increased the need for organizing subunits territorially A J DuBrin, Fundamentals of Organizational 12–14 Sources of Individual and Subunit Power Departmentalization (cont’d)  Product/Service Departmentalization  Is arranging units by the product or service they provide  Customer Departmentalization  Creates a structure based on customer needs Hybrid (or Mixed) Organization Structure  Combines the advantages of different organizational types Line versus Staff  Line groups are responsible for the primary purposes of the firm whereas staff groups are responsible for secondary purposes A J DuBrin, Fundamentals of Organizational 12–15 Functional Departmentalization President Vice President Marketing Vice President Operations Vice President Engineering Vice President Human Resources Vice President Finance and Chief Financial Officer EXHIBIT 12-2 A J DuBrin, Fundamentals of Organizational 12–16 Product-Service Departmentalization EXHIBIT 12-3 CEO Vice President Marketing Vice President Operations Vice President Engineering Vice President Human Resources Large Appliance Division Small Appliance Division Airplane Engines Division Real Estate Development Division Marketing Operations Engineering A J DuBrin, Fundamentals of Organizational Human Resources 12–17 Hybrid Organization Structure International CEO Vice President Desktop Computers Vice President Printers Vice President Palm-Size Computers Marketing and Sales Operations Human Resources Domestic Manufacturing Logistics Compensation Training and Development EXHIBIT 12-4 A J DuBrin, Fundamentals of Organizational 12–18 Mixed Organizing at Various Levels CEO Executive Vice President Sales and Marketing Vice President Sales Sales Manager West Executive Vice President Product Planning and Design Vice President Marketing Manager Advanced Plannning Sales Manager South Sales Manager Midwest EXHIBIT 12-4A Vice President Product Planning Sales Manager East Executive Vice President Operations Vice President Manufacturing Vice President Information Systems Manager Special Projects Manager Current Product Planning Manager Environmental Regulations A J DuBrin, Fundamentals of Organizational 12–19 Key Modifications to the Bureaucratic Structure Matrix Organization  Is a project structure superimposed on a functional structure to take advantage of new opportunities and solve special problems  Projects are temporary groups of specialists working under one manager to accomplish a fixed objective such as launching a new product  Matrix structure creates a dual reporting challenge—the involved employees may have to report to two bosses  A key advantage is to implement projects quickly A J DuBrin, Fundamentals of Organizational 12–20 Matrix Organization in an Electrics Company President or Electrical Operations Marketing Electrical Operations Marketing Engineer Technician Specialist Electrical Operations Marketing Engineer Technician Specialist Digital Electrical Operations Marketing Assistant Engineer Technician Specialist Engineer Laptop Computer Project Cellular Phone Project Personal Project EXHIBIT 12-5 Information Systems Information Systems Specialist Information Systems Specialist Information Systems Specialist Quality Quality Analyst Quality Analyst Quality Analyst Horizontal Flow of Project Authority and Responsibility General Manager Vertical Flow of Functional Authority and Responsibility A J DuBrin, Fundamentals of Organizational 12–21 Flat Organizational Structures and Downsizing Flat Organization  Has relatively few levels  Is less bureaucratic because:   There are few managers available to review decisions Short chain-of-command creates less concern about authority differences among people  Are more efficient than tall organizations  Requires that managers be conscious of the effects that downsizing to a flatter structure has on surviving employees A J DuBrin, Fundamentals of Organizational 12–22 Outsourcing as an Organizational Arrangement Outsourcing  Is having work done by other organizations  Is a method of dividing the work between groups on the outside with groups on the inside  Reduces the need for employees and physical assets and reduces payroll costs  Can create ethical dilemmas for companies who have no control over the actions of their outsourcing suppliers A J DuBrin, Fundamentals of Organizational 12–23 Leading-Edge Organizational Structures The Horizontal Structure  Is the arrangement of work by teams that are responsible for accomplishing a process  Is a structure in which employees take collective responsibility for customers Reengineering  Is the radical redesign of work to achieve substantial improvements in performance  Searches for the most efficient way to perform a task  Organizes work horizontally rather than vertically A J DuBrin, Fundamentals of Organizational 12–24 A Horizontal Structure Customer Request EXHIBIT 12-6 Marketing Specialist Finance Specialist IT Specialist Operations Specialist A J DuBrin, Fundamentals of Organizational Order Fulfillment 12–25 The Network Structure A Network Structure (or virtual organization)  Is a temporary association of otherwise independent firms that are linked by technology to share resources and markets  Is horizontally oriented  Requires that its members trust one another A J DuBrin, Fundamentals of Organizational 12–26 Organigraphs: Drawing How Companies Really Work Organigraphs  Maps that provides an overview of the company’s functions and the way people organize themselves at work  Help understand organizational functioning  Assist in expanding into new markets and opportunities  Exhibit 12-7 in the textbook depicts the current configuration of a bank and strategic options for altering the structure of the organization A J DuBrin, Fundamentals of Organizational 12–27 ... J DuBrin, Fundamentals of Organizational 12–4 Foundation Concepts of Organizational Structure Formal versus Informal Structure  Formal organizational structure  Is an official statement of. .. centralization A J DuBrin, Fundamentals of Organizational 12–7 Foundation Concepts of Organizational Structure Complexity  Refers to the number of different job titles and organizational units... skills for coordination and is composed of a core of highly trained professionals A J DuBrin, Fundamentals of Organizational 12–11 The Bureaucratic Form of Organization High Few TopLevel Managers