Organizational Behavior: Foundations of Organization Structure

Robbins, Judge, and Vohra
Organizational Behavior
14th Edition
Foundations of Organization Structure

Kelli J. Schutte
William Jewell College Copyright 2012 Dorling Kindersley (India) Pvt. Ltd Authorized adaptation from the United States edition of Organizational Behavior, 14e
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Chapter Learning Objectives

After studying this chapter, you should be able to:
Identify the six elements of an organizations structure. Identify the characteristics of a bureaucracy. Describe a matrix organization. Identify the characteristics of a virtual organization. Show why managers want to create boundaryless organizations. Demonstrate how organizational structures differ, and contrast mechanistic and organic structural models. Analyze the behavioral implications of different organizational designs. Show how globalization affects organizational structure.
Copyright 2012 Dorling Kindersley (India) Pvt. Ltd Authorized adaptation from the United States edition of Organizational Behavior, 14e
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What Is Organizational Structure?

Organizational Structure
How job tasks are formally divided, grouped, and coordinated Key Elements:
1. Work specialization
2.
3. 4.
Departmentalization
Chain of command Span of control
5.
6.
Centralization and decentralization

Formalization
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1. Work Specialization
The degree to which tasks in the organization are subdivided into separate jobs 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
Can create greater economies and efficiencies but not always
E X H I B I T 15-1 Copyright 2012 Dorling Kindersley (India) Pvt. Ltd Authorized adaptation from the United States edition of Organizational Behavior, 14e
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Work Specialization Economies and Diseconomies
Specialization can reach a point of diminishing returns Then job enlargement gives greater efficiencies than does specialization
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2. Departmentalization
The basis by which jobs are grouped together Grouping Activities by:
Function Product Geography Process Customer
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3. Chain of Command
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 The rights inherent in a managerial position to give orders and to expect the orders to be obeyed A subordinate should have only one superior to whom he or she is directly responsible
Authority
Unity of Command
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4. Span of Control
The number of subordinates a manager can efficiently and effectively direct
Wider span of management control increases organizational efficiency Drawbacks of narrow span of control:
Expense of additional layers of management Increased complexity of vertical communication Encouragement of overly tight supervision and discouragement of employee autonomy
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Contrasting Spans of Control
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5. Centralization and Decentralization

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.
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6. Formalization
The degree to which jobs within the organization are standardized.
High formalization
Minimum worker discretion in how to get the job done Many rules and procedures to follow
Low formalization
Job behaviors are nonprogrammed Employees have maximum discretion
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Common Organization Designs: Simple Structure

Simple Structure
A structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization
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Common Organizational Designs: Bureaucracy

Bureaucracy
A structure of highly routine operating 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
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An Assessment of Bureaucracies
Strengths
Results in 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
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Common Organizational Designs: Matrix

Matrix Structure
A structure that creates dual lines of authority and combines functional and product departmentalization
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
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New Design Options: Virtual Organization

A small, core organization that outsources its major business functions
Highly centralized with little or no departmentalization Provides maximum flexibility while concentrating on what the organization does best Reduced control over key parts of the business
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New Design Options: 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 Concepts
Eliminate vertical (hierarchical) and horizontal (departmental) internal boundaries Breakdown external barriers to customers and suppliers
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Two Extreme Models of Organizational Design
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Four Reasons Structures Differ

1. Strategy
Innovation Strategy
A strategy that emphasizes the introduction of major new products and services Organic structure is best for the implementation of this strategy
Cost-minimization Strategy
A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting Mechanistic model is best for the implementation of this strategy.
Imitation Strategy
A strategy that seeks to move into new products or new markets only after their viability has already been proven Mixture of the organic and mechanistic structure is best for the implementation of this strategy
SEE E X H I B I T 15-8 Copyright 2012 Dorling Kindersley (India) Pvt. Ltd Authorized adaptation from the United States edition of Organizational Behavior, 14e
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Four Reasons Structures Differ (Continued)

2. Organizational Size
As organizations grow, they become more mechanistic, more specialized, with more rules and regulations How an organization transfers its inputs into outputs
The more routine the activities, the more mechanistic the structure, and the greater the formalization Custom activities need an organic structure
3. Technology
4. Environment
Institutions or forces outside the organization that potentially affect the organizations performance
Three key dimensions: capacity, volatility, and complexity
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Three-Dimensional Environment Model

Volatility
Complexity
Capacity
Capacity
The degree to which an environment can support growth
Volatility
The degree of instability in the environment
Complexity
The degree of heterogeneity and concentration among environmental elements
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Organizational Designs and Employee Behavior

Impossible to generalize due to individual differences in the employees Research findings
Work specialization contributes to higher employee productivity, but it reduces job satisfaction The benefits of specialization have decreased rapidly as employees seek more intrinsically rewarding jobs The effect of span of control on employee performance is contingent upon individual differences and abilities, task structures, and other organizational factors Participative decision making in decentralized organizations is positively related to job satisfaction
People seek and stay at organizations that match their needs.

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Global Implications
Culture and Organizational Structure
Many countries follow the U.S. model For many Indian managers, individual leadership is the most important reason for the success or failure of an organization
Culture and Employee Structure Preferences

Cultures with high-power distance may prefer mechanistic structures
Culture and the Boundaryless Organization

May be a solution to regional differences in global firms Breaks down cultural barriers, especially in strategic alliances Telecommuting also blurs organizational boundaries
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Summary and Managerial Implications

Structure impacts both the attitudes and behaviors of the people within it
Associated with
Impact of Technology
Makes it easier to change organizational structure to fit employee and organizational needs
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Robbins, Judge, and Vohra

Foundations of Organization Structure

Chapter Learning Objectives

What Is Organizational Structure?

Centralization and decentralization

Can create greater economies and efficiencies but not always

Work Specialization Economies and Diseconomies

Contrasting Spans of Control

5. Centralization and Decentralization

Common Organization Designs: Simple Structure

Common Organizational Designs: Bureaucracy

Common Organizational Designs: Matrix

New Design Options: Virtual Organization

New Design Options: Boundaryless Organization

Two Extreme Models of Organizational Design

Four Reasons Structures Differ

Four Reasons Structures Differ (Continued)

Three-Dimensional Environment Model

The degree to which an environment can support growth

Organizational Designs and Employee Behavior

People seek and stay at organizations that match their needs.

Culture and Employee Structure Preferences

Culture and the Boundaryless Organization

Summary and Managerial Implications

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

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