Basic Organization Designs

Where We Are Part 1 Introduction Part 2 Planning Part 3 Organizing Part 4 Leading Part 5 Controlling Part 3 Organizing Chapter 5 Basic Organization Designs Chapter 6 Staffing and Human Resource Management Chapter 7 Managing Change and Innovation Chapter 5 Basic Organization Designs

Chapter Guide 6 Basic elements of organization structure –Work specialization, chain of command, span of control, authority and power, degree of centralization, departmentalization 5 Types of organization design –Simple structure, bureaucracies, matrix structure, team based structure, boundaryless organization

Organizational Structure The formal arrangement of jobs within an organization.

Work Specialization Chain of Command Span of Control Authority and Responsibility Responsibility DepartmentalizationDepartmentalization Degree of Centralization Centralization Basic Elements of Structure Basic elements: Overview

Work Specialization –The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person. –Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover. Basic elements: 1 Work specialization

Economies of Work Specialization Impact from Economies of Specialization Impact from Human Diseconomies Work Specialization High Low High Productivity Basic elements: Work specialization

Chain of Command The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to who. Basic elements: 2 Chain of command

The Chain of Command District A District A District B District B District C District C District D District D District E District E District F District F District G District G Region 1 Region 1 Region 2 Region 2 Region 3 Region 3 Region 4 Region 4 Region 5 Region 5 Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President Chief Executive Officer Chief Executive Officer Executive Vice President Executive Vice President Executive Vice President Executive Vice President President Basic elements: Chain of command Unity of command Unity of command : No person should report to more than one boss

The Span of Control ContingencyVariablesContingencyVariables Level in the Organization Organization Basic elements: 3 Span of control

AuthorityandResponsibility AuthorityandResponsibility Responsibility refers the obligation to perform assigned activities Authority refers the right inherent in a managerial position to give orders Basic elements: 4 Authority and responsibility

Executive Director Assistant to the Executive Director Unit 2 Manager Unit 1 Manager Other Human Resources OperationsPurchasing Other Directors Director of Purchasing Director of Human Resources Director of Operations OtherOperationsPurchasing Human Resources Line Authority Staff Authority Basic elements: Authority and responsibility Line Versus Staff Authority

AuthorityPower Defining … capacity decisions An individual’s capacity to influence decisions managerial position The right inherent in a managerial position to give orders Basic elements: Authority and responsibility

Authority vs. Power Marketing Human Resources ProductionAccounting Finance Chief Executive Officer Research and Development Finance Accounting Marketing Human Resources Production Research and Development Function Authority Level The Power Core Authority Power Authority is a right based one one’s position in an organization, while Power refers to individual‘s capacity to influence decisions. Authority is a two dimensional concept, while Power is a three dimensional one. Basic elements: Authority and responsibility

The Degree of Centralization Higher Employee Empowerment Centralization Decentralization HigherLower Top Management Control Lower Basic elements: 5 Degree of centralization

Five Ways to Departmentalize ProcessProcess FunctionalFunctional CustomerCustomer ProductProduct GeographicGeographic Basic elements: 6 Departmentalization

Organic Organic v Collaboration v Adaptable Duties v Few Rules v Informal Communication v Decentralized Decisions v Flatter Structures Mechanistic Mechanistic v Rigid Hierarchy v Fixed Duties v Many Rules v Formal Communication v Centralized Decisions v Taller Structures Organizational Forms Two forms of organizational structure

OrganizationDesignApplications Simple Structure Bureaucracy Matrix structures Team based Boundaryless Types of design

Wide Spans of Control FewDepartments LittleFormalization The Simple Structure Types of design: 1 Simple structure (Traditional design) CentralizedAuthority

The Bureaucracy DivisionalStructureFunctionalStructure Types of design: 2 The bureaucracy (Traditional design)

The Matrix Structure Design Engineering Contract Engineering ManufacturingPurchasingAccounting Human Resources Design Group Contract Group Manufacturing Group Human Resources Group Alpha Project Omega Project Repeated as above for each project Purchasing Group Accounting Group Beta Project Gamma Project Types of design: 3 The matrix (Contemporary design)

The Matrix Structure Cross-FunctionalCoordinationClearAccountability Allocation of Specialists Dual Chain of Command Types of design: The matrix (Contemporary design)

The Team-Based Structure Hold Teams AccountableEmpowerWorkers Types of design: 4 Team based (Contemporary design)

TheBoundarylessOrganizationTheBoundarylessOrganization Limited Chain Of Command Limited Chain Of Command Widened Spans Of Control Widened Spans Of Control Empowered Employee Teams Empowered Types of design: 5 Boundaryless (Contemporary design)

6 elements of organization structure Authority vs. power 5 ways of departmentalization Mechanistic vs. organic organizations Strengths of the matrix structure Boundaryless organization Chapter Summary