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Organizational Behavior Presented To: Sir Tisman Pasha Presented By: Khurram Shahzad Roll# : 07-32

BZUPAGES.COM Foundations Of Organization Structure CH#16

BZUPAGES.COM Contents Why Do Structures Differ? Organizational Designs and Employee Behavior Organization Structure: Its Determinants and Outcomes

BZUPAGES.COM Why Do Structures Differ?

BZUPAGES.COM Why Do Structures Differ? Mechanistic Model: A structure characterized by:  Extensive departmentalization  High formalization  Centralization  Restricted Information Flow

BZUPAGES.COM Why Do Structures Differ? Organic Model: A structure characterized by:  Flat  cross-functional teams  has low formalization  Relies on participative decision making  Free Flow of information

BZUPAGES.COM Mechanistic Versus Organic Models

BZUPAGES.COM Factors Causes The Organization’s Structure Differ Strategy Organization Size Technology Environment

BZUPAGES.COM 1- Organization Strategy Organization goals are achieved by Strategies Strategy and Structure should be closely linked Structure must follow Strategy Change in Organization’s Strategy should be reflected changes in it’s Structure to support this change

BZUPAGES.COM Strategy Framework Dimensions 1- Innovation Strategy: A strategy that emphasizes the introduction of major new products and services. e.g. Apple 3- Imitation Strategy: A strategy that seeks to move into new products or new markets only after their viability has already been proven. e.g. HP 2- Cost-minimization Strategy: A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting. e.g. Wal-Mart

BZUPAGES.COM The Strategy-Structure 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

BZUPAGES.COM 2- Organization SIZE Organization’s Size Significantly affects it’s structure Organizations with 2000 and more employees are Called Large Organizations Increasing Employees does not affect the larger organizations But Increasing Employees can affect the shifting of structure for Small Organizations

BZUPAGES.COM Why Do Structures Differ? – Size “As an organization grows larger, it becomes more mechanistic.” Characteristics of large organizations: More specialization More Departmentalization More hierarchal structure More rules and regulations than Smaller organization

BZUPAGES.COM 3- Organization Technology Technology: “How an organization transfers its inputs into outputs.” Every Organization has at-least one technology for converting Financial, Human and physical resources into products and services. Examples: Ford Motors uses “Assembly-line process” for it’s products Universities normally uses “Formal lecture method”

BZUPAGES.COM Characteristics of Routine and Non-Routine Technologies Routine technologies are associated with long, departmentalized structures and formalization in organizations. Routine technologies leads to centralization when formalization is low. Non-routine technologies are associated with delegated decision authority.

BZUPAGES.COM 4- Organization Environment “Institutions or forces outside the organization that potentially affect the organization’s performance.” Organization’s structure is affected by it’s environment due to environmental uncertainty. Organization’s Having static environment are less affected by environment. Organization’s Having Dynamic environment are more affected by environment.

BZUPAGES.COM The Three Dimensional Model of the Environment Key Dimensions: 1- Capacity: the degree to which an environment can support growth. 2- Volatility: the degree of instability in the environment. 3- Complexity: The degree of heterogeneity and concentration among environmental elements.

BZUPAGES.COM Cont…….. Complexity Volatility Capacity

BZUPAGES.COM Organizational Designs And Employee Behavior

BZUPAGES.COM Organizational Designs & Employee Behavior 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.

BZUPAGES.COM Organization Structure: Its Determinants and Outcomes

BZUPAGES.COM Organization Structure: Its Determinants and Outcomes

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