1. McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Learning Goals
What is an organization’s structure, and what does it consist of?
What are the major elements of an organizational structure?
What is organizational design? What factors does the organizational design process depend on?
What are some of the more common organizational forms that an organization might adopt for its structure?

3. Learning Goals, Cont’d
When an organization makes changes to its structure, how does that restructuring affect job performance and organizational commitment?
What steps can organizations take to reduce the negative effects of restructuring efforts?

4. Organizational Structure
Organizational chart

5. Two Sample Organizational Structures
Figure 15-1

6. Elements of Organizational Structure
Work specialization
Also known as division of labor.
Assembly line worker.
Chain of command
Specific flow of authority down through the levels of an organization’s structure.

7. Elements of Organizational Structure, Cont’d
Span of control
Narrow spans of control allow managers to be much more hands-on with employees.
Centralization
OB on Screen
Star Wars II: Attack of the Clones

8. The Relationship between Span of Control and Organizational Performance
Figure 15-2

9. Elements of Organizational Structure, Cont’d
Formalization
Necessary coordination mechanism that organizations rely on to get a standardized product or deliver a standardized service.

10. Elements of Organizational Structure
Table 15-1

11. Elements in Combination
Mechanistic organizations
Rigid and hierarchical chain of command, high degrees of work specialization, centralization of decision making, and narrow spans of control.
Organic organizations
Low levels of formalization, weak or multiple chains of command, low levels of work specialization, and wide spans of control.

12. Discussion Questions
Is it possible to be a great leader of employees in a highly mechanistic organization?
What special talents or abilities might be required?

13. Characteristics of Mechanistic vs. Organic Structures
Table 15-2

14. Organizational Design
Business environment
Stable environment
Dynamic environment

15. Organizational Design, Cont’d
Organizational Design, continued
Company strategy
Low-cost product strategy
Differentiation strategy
Technology
Company size

16. Common Organizational Forms
Simple structures
Bureaucratic structure

17. An Organizational Structure for a Small Restaurant
Figure 15-3

18. Bureaucratic Structures
Functional structure
Figure 15-4

19. Multi-Divisional Structures
Product structures
Figure 15-4

20. Multi-Divisional Structures, Cont’d
Geographic structures
Figure 15-4

21. Multi-Divisional Structures, Cont’d
Client structure
Figure 15-4

22. Matrix Structures Matrix structures
The matrix represents a combination of a functional structure and a product structure.
Figure 15-5

23. Discussion Questions
If you worked in a matrix organization, what would be some of the career development challenges that you might face?
Does the idea of working in a matrix structure appeal to you? Why or why not?

24. Why Do Some Organizations Have Different Structures than Others?
Figure 15-6

25. How Important is Structure?
Changes to an organization’s structure can have negative effects on the employees who work for the company, at least in the short term.
Restructuring
Restructuring has a more significant negative effect on organizational commitment.

26. Effects of Organizational Structure on Performance and Commitment
Figure 15-7

27. Restructuring Steps in restructuring Helping restructuring to succeed
Recognize the need to change
Restructure
Helping restructuring to succeed
Manage layoff survivors (employees that remain with the company following a layoff)
One of the best ways to help layoff survivors adjust is to do things that give them a stronger sense of control.

28. Takeaways
An organization’s structure formally dictates how jobs and tasks are divided and coordinated between individuals and groups within the organization. This structure, provides the foundation for organizing jobs, controlling employee behavior, shaping communication channels, and providing a lens through which employees view their work environment.
There are five major elements to an organization’s structure that can be organized in such a way as to make an organization more mechanistic in nature, which allows it to be highly efficient in stable environments, or more organic in nature, which allows it to be flexible and adaptive in changing environments.

29. Takeaways, Cont’d
Organizational design is the process of creating, selecting, or changing the structure of an organization. Factors to be considered in organizational design include a company’s business environment, its strategy, its technology, and its size.
There are literally thousands of organizational forms. The most common is the simple structure, which is used by most small companies. Larger companies adopt a more bureaucratic structure. This structure may be functional in nature, such that employees are grouped by job tasks, or multi-divisional, such that employees are grouped by product, geography, or client. Organizations may also adopt a matrix structure.

30. Takeaways, Cont’d
Organizational restructuring efforts have a weak negative effect on job performance. They have a more significant negative effect on organizational commitment, because employees tend to feel less emotional attachment to organizations that are restructuring.
To reduce the negative effects of restructuring, organizations should focus on managing the stress levels of the employees who remain after the restructuring. Providing employees with a sense of control can help them learn to navigate their new work environment.