Organizational Structures

Organizational Structures

Todays companies, more team orientated. Organizational Structures, becoming more important. Defines how job tasks are coordinated.

Organizational Structures
Many different physical layouts. Could be very tall, or very flat.

Organizational Structures

Could be anywhere in-between those extremes.

Flat Structure
Team orientated. Open atmosphere. Problems solved quickly. More interaction between different hierarchical levels.

Organizational Structures

Tall Structure
More levels of organization Limited interaction. More personal responsibility. If you have a problem, you would talk to your manager, who would talk to their manager, etc. Often, the message that you told to your manager, is different from the one they portray to their manager

Organizational Structures

When deciding which organizational structure is best for their company managers need to address six key elements:

Work Specialization Departmentalization Chain of command Span of control Centralization and decentralization Formalization

Six Key Questions

Six Key Elements

1. Work Specialization or Division of Labor:

The degree to which tasks in the organization are subdivided into separate jobs Ex. Henry Ford, assembly line Individuals specialize in doing part of an activity, rather than the whole thing May lead to boredom, fatigue, stress and increased absenteeism Raises employee productivity and efficiency, but lowers job satisfaction

Six Key Elements

2. Departmentalization:

The basis on which jobs are grouped together Creates competitiveness between departments Narrow vision with respect to organizational goals 5 different kinds of departmentalization:

Functional Product Geographic Process Customer

Six Key Elements:

Types of Departmentalization
A) Functional

Functional Departmentalization groups activities by functions performed. More efficient to put together people with common skills and orientation into a common unit.

Six Key Elements:

Types of Departmentalization
B) Product:
Grouping your organization depending on the type of product created is product departmentalization. Increases accountability for product performance. Also works with services.

Six Key Elements:

Types of Departmentalization
C) Geographic:

Departmentalized on the basis of geography, or territory. Ex. International companies having different departments for each country.
Organizes departments by the processing that occurs. Ex. inspecting, packing, shipping

D) Process:

E) Customer:

Departmentalize by the type of customer the organization seeks to reach. Ex. Corporate or individual customers.

Six Key Elements

3. Chain of Command:

Unbroken line of authority that extends form the top of the organization to the bottom. Designates where you go if you have a problem. Becoming less structured than it was in the past. The number of employees a manager can efficiently and effectively direct. Generally determines the number of levels an organization has.

4. Span of Control:

Six Key Elements

5. Centralization and Decentralization:

Decentralization:

The decision discretion is pushed down to lower-level employees. Take action quicker. More people provide input into decisions. Easier to address customer concerns. The degree to which decision making is concentrated at a single point in the organization. Top management makes all the decisions.

Centralization:

Six Key Elements

6. Formalization

The degree to which jobs within the organization are standardized.

Low Formalization: Job behaviours are relatively nonprogrammed. Lots of employee freedom. Less standardization. High Formalization: Explicit job description. Lots or organizational rules. Clearly defined procedures for work processes.

Two Models of Organizations

Mechanistic Model:

A structure characterized by extensive departmentalization, high formalization, a limited information network and centralization.
A structure that is flat, uses cross hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on group decision making.

Organic Model:

Mechanistic vs. Organic Models

Two Models of Organizations

Which model is chosen depends on the members of the organizations experience, personality, the work task and their cultural background. Mechanistic:

People with a high degree of bureaucratic orientation

Organic:

People with a low degree of bureaucratic orientation