ORGANIZATION DESIGNS

Organization Design
Definition
Used to manage the total organization
the overall pattern of structural
components and arrangement
.
Personal Staff vs Professional Staff
 Departmentalization

Departmentalization is the lateral (horizontal)

differentiation of the organization in departments.

Departments are organizational units that share

a common supervisor and common resources,
are jointly responsible for performance, and tend
to identify and collaborate with one another.
Departmentalization
Bases of Departmentalization

1. Organizational function
2. Product
3. Process
4. Geography or territory
5. Customer
 Criteria for Relative Advantages of
Alternative Departmentalization Bases
1. Which approach (basis) permits the maximum
use of special technical language?

2. Which provides the most efficient utilization of

machinery and equipment?

3. Which provides the best hope of obtaining the

required control and coordination?
 Span of Control

Span of Control is the number of

employees who report to a single
manager or supervisor.
 Height of the Hierarchy
The hierarchy describes who reports to whom
and the span of control of each manager. The
hierarchy is depicted by the vertical lines on
the organization chart.

The hierarchy is related to the span of

control. When spans are narrow the height of
the hierarchy will be large (tall). When spans
are wide, the height of the hierarchy will be
low (flat).
Span of Control - Illustration
 Factors Influencing the Span of
Control
• Competence of supervisor and subordinates
• Physical dispersion of subordinates
• Extent of non-supervisory work in manager’s
job
• Degree of interaction required
• Extent of standardized procedures
• Similarity of tasks being performed
• Frequency of new problems
• Preferences of supervisors and subordinates
 James Worthy – Sears, Roebuck
In 1950, James Worthy, an early behaviorist studied the
Sears store network. He found that there were two distinct
types of stores present in the network: tall and flat.

Metropolitan stores: larger, many employees, many staff,

and large inventory.

Rural stores: small, few employees, little/no staff, and

modest inventory.
 Worthy/Sears, continued
• Tall stores were characterized by
relatively high turnover among
employees, significant numbers of
grievances, low employee morale.
• Flat stores were characterized by low
rates of turnover, few grievances, and
moderate morale.
Organizational Design Forms
Simple Organization

Entrepreneur

Employees
Characteristics of Simple
Organizations

1. Small
2. Flat
3. Highly Centralized
4. Very Flexible
5. Fast
 Functional Structure
President

VP - MarketingVP - Operations VP - HRM

Functional structure is a design that groups similar or

related occupational specialties together.
 Advantages of Functional
Departmentalization
• Promotes skill specialization
• Reduces duplication of resources and
coordination problems within the functions
• Enhances career development within
departments
• Superiors & subordinates share common
expertise
• Promotes high-quality technical problem
solving
 Disadvantages of Functional
Departmentalization
• Emphasizes routine tasks
• Reduces communication between departments
• May create conflict over product priorities
• Can make scheduling difficult across
departments
• Focuses on departmental as opposed to
organizational issues
• Develops managers who are experts in narrow
fields
 Strengths of Functional
Departmentalization
• Best in a stable environment
• Best in small-medium sized organizations
• Best when only one/few products or
services
• Economies of scale within functional
groups
 Weaknesses of Functional
Departmentalization
• Slow response time to environmental
changes
• Less innovation
• “Tunnel vision” on organizational goals
• Decisions may pile up at top: hierarchy
overload