Ch 13: Organizational Structure

Front 1

ORGANIZATIONAL STRUCTURE

Back 1

Division of labor and patterns of coordination, workflow, and formal power that direct organizational activities

Front 2

2 FUNDAMENTAL PROCESS IN ORGANIZATIONAL STRUCTURE

Back 2

1. Division of Labor

2. Coordination

Front 3

DIVISION OF LABOR

Back 3

1. Subdividing work into separate jobs assigned to different people

2. Limited by ability to coordinate work

3. Potentially increases work efficiency

4. Necessary as company grows and work becomes more complex

Front 4

3 COMPONENTS TO COORDINATING WORK ACTIVITIES

Back 4

1. Informal Communication

2. Formal Hierarchy

3. Standardization

Front 5

INFORMAL COMMUNICATION

Back 5

1. Sharing information on mutual tasks, forming common mental models to synchronize work activities

2. Good for flexibility, nonroutine and ambiguous situations

3. Easiest in small firms

Front 6

FORMAL HIERARCHY

Back 6

Assigning legitimate power to individuals, who then use this power to direct work processes and allocate resources

Front 7

STANDARDIZATION

Back 7

Creating routine patterns of behavior or output

Front 8

SUBTYPES/STRATEGIES OF INFORMAL COMMUNICATION

Back 8

1. Direct communication

2. Liaison roles

3. Integrator roles

4. Temporary teams

Front 9

LIAISON ROLE

Back 9

Communicate and share information with coworkers in other work units

Front 10

INTEGRATOR ROLES

Back 10

Responsible for coordinating a work process by encouraging employees in each work unit to share information and informally coordinate work activities

Front 11

CONCURRENT ENGINEERING

Back 11

The organization of employees from several departments into a temporary team for the purpose of developing a product or service

Front 12

SUBTYPES/STRATEGIES OF FORMAL HIERARCHY

Back 12

1. Direct supervision

2. Formal communication channels

Front 13

SUBTYPES/STRATEGIES OF STANDARDIZATION

Back 13

1. Standardized processes, i.e., job descriptions

2. Standardized outputs, i.e., sales targets

3. Standardized skills, i.e., training

Front 14

FOUR ELEMENTS OF ORG STRUCTURE

Back 14

1. Span of control

2. Centralization

3. Formalization

4. Departmentalization

Front 15

SPAN OF CONTROL (SPAN OF MANAGEMENT)

Back 15

The number of people directly reporting to the next level in the hierarchy; the fewer the people the more narrow the span

Front 16

WIDER SPAN OF CONTROL POSSIBLE WHEN:

Back 16

1. Other coordinating mechanisms are present

2. Routine tasks

3. Low employee interdependence

Front 17

AS COMPANIES GROW, THEY:

Back 17

1. Build a taller hierarchy

2. Widen span, or both

Front 18

PROBLEMS WITH TALL HIERARCHIES

Back 18

1. Overhead costs

2. Worse upward information

3. Focus power around managers, so staff less empowered

Front 19

CENTRALIZATION

Back 19

The degree to which formal decision authority is held by a small group of people, typically those at that top of the organizational hierarchy.

Front 20

VARYING DEGREES OF CENTRALIZATION IN DIFFERENT AREAS OF THE COMPANY

Back 20

1. Sales--decentralized; front line and supervisors

2. Information Systems--centralized; upper management

3. Production--midpoint; middle management

Front 21

FORMALIZATION

Back 21

The degree to which organizations standardize behavior through rules, procedures, formal training, and related mechanisms. Increases as firms get older, larger, and more regulated

Front 22

PROBLEMS WITH FORMALIZATION

Back 22

1. Reduces organizational flexibility

2. Discourages organizational learning/creativity

3. Reduces work efficiency

4. Increases job dissatisfaction and work stress

Front 23

ORGANIC STRUCTURE

Back 23

1. Wide span of control

2. Low formalization

3. Decentralized decisions

Front 24

MECHANISTIC STRUCTURE

Back 24

1. Narrow span of control

2. High formalization

3. High centralization

Front 25

DEPARTMENTALIZATION

Back 25

Specifies how employees and their activities are grouped together

Front 26

3 FUNCTIONS OF DEPARTMENTALIZATION

Back 26

1. Establishes chain of command

2. Creates common mental models, measures of performance, etc.

3. Encourages staff to coordinate through informal communication

Front 27

6 TYPES OF DEPARTMENTALIZATION

Back 27

1. Simple structure

2. Functional structure

3. Divisional structure

4. Team-based structure

5. Matrix structure

6. Network structure

Front 28

FUNCTIONAL STRUCTURE

Back 28

An organizational structure in which employees are organized around specific knowledge or other resources; i.e., production, marketing, accounting, etc.

Front 29

BENEFITS OF FUNCTIONAL STRUCTURE

Back 29

1. Economies of scale

2. Supports professional identity and career paths

3. Easier supervision

Front 30

LIMITATIONS OF FUNCTIONAL STRUCTURE

Back 30

1. More emphasis on subunit than organizational goals

2. Higher dysfunctional conflict

3. Poorer coordination--requires more controls

Front 31

DIVISIONAL (MULTIDIVISIONAL OR M-FORM) STRUCTURE

Back 31

An organizational structure in which employees are organized around geographic areas, outputs, or clients; i.e., healthcare, lighting products, consumer lifestyle; best form depends on environmental diversity or uncertainty

Front 32

3 VARIATIONS OF DIVISIONAL STRUCTURE

Back 32

1. Geographic divisional structure

2. Product/service divisional structure

3. Client divisional structure

Front 33

GEOGRAPHICAL DIVISIONAL STRUCTURE

Back 33

Organizes employees around distinct regions of the country or world

Front 34

FEWER GEOGRAPHIC DIVISIONS BECAUSE:

Back 34

1. Technology presents less of a need for local representation

2. Reduced geographic variation; freer trade

3. More global clients

Front 35

PRODUCT/SERVICE DIVISIONAL STRUCTURE

Back 35

Organizes employes around distinct outputs

Front 36

CLIENT DIVISIONAL STRUCTURE

Back 36

Organizes employees around specific customer groups

Front 37

GLOBALLY INTEGRATED ENTERPRISE

Back 37

1. Connects work processes around the world rather than replicating them within each country or region

2. Functional heads are geographically distributed

3. Firm's "home" country is no longer focus of business

Front 38

BENEFITS OF DIVISIONAL STRUCTURES

Back 38

1. Building block structure -- accommodates growth

2. Focuses on markets/products/clients rather than tasks

Front 39

LIMITATIONS OF DIVISIONAL STRUCTURES

Back 39

1. Duplication, inefficient use of resources

2. Specializations are dispersed--silos of knowledge

3. Revising divisional structure emphasis produces politics and conflict among executives

Front 40

TEAM-BASED STRUCTURE

Back 40

1. Self-directed work teams

2. Teams organized around work processes

3. Typically organic structure

4. Wide span of control

5. Highly decentralized

6. Low formalization

Front 41

BENEFITS OF TEAM-BASED STRUCTURE

Back 41

1. Responsive, flexible

2. Lower admin costs

3. Quicker, more informed decisions

Front 42

LIMITATIONS OF TEAM-BASED STRUCTURE

Back 42

1. Interpersonal training costs

2. Slower during team development

3. Role ambiguity increases stress

4. Problems with supervisor role changes

5. Duplication of resources

Front 43

MATRIX STRUCTURE

Back 43

An organizational structure that overlays

structures in order to leverage the benefits of both.

Front 44

BENEFITS OF MATRIX STRUCTURES

Back 44

1. Uses resources and expertise effectively

2. Improves communication, flexibility, innovation

3. Focuses specialists on clients and products

4. Supports knowledge sharing within specialty

5. Solution when two divisions have equal importance

Front 45

LIMITATIONS OF MATRIX STRUCTURES

Back 45

1. Increases goal conflict and ambiguity

2. Two bosses dilutes accountability

3. More conflict, organizational politics, and stress

Front 46

NETWORK STRUCTURE

Back 46

An alliance of several organizations for the purpose of creating a product or serving a client

Front 47

BENEFITS OF NETWORK STRUCTURES

Back 47

1. Highly flexible

2. Potentially better use of skills and technology

3. Not saddled with same resources for all products

Front 48

LIMITATIONS OF NETWORK STRUCTURES

Back 48

1. Exposed to market forces

2. Less control over subcontractors than in-house

Front 49

CONTINGENCIES OF ORGANIZATIONAL DESIGN

Back 49

1. External Environment

2. Organizational size

3. Technology

4. Organizational strategy

Front 50

FOUR CHARACTERISTICS OF EXTERNAL ENVIRONMENTS INFLUENCE THE TYPE OF ORGANIZATIONAL STRUCTURE

Back 50

1. Dynamism

2. Complexity

3. Diversity

4. Hostility

Front 51

DYNAMIC ENVIRONMENTS

Back 51

1. High rate of change

2. Lead to novel situations

3. Lack identifiable patterns

4. Organic structures are well suited to this type of environment

Front 52

STABLE ENVIRONMENTS

Back 52

1. Regular cycles of activity

2. Predictable changes in supply and demand

3. Mechanistic structures are more efficient with this type of environment

Front 53

COMPLEX ENVIRONMENT

Back 53

1. Many elements (such as stakeholders)

2. Decentralized

Front 54

SIMPLE ENVIRONMENT

Back 54

1. Few environmental elements

2. Less need to decentralize

Front 55

DIVERSE ENVIRONMENT

Back 55

1. Several products, clients, regions

2. Use divisional structure aligned with the diversity

Front 56

INTEGRATED

Back 56

1. Single product, client, place

2. Use functional structure, or geographic division if global

Front 57

HOSTILE ENVIRONMENT

Back 57

1. Competition and resource scarcity

2. Reduced predictability of access to resources and demand for outputs

3. Use organic structure for responsiveness

Front 58

MUNIFICENT ENVIRONMENT

Back 58

1. Plenty of resources and product demand

2. Less need for organic structure

Front 59

AS ORGANIZATIONS GROW, THEY HAVE:

Back 59

1. More division of labor (job specialization)

2. Greater use of standardization

3. More hierarchy and formalization

4. More decentralization

Front 60

TECHNOLOGY

Back 60

The mechanisms or processes by which an organization turns out its product or service.

Front 61

TECHNOLOGICAL CONTINGENCIES

Back 61

1. Variability

2. Analyzability

Front 62

VARIABILITY

Back 62

The number of exceptions to standard procedure that tend to occur

Front 63

ANALYZABILITY

Back 63

The predictability or difficulty of the required work

Front 64

ORGANIZATIONAL STRATEGY

Back 64

The way the organization positions itself in its setting in relation to its stakeholders, given the organization's resources, capabilities, and mission.

Front 65

STRUCTURE FOLLOWS STRATEGY

Back 65

1. Strategy points to the environments in which the organizations will operate

2. Leaders decide which structure to apply

Front 66

INNOVATION STRATEGY

Back 66

A more organic structure would be preferred because it is easier for employees to share knowledge and be creative

Front 67

COST LEADERSHIP STRATEGY

Back 67

A mechanistic structure is preferred because it maximizes production and service efficiency.