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Foundations of organization structure

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  1. Foundations of organization structure Prof. : Vivian Chen Reporter : Arthur Chung

  2. Outline • What is organization structure ? • Organization structure six key elements . • Common organizational design . • New design option . • Why do structure differ ? • Organization designs and employee behavior . • Summary .

  3. What is organizational structure ?

  4. organizational structure Six Key elements • Work Specialization . • Departmentalization . • Chain of Command . • Span of Control . • Centralization and Decentralization . • Formalization .

  5. Work specialization • Definition : • The degree to which tasks in the organization are subdivided into separate jobs . ( or division of labor ) • The essence of work specialization is that rather than entire job being done by one individual , it is broken down into a number of steps , with each step being completed by a separate individual . • In essence , individuals specialize in doing part of an activity rather than the entire activity .

  6. Economies and Diseconomies of work specialization

  7. Departmentalization • Definition : • The Basis by which jobs are grouped together . • Kinds of Departmentalization • Functions . • Product of the organization produces . • Geography or territory . • Particular type of customer the organization seeks to reach .

  8. Chain of command • Definition : • The unbroken line of the authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom . • Authority • The right inherent in a managerial position to give orders and to expect to the orders to be obeyed . • The unity-of-command principle helps preserve the concept of an unbroken line of authority . • Unity-of-command • The idea that a subordinate should have only one superior to whom he pr she is directly responsible .

  9. Span of control • Definition : • The number of subordinates a manager can efficiently and effectively direct .

  10. Centralization and decentralization • Definition : • The degree to which decision making is concentrated at a single point in the organization . ( The rights inherent in one’s position ) , decentralization is oppositive .

  11. Formalization • Definition : • The degree to which jobs within the organization are standardized .

  12. Common organizational designs(1) • The Simple Structure : • A structure characterized by a low degree of departmentalization , wide spans of control , authority centralized in a single person , and little formalization . • The Strength : • Simplicity . • Fast . • Flexible . • Inexpensive to maintain . • Accountability is clearly . • The Weakness : • It’s difficult to maintain in anything other than small organizations .

  13. Common organizational designs(2) • The Bureaucracy : • A structure with highly routine operating tasks achieved through specialization , very formalization rules and regulations , tasks that are grouped into functional departments , centralized authority , narrow spans of control , and decision making that follows the chain of command . • The Strength : • The ability to perform standardized activities in a highly efficient manner . • The Weakness : • It is illustrated in the following dialogue among four executives in one company : • Ya know , nothing happens in this happens until we produce something . • Wrong . • What are you talking about ? • Nothing happens here until we sell something . • It is something we’ve all experienced at one time or another when have to deal with people who work in these organizations : obsessive concern with following rules .

  14. Common organizational designs(3) • The Matrix Structure : • A structure that creates dual lines of authority and combines functional and product departmentalization . • The Strength : • It lies in putting like specialists together , which minimizes the number necessary while following the pooling and sharing of specialized resources across products. • It lies in its ability to facilitate coordination when the organization has a multiplicity of the complex and interdependent activities . • It facilitates the efficient allocation of specialists . • The Weakness : • The difficulty of coordinating the tasks of diverse functional specialists so that their activities are completed on time and within budget . • Ii lies in the confusion it creates , its propensity to foster power struggles , and the stress it places on individuals .

  15. New design options -Team Structure • Definition: • The use of teams as the central device to coordinate work activities .

  16. New design options -Virtual Structure • Sometimes called the network or modular organization . • Definition : • A small , core organization that outsources major business functions . • Advantage : • Flexibility .

  17. New design options -Boundaryless Structure • Definition : • An organization that seeks to eliminate the chain of command , have limitless spans of control , and replace departments with empowered teams .

  18. What do Structure Differ ? (1) • Mechanistic Model : • A structure characterized by extensive departmentalization , high formalization , a limited information network , and centralization . • Organic Model : • A structure that is a flat , uses cross-hierarchical and cross-functional teams , has low formalization , possesses a comprehensive information network , and relies on participative decision making .

  19. Mechanistic Model V.S. Organic Model

  20. What do Structure Differ ? (2)Strategy • Innovation Strategy : • A strategy that emphasizes the introduction of major new products and services . • Cost-Minimization Strategy : • A strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses , and price cutting . • Imitation Strategy : • A strategy that seeks to move into new products or new markets only after their viability has already been proven .

  21. What do Structure Differ ? (2)Strategy

  22. What do Structure Differ ? (3)Organization Size • There is no considerable evidence to support the idea that an organization’s size affects its structure .

  23. What do Structure Differ ? (4)Technology • The term of technology refers to how an organization transfer its inputs into outputs .

  24. What do Structure Differ ? (5)Environment • An organization’s environment is composed of institutions or forces outside the organization that potentially affect the organization’s performance . • Three-Dimensional Model of the Environment • Capacity : support growth . • Volatility : Dynamic or stable . • Complex : Scarce or Abundant .

  25. Organizational Design and Employee Behavior • To Maximize employee performance and satisfaction , individual differences , such as experience , personality , and the work task , should be taken into account . • In addition , national culture influences the preference for structure , so it , too , need to be considered .

  26. Summary

  27. Thank you for tour listening .