MNGT 361 Chapter 5: Organizational Structure and Design
MNGT 361 Chapter 5: Organizational Structure and Design MNGT 361
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This 5 page Class Notes was uploaded by Angela Potter on Thursday March 3, 2016. The Class Notes belongs to MNGT 361 at Towson University taught by Donald McCulloh in Spring 2016. Since its upload, it has received 34 views. For similar materials see Leadership and Management in Business, management at Towson University.
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Date Created: 03/03/16
MNGT 361 Chapter 5: Organizational Structure and Design Work Specialization Work specialization is dividing work activities into separate job tasks individuals specialize in doing part of an activity work specialization makes efficient use of the diversity of skills that workers hold Some tasks require highly developed skills, whereas others lower level skills Excessive work specialization or human diseconomies may lead to stress, low productivity, increased absenteeism Departmentalization Departmentalization is when common work activities are grouped back together so work gets done in a coordinated and integrated way Five common forms of departmentalization Functional groups: employees based on work performance ex. accounting, human resources Product groups: employees based on major product areas in the corporation ex. mens shoes, women’s shoes Customer group: employees based on customers problems and needs ex. retail, wholesale Geographic groups: employees based on action served ex. north or south regions Process groups: employees based on the basis of work or customer flow Authority and Responsibility the chain of command is the continuous line of authority that extends from upper organizational levels to the lowest and clarifies who reports to whom authority refers to the rights inherent in a managerial position to give orders and expect the orders to be obeyed each management position has specific inherent rights that incumbents acquire from the position’s rank or title when managers delegate authority they must allocated commiserate responsibility Two types of authority relationships Line authority employer employee authority relationship extends from top to bottom line managers can direct the work of employees and make decisions without having to consult anyone Staff Authority a mangers function is classified as line or staff based not he organizations objectives Unity of Command the chain of command is the continuous line of authority that extends from upper organizational levels to the lowest and clarifies who reports to whom an employee should have only one supervisor because if there are two supervisors they may have conflicting demands and priorities Authority and Power They are often confused Authority is a right, which is baed on the position in the organization Power refers to an individual capacity to influence decisions Power is 3 dimensional it includes functional, hierarchal, and centrality dimensions Five sources of power: coercive power based on fear reward power based on the ability to distribute something that others value legitimate power based on ones position in the formal hierarchy expert power based on ones expertise, skills, or knowledge referent power based on identification with a person who has desirable resources Span of Control How many employees can a manger efficiently and effectively direct top managers need a smaller span than do middle managers, and middle managers require a smaller span than do supervisors many organizations are increasing their spans of control the more training or expertise an employee has the less direct supervision needed other contingency variables should also be considered similarity of employee tasks the task complexity the physical proximity of employees degree of standardization Centralization and Decentralization Centralization is a function of how much decision making authority is pushed down to lower levels in the organization Centralizationdecentralization is a degree phenomenon, no organization is completely centralized or completely decentralized Managers often choose the amount of centralization or decentralization that will allow them to best implement their decisions and achieve organizational goals Formalization how standardized an organizations jobs are and the extent to which employee behavior is guided by rules and procedures early management writers expected organizations to be fairly formalized, as formalization goes hand in hand with bureaucratic style organizations today organizations rely less on strict tules and standardization to guide and regulate employee power Mechanist and Organic Organizations Mechanist organization (bureaucracy) was the natural result of combining six elements of structure chain of command principle ensured that existence of a formal hierarchy of authority keeping the span of control small created tall, impersonal structures top management increasingly imposed rules and regulations departmentalization increased impersonality and the need for multiple layers of management the high degree of work specialization created simple, routine, and standardized jobs Organic form is highly adaptive and is a direct contrast to the mechanist form the organic organization loose structure allows it to change rapidly as needs requires employees are professionals whom are technically proficient and trained to handle a wide variety of problems very few formal rules and little direct supervision low in centralization How does Strategy Affect Structure? Strategy and structure should be closely linked Organizational structure should follow strategy, if a strategy change is made the structure needs to be modified as well A costleadership strategy seeks stability and efficiency stability and efficiency help to produce lowcost goods and services and can best be achieved with a mechanist organization How does size affect structure? there is evidence that an organization’s size significantly affects its structure large organization (2,000 or more) employees tend to have more work specialization, horizontal and vertical differentiation, and rules and regulations that do small organization the relationship is not linear; size becomes less important as an organization expands Environment and Structure Mechanist organizations are most effective in stable environments Organic organizations are best matched with dynamic and uncertain environments Mechanist organizations tend to be illequipped to respond to rapid environmental change Organizational Design Simple Structure low departmentalization, wide spans of control, authority centralized in a single person, and little formalization most used in smaller businesses strengths: fast, flexible, and inexpensive to maintain, and accountability is clear weakness: effective only in small organizations, increasing inadequate as organization grow, it is risky since everything depends on one person Functional Structure as the number of employees increase, more formal rules increase rules and regulations are implemented, departments are created, levels of management are created bureaucracy is formed (functional and divisional structures) functional structure expands the functional orientation strength of lies in work specialization weakness is that organization frequently loses sight of its best interest in the pursuit of functional goals Divisional Structure organization made of self contained units or divisions ex. johnson and johnson has three divisions advantage is that it focuses on results disadvantage is duplication of activities and resources Contemporary Organizational Design Team structure when the entire organization const of work groups or teams team members have authority to make decisions that affect them because there is no rigid chain of command ex. amazon Matrix Structure assigns specialists from different functional departments to work on projects led by a project manager has at least two bosses, a dual chain of command; functional departmental manager and their product or project mangers authority shared between two managers to work effectively, project and functional mangers must communicate and coordinate strength: it can facilitate coordination of a multiple set of complex and interdependent projects while still retaining the economies that result form keeping functional specialist grouped together weakness: power struggle and confusion Project Structure employees continuously work on projects flexible strength: employees can be deployed rapidly to respond to environmental changes weakness: complexity of assigning people to projects and personality conflicts Boundaryless Organization is not defined or limited by boundaries or categories imposed by traditional structures increases its interdependence with its environment two types of boundaries internal: horizontal and vertical external: separate the organization from its customers, suppliers, and other stakeholders network organization (modular organization) uses its own employees to do some work activities and networks of outside suppliers to provide other needed product components or work processes virtual organization consists of small core of full time employees outside specialist temporarily hired as needed to work on projects Organizational Design Challenges How to keep employees connected? choosing a design that best facilitate employees How do global difference affect organizational structure? How to build a learning organization? How can mangers design efficient and effective flexible work arrangements? telecommuting: employees work at home and are linked to workplace by computer compressed work week, workweek where employees work longer hours but fewer days per week
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