BA 624 Colquitt Chapter 15: Organizational Mechanisms

Benefits of narrow spans of control

Allows managers to be more hands-on, to use directive leadership styles while developing close mentoring relationships with employees. Especially important if the manager has substantially more skill or expertise than subordinates. Assumed that employees will be more productive.

Organic organizations

Flexible, adaptive, outward-focused organizations that thrive in dynamic environments. Typified by a structure that relies on low levels of formalization, weak/multiple chains of command (decentralized), low level of work specialization, lateral communication encouraged (information/advice vs. orders), wide spans of control, and employees encouraged to develop knowledge and expertise outside of their specialization. Organic structures are more likely to allow for transformational leadership to have a positive effect on employees.

Downsides of high specialization

Problematic in smaller firms where employees must be flexible. Decrease in variety can cause lower job satisfaction.

Downsides of narrow spans of control

Requires organizations to hire many managers - significantly increases labor costs. Employees can become resentful of close supervision and desire more latitude in decision-making. Research shows that a moderate span of control is best for productivity. More layers of management means having to pay more management salaries. Communication becomes more complex as each new layer becomes a point through which information must pass upward or downward. Organization's ability to make decisions is slower because approval must be authorized at every level.

Mechanistic organizations

Typified by a structure that relies on high levels of formalization, rigid, clear, and hierarchical chain of command, high degrees of work specialization, centralization of decision making, and narrow spans of control. Efficient, rigid, predictable, and standardized organizations that thrive in stable environments. Information passed through vertical communication between employee and their supervisor. Employees encouraged to develop firm-specific knowledge and expertise within their area of specialization.

Differentiation strategy

a company strategy that describes a focus on making a product that is unique in some way due to a higher level of quality or offering features that a low-cost product doesn't. Hinges on adjusting to changing environments quickly - organic structure is more appropriate.

Low-cost producer strategy

a company strategy that focuses on selling products at the lowest possible cost. Focus is on being efficient. More likely to adopt a mechanistic approach to organizational design.

Organizational chart

a drawing that represents every job in the organization and the formal reporting relationships between those jobs. Helps organizational members and outsiders understand and comprehend how work is structured within the company.

Company strategy

a factor in organizational design that describes an organization's and goals and how it tries to capitalize on its assets to make money.

Technology

a factor in organizational design that describes the method by which an organization transforms inputs into outputs. The more routine a technology, the more mechanistic its structure.

Company size

a factor in organizational design that describes the total number of employees. As many organizations get bigger, they attempt to create smaller units within the firm to create a feeling of smallness/entrepreneurial spirit.

Product structures

a type of a multi-divisional, bureaucratic structure that groups business units around different products that the company produces. Make sense when firms diversify to the point that the products they sell are very different. One downside occurs when divisions don't communicate and don't have the ability to learn from each other.

Functional structure

a type of bureaucratic structure that groups employees by the functions they perform for the organization (e.g. marketing expertise --> marketing group). Success is based on the efficiency advantages that come with having a high degree of work specialization that's centrally coordinated. Most efficient when the organization has a relatively narrow focus, fewer product lines or services, and a stable environment. Weakness of this structure: individuals within each function get so wrapped up in their own goals/viewpoints that they lose sight of the bigger organizational picture - not communicating as well across as within functions.

Multi-divisional structures

a type of bureaucratic structure where employees are grouped into divisions around products, geographic regions, or clients. Each division operates autonomously from the others and has its own functional groups. Generally develops from companies where interests and goals are too diverse for a functional structure to handle.

Client structure

a type of multi-divisional, bureaucratic structure that describes organizations who have a number of very large customers or groups of customers that all act in a similar way.

Geographic structures

a type of multi-divisional, bureaucratic structure where groups are based around the different locations where the company does business.

Chain of command

an element of organizational structure that answers the question of "who reports to whom?" and signifies formal authority relationships.

Formalization

an element of organizational structure that refers to the degree to which rules and procedures are used to standardize behaviors and decisions in an organization. A necessary coordination mechanism that organizations rely on to get a standardized product or deliver a standardized service. If employee job roles have a high level of formalization, it works best to have a centralized structure.

Work specialization

an element of organizational structure that refers to the degree to which tasks in an organization are divided into separate jobs. Also known as division of labor. A never-ending trade-off between productivity, flexibility, and worker motivation.

Centralization

an element of organizational structure that refers to where decisions are formally made in organizations. Highly centralized structures mean that only the top managers have the authority to make final decisions - concentrated power and authority within a small group of individuals.

Span of control

an element of organizational structure that represents how many employees each manager in the organization has responsibility for. Less employees = narrow span of control. Affects how tall or flat the organizational chart becomes (narrower spans of control = more managers = flatter structure; wider spans = less managers = taller structure).

Matrix structures

an increasingly common type of bureaucratic structure that try to take advantage of two types of structures, e.g. functional and product structure. Allows an organization to put together very flexible teams based on the experiences and skills of their employees; enables the organization to adjust much more quickly to the environment than a traditional bureaucratic structure. Gives each employee two chains of command, two groups with which to interact, and two sources of information to consider, which can create high stress levels especially if one of the groupings has more power than the other.

Bureaucratic structures

an organizational form that exhibits many of the facets of the mechanistic organization. Designed for efficiency and rely on high levels of work specialization, formalization, centralization of authority, rigid and well-defined chains of command, and relatively narrow spans of control.

Dynamic business environments

change on a frequent basis and require organizations to have structures that are more adaptive.

Business environment

consists of customers, competitors, suppliers, distributors, and other factors external to the firm, all of which have an impact on organizational design

Stable business environment

does not change frequently; changes are slow. Allows organizations to focus on efficiency and require little change over time.

Organizational structure

formally dictates how jobs and tasks are divided and coordinated between individuals and groups within the company

Simple structures

the most common form of organizational design (there are more small organizations than large ones). A flat organization with one person as the central decision-making figure. Not large enough to have a high degree of formalization and will have only basic differences in work specialization. Employees can come and go with no major ripple effects on the organization.

Restructuring

the process of changing an organization's structure. Has a small negative effect on task performance, but a significant negative effect on organizational commitment.

Organizational design

the process of creating, selecting, or changing the structure of an organization.