Chapter 11 - Organizational Design

Organization

a deliberate arrangement of people assembled to accomplish some specific purpose (that individuals independently could not accomplish alone). common characteristics: - have a distinct purpose (goal) - are composed of people - have a deliberate structure

Organizational Design

a process involving decisions about six key elements: - work specialization - departmentalization - chain of command - span of control - centralization and decentralization - formalization

Cross-Functional Team

a work team composed of individuals from various functional specialties

Functional Structure

an organizational design that groups together similar or related occupational specialties

Organic Organization

an organizational design that's highly adaptive and flexible

Mechanistic Organization

an organizational design that's rigid and tightly controlled

Simple Structure

an organizational design with low departmentalization, wide spans of control, centralized authority and little formalization

Divisional Structure

an organizational structure made up of separate, semiautonomous units or divisions

Organizing

arranging and structuring work to accomplish an organization's goals

Size and Structure

as organization grows larger, the structure tends to change from organic to mechanistic with increased specialization, departmentalization, centralization and rules/regulations

Line Authority

authority that entitles a manager to direct the work of an employee

Departmentalization

basis by which jobs are grouped together

Chain of Command

continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization - clarifies who reports to whom

Work Specialization

dividing work activities into separate job tasks - believed it could lead to great increases in productivity - overspecialization can result in boredom, fatigue, stress, ect

Employee Empowerment

giving employees more authority (power) to make decisions

Functional

grouping jobs by functions performed

Product

grouping jobs by product line

Customer

grouping jobs by type of customer and needs

Process

grouping jobs on the basis of product or customer flow

Geographical

grouping jobs on the basis of territory or geography

Staff Authority

positions with some authority that have been created to support, assist, and advise those holding line authority

Centralization

the degree to which decision making is concentrated at upper levels of the organization

Formalization

the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures - highly formalized jobs offer little discretion over what is to be done - low formalization means fewer constraints on how employees do their work

Decentralization

the degree to which lower-level employees provide input or actually make decisions

Organizational Structure

the formal arrangement of jobs within an organization

Unity of Command

the management principle that each person should report to only one manager

Span of Control

the number of employees who can be effectively and efficiently supervised by a manager

Responsibility

the obligation or expectation to perform

Authority

the rights inherent in a managerial position to tell people what to do and to expect them to do it

Acceptance Theory of Authority

the view that authority comes from the willingness of subordinates to accept it

Organizational Chart

the visual representation of an organization's structure

Strategy and Structure

- changes in corporate strategy should lead to changes in organization's structure that support the strategy - certain structural designs work best with different organizational strategies (organic = meaningful/unique innovations; mechanistic = tightly control costs)

Purposes of Organizing

- divides work to be done into specific jobs and departments - assigns tasks and responsibilities associated with individual jobs - coordinates diverse organizational tasks - clusters jobs into units - establishes relationships among individuals, groups, and departments - establishes formal lines or authority - allocates and deploys organizational resources

Environmental Uncertainty and Structure

- mechanistic organizational structures tend to be most effective in stable and simple environments - the flexibility of organic organizational structures is better suited for dynamic and complex environments

Technology and Structure

- organizations adapt structures to their technology

Woodward's Classification of Firms Based on Complexity of the Technology Employed

- unit production of single units or small batches - mass production of large batches of output - process production in continuous process of outputs