Chapter 11: Organizational Design
Learning Objectives
• Describe six key elements in organizational design.
• Contrast mechanistic and organic structures.
• Discuss contingency factors favoring mechanistic or organic models.
• Describe traditional organizational design options.
• Discuss organizing flexibility in the 21st century.
• Develop skills at acquiring and using power.
• Know how to stay connected and in the loop when working remotely.
Elements of Organizational Design
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization
Purpose of Organizing
• Dividing work into specific jobs and departments.
• Assigning tasks and responsibilities.
• Coordinating diverse organizational tasks.
• Establishing relationships among individuals, groups, and departments.
• Establishing formal lines of authority.
• Allocating organizational resources.
Work Specialization
• Dividing work activities into separate job tasks.
• Increases work output by making efficient use of worker skills.
• Can lead to human diseconomies if overdone (e.g., fatigue, stress).
Departmentalization
• Grouping jobs together.
• Five common forms:
• Functional
• Product
• Geographical
• Process
• Customer
Teams
• Use of teams, especially cross-functional teams, to accomplish complex tasks.
• Cross-functional teams: Work teams composed of individuals from various
functional specialties.
Chain of Command
• Line of authority extending from upper to lower organizational levels.
• Clarifies who reports to whom.
• Includes concepts of authority, responsibility, and unity of command.
Span of Control
• Number of employees a manager can efficiently manage.
• Traditional view: Managers should not supervise more than five or six
subordinates.
• Contemporary view: No magic number; influenced by various factors.
Centralization and Decentralization
• Centralization: Decision-making concentrated at upper levels.
• Decentralization: Lower-level employees provide input or make decisions.
• Factors influencing centralization or decentralization:
• Environment stability
• Managerial capability
• Decision significance
• Organizational size and complexity
Employee Empowerment
• Giving employees more authority to make decisions.
• Important for organizational success and motivation.
Formalization
• How standardized an organization’s jobs are.
• High formalization: Explicit job descriptions, numerous rules, and procedures.
• Low formalization: More discretion for employees.
Mechanistic and Organic Structures
• Organization: Rigid and tightly controlled.
• Organization: Flexible and adaptable.
• Mechanistic: Specialized tasks, clear chain of command, narrow spans of control,
high formalization.
• Organic: Cross-functional teams, free flow of information, wide spans of
control, low formalization.
Strategy and Structure
• Organizational structure should facilitate goal achievement.
• Different structures work best with different strategies.
• Larger organizations tend to be more mechanistic.
Technology and Structure
• Unit production, mass production, and process production.
• Technology influences organizational structure.
Environmental Uncertainty and Structure
• Stable environments favor mechanistic designs.
• Uncertain environments favor organic designs.