Basic Characteristics of Organizational Structure

Basic Characteristics of Organizational Structure

Basic Characteristics of Organizational Structure Division of labor: dividing up the many tasks of the organization into specialized jobs Hierarchy of authority: Who manages whom. Span of control: Who manages whom. Line vs staff positions Decentralization Hierarchy of Authority

Tall vs flat hierarchies Autonomy and control Communication Size Span of Control A wide span of control: a large number of employees reporting, A narrow span of control: a small number employees reporting The appropriate span of control depends on the experience, knowledge and skills of the

employees and the nature of the task. Line vs Staff Positions Line vs Staff: Line positions are those in which people are involved in producing the main goods or service or make decisions relating to the production of the main business. Staff positions These are positions in which people make recommendations to others but are not directly involved in the production of the good or service Decentralization

The extent to which decision making is concentrated in a few people or dispersed through out the organization Advantage: benefits associated with greater participation and moving the decision closest towards implementation Disadvantage: Lack of perspective and information, lack of consensus Functional Structure CEO M a n u fa c tu r in g

S a le s R & D A c c o u n tin g & F in a n c e Advantage: efficiency, communication Disadvantage: isolation of units Product Structure CEO Soup D iv is io n

M a n u fa a c tu r in g N u ts D iv is io n S a le s M a n u fa c tu r in g S a le s Advantages: Product focus, flexibility Disadvantage: Duplication of effort Market Structure CEO

C o rp o ra te C u s to m e r s S a le s C u s to m e r S e r v ic e In d iv id u a l C u s to m e rs S a le s C u s to m e r S e r v ic e Geographic Structure

CEO W est S a le s C u s to m e r S e r v ic e E ast S a le s C u s to m e r S e r v ic e Matrix Structure R&D

Product A Product B Product C Engineering Manufacting Integration

Hierarchy of authority Liaison roles Teams, committees, task forces Standardization & formalization Mechanistic & Organic Designs Mechanistic: tallness in hierarchy, specialization, centralization in authority, formalization. Work best under stable conditions Organic: flatness, generalization, decentralization flexibility Best fit dynamic conditions and complex technology

Designs and Dimensions Dimension Organic Mechanistic Control span Wide Narrow Authority

Few Many Formalizatn Low High Centralizatn Low

High Position Power Low High Expert Power Low High Effectiveness Criteria

Output approach Internal process approach Systems resource approach Stakeholder approach Effectiveness & Structure Size and structure Complexity Differentiation Decentralization Formalization

Structure and satisfaction Decentralization Span of control Backwards & Forwards Summing up: Today we examined the characteristics of organizational structure, differentiation and coordination. Mechanistic and organic designs were discussed and organizational effectiveness Looking ahead: Next time we explore environments, culture, technology and structure.

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