Organizational Structure

Question 1

Why do we care about Organizational Structure

Answer 1

• Organizational structure is about the flow of capital and information
• Defines how work is accomplished, what employees do and how that is connected to coworkers and the organization’s goals

Question 2

6 elements of organization structure

Answer 2

1. To what degree are tasks subdivided into separate jobs? Work Specialization
2. On what basis will jobs be grouped together? Departmentalization
3. To whom do individuals and groups report? Chain of Command
4. How many individuals can a manager efficiently and effectively handle? Span of Control
5. Where does decision-making authority lie? Centralization and Decentralization
6. To what degree will there be rules and regulations to direct employees and managers? Formalization

Question 3

Work Specialization

Answer 3

• Subdividing work into separate jobs assigned to different people  Division of Labour
• Pros:
• Potentially increases work efficiency.
• Less time changing tasks, putting equipment away
• Easier to train employees.
• Cons:
• Boredom, stress, low productivity, high turnover, increased absenteeism
• Necessary as the company grows and work becomes more complex

Question 4

Departmentalization

Answer 4

• Specifies how employees and activities are grouped
• Types of departmentalization:
• Functional- based on work performed E.g. engineering, accounting, human resources, info systems
• Product- based on product areas in the organization E.g. women’s apparel, men’s footwear
• Geographic- based on the location served
  E.g. North, South, Midwest
• Process - based on workflow e.g. testing, payment
• Customer - based on customers’ problems and needs E.g. wholesale, retail, government

Question 5

Chain of Command

Answer 5

A continuous line of authority that extends from the upper levels to the lowest level and clarifies who reports to whom
- Authority: Who has the right to give orders and expect them to be obeyed
- Delegation: Assignment of authority to another person to carry out specific duties, allowing the employee to make some of the decisions
- Unity of Command: Subordinates should have one superior

Question 6

Formalization

Answer 6

• To what extent are there clear rules, regulations, and procedures for how things should be done?

Question 7

Bureaucracy:

Answer 7

Job specialization
High departmentalization
Narrow spans of control
Centralized authority
A clear chain of command
Formalized rules

Question 8

Simple Structure:

Answer 8

Low departmentalization
Wide spans of control
Centralized (single person)
Little formalization

Question 9

Matrix Structure:

Answer 9

Combines functional and product departmentalization.
Has a dual chain of command

Question 10

Mechanistic model

Answer 10

• High specialization
• Rigid departmentalization
• Clear chain of command
• Narrow spans of control
• Centralization
• High formalization

Question 11

The organic Model

Answer 11

• Cross-functional teams
• Cross-hierarchical teams
• Free flow of information
• Wide spans of control
• Decentralization
• Low formalization

Question 12

Mechanistic vs Organic

Answer 12

Mechanistic VS. Organic:
Strategy: Cost minimization - Innovation
Size: Bigger - Smaller
Technology: Routine - Non-routine
Environment; Certain - Uncertain
Culture: High power distance - Low power-distance

Question 13

(De)Centralization

Answer 13

Who has decision-making authority?
- Varying degrees of centralization in different areas of the company
E.g., Sales are decentralized; info systems centralized