Organizing / Organizational structure Flashcards
Organizing
Organizing is the process of assigning duties to personnel and coordinating employee efforts in order to ensure maximum efficiency.
- Job design: specialization, rotating jobs, job enrichment, job description
- Resource allocation: aligning tasks and people and other necessary resources
- Coordination: tools to make people work together, laid down rules, teamwork
- Departmentalization, organizational structure: based on the activities, knowledge and environment, thoughts of shareholders
Organizational Structure
The anatomy (overall pattern of structural components and arrangements) of the organization, providing a foundation within which the organization functions.
As a framework it focuses on the differentiation of positions, formulations of rules and procedures, and prescriptions of authority.
Therefore, it is the formal division of human resources and tasks as a means of managing and coordinating activities in an organization
Division of labour
Dividing work into small components so that the workers become specialists in their tasks. Can be based on:
* functions,
* products,
* regions (geographical areas),
* clients.
- one-dimensional: e.g., functional structure;
- multi-dimensional: e.g., divisional, matrix organizations
Authority
the right to command.
It refers to the right of individuals to make decisions without approval by higher management and to expect obedience from others.
* one-line: linear structure
* multi-line: functional, matrix structures
Types of Authority
Line authority: the common and basic form of command structure, clearly demarcates superiors from subordinates. (The formal power to direct and control immediate subordinates.)
* production, distribution, sales, etc.
Staff authority: having the right to support, advise, and assist those with line
authority.
* normally associated with larger organisations (wide range of diversified functions)
* significant number of personnel to manage
* e.g., legal department, training and development department
Functional authority: the power to initiate actions (or stop actions taking place) in a
designated area of expertise.
* e.g., a production manager can make decisions to help maintain flow of output based
on their experience and knowledge of the production process without referring to a
higher authority
Coordination:
the synchronization of the human efforts of individuals and groups for
the purpose of attaining organizational efficiency.
Coordination tools :
* Technocratic – planning system, budgeting;
* Structural – report system, teams, projects;
* Employee-oriented (personalized) – individual/group motivation
Linear structure
- Division of labour: one-dimensional (products, clients)
- Authority sharing: one-line
- Coordination: technocratic and structural tools, based on position, power
- Advantages: simple, transparent, it can be enlarged horizontally and
vertically - Disadvantages: inflexible, surfeit, information distortion (communication
breakdown) - Application: static environment, simple, homogeneous tasks, smaller
organizations
Functional Structure
Division of labor: according to functions, task regulations, job descriptions, one dimensional
* Authority: decision making according to functions centralized, highly regulated
decisions; multi-line
* Coordination: vertically through the official way, horizontally on the same level of hierarchy, strong regulations, technocratic tools
* Advantages: high efficiency, clear regulations, complicated tasks could be
accomplished
* Disadvantages: slow decision making process, decisions are concentrated on the top of the hierarchy, decrease the ability of accommodation, can not use wide range of products
* Application: stable environment, a narrow range of products
Divisional Structure
- Division of labor: according to products, customers or regions, multi dimensional
- Authority: decentralized decisions between the central unit and the divisions,
centralized within the divisions; one- or multi-line - Coordination: horizontally hardly among the divisions, technocratic tools
- Advantages: big independency, motivation is important, strategic and operational
tasks are separated - Disadvantages: parallel existing functional organizations, increased number of
staff, divisions became selfish - Application: dynamic environment, a wide range of products
Matrix structure
- Division of labor: horizontally functional (technical, sales, etc.), vertically products or projects, multi-dimensional
- Authority: multi-line; functional and project leaders making the decisions
together, decentralized decisions, decisions are not highly regulated - Coordination: horizontally and vertically because of the structure, employee oriented tools
- Advantages: dynamic and flexible structure, good studying process at problem
handlings, mixed structure, accommodate to the challenges - Disadvantages: two-line management, competition among the managers, nobody
dares to take the responsibility for the decisions - Application: dynamic environment, conflict management skills within the
organization, at complex innovation claims
Types According to Adaptability
Mechanistic (static) structures: linear form, functional form, divisional form (in part)
Organic (dynamic) structures: divisional form (in part), matrix design, project-based organizations, network structure, virtual organizations
The Mechanistic Structure
- Accommodates to the stable environment
- Division of labor: exact tasks, experts
- Hierarchy: coordination on top levels only, official way,
regulation - Loyalty, obedience (e.g., manufacturing )
- Concentrated authority
The organic structure
- Accommodates to the dynamic environment
- No specialization, no experts
- Flexible
- Communication and interaction is in the whole organization
- Decentralized authority
- Functions based on commitment (e.g., Research & Development
Technology & Structure
(Woodward)
Connections between technology and organizational structure: Organizational structure is contingent on the types of production technologies employed by the firm.
* Unique, Unit or Small batch production
→ Organic org. structure (decentralized)
* Large batch or Mass production
→ Mechanistic org. structure (bureaucracy)
* Automation or standardized (continuous process)
production
→ Organic org. structure (decentralized)
Strategy & Structure
(Chandler)
Connections between strategy and organizational structure:
* Strategy determines the structure.
* But structure has weak influence on strategy.
Environment & Structure
Thompson (1967) & Duncan (1972)
The most important environmental dimensions are :
* Simple (few elements only – weak influence) vs. Complex (many elements – strong influence) Dimension
* Static (not too many changes) vs. Dynamic (several changes) Dimension
* Perceived Uncertainty: we do not have enough information about the environment
Hybrid organizations
In hybrid organizations two or more typical organizational forms are alloyed
Strategic alliances, concerns, holdings
A formal agreement committing two or more firms to exchange resources to produce products or services. Normally long-term, formal relationships which are mutually beneficial, albeit all parties remain independent organizations
Strategic alliances, concerns, holding
The holding company affects the managed company only with assets of asset management. A holding company is a company that owns other companies’ outstanding stock. A holding company usually does not produce goods or services itself; rather, its purpose is to own shares of other companies to form a corporate group.
Boundaryless Organizations
hierarchy, pre-defined structural boundaries, specific roles, distance should be minimalized.
- Only a few fixed, permanent connections.
- The organization itself is in constant change.
- Flattening hierarchy + better interactions among the different functional areas (especially regarding processes overarching functional areas).
Virtual Organizations
- A type of boundaryless organisations;
- geographically dispersed;
- a set of functionally and/or culturally diverse individuals;
- who keep in touch with electronic communication.
- No formal structure
- Activities happen mainly electronically
- Some permanent workers +
- labour hire,
- temporary employment,
- outsourcing,
- service contracts.
- Headcount is constantly changing
following demands - projects are common
- the lean management approach is decisive
- core competencies are the focus
- adaptivity (re-arrangement of competences) is an important
feature - the novel combination and use of resources is typical
Organizations virtual elements
- Every organizations have virtual elements
Only a few are capable of functioning completely virtually:
* financial service companies,
* various organizations of the knowledge industry,
* advertising agencies,
* e-commerce organizations,
* which have completed the outsourcing of activities.
