UNIT 4- ORGANIZATIONAL DESIGN Flashcards
Mechanistic structure
Generally, more simplistic
- Highly formalized and bureaucratic
- Usually quite centralized
- Communication through formal channels
- Specific job descriptions detailing roles and responsibilities
- Are efficient and help to minimize costs
Organic structures
Generally, more complex
- Flexible and decentralized, with low levels of formalization
- Communication lines are fluid and flexible
- Job roles may change regularly and will adapt to different situations
- Tend to be more innovative
Hierarchy
The Span of Control: the number of employees that a manager can efficiently and effectively manage.
- In the past spans of control were quite narrow, as managers couldn´t supervise too many people or processes at one time
- Nowadays, due to technology, spans of control are wider which allows for broader supervision.
- In general, the wider the span, the more efficient the organizational model
This means that organizations today tend to have less management layer, be less hierarchical, and look flatter.
May be affected by:
- Skills and abilities of managers and employees to work alone
- Complexity of tasks and standardized procedures
- Need for physical proximity
- Sophistication of information systems
Specialization
The degree to which tasks in the organization are subdivided into separate jobs. Also refers to division of labor or job design.
- This can bring a number of efficiency gains such as shared use of resources and training needs, but it may also lead to disadvantages such as boredom, stress, low productivity, and high staff turnover
- A good structure should also consider the needs of enabling specialists to collaborate effectively. This does not mean necessarily by grouping them together, but may involve interconnected processes (e.g.using matrix model)
Accountability
In the past an order was given, and it was passed down (vertically) the chain of command very clearly. Early management writers said that an employee should only have one boss/superior to whom he/she is responsible.
- Authority: the right inherent in a managerial position to give orders and expect them to be obeyed.
- Responsibility: an obligation to performed assigned activities
This idea focuses on clarity of reporting and responsibility. Multinational using a mix of structural designs often have problems with this issue.
- Nowadays, with more complex structures, ownership for decisions is increasingly important.
Autonomy
- Centralization- where the authority and decision making is concentrated, and top-level managers tend to make decisions with little input from subordinates
- Decentralization- decisions are made by diverse business units. Common in many modern companies to make them more flexible.
- Advantages: may include employee motivation, and faster reaction time
- Disadvantages: may include different motivations of decentralized units (e.g. short-term profit verses long term value construction) and abilities and skills of different areas of the organization to use effectively the authority they have
Flexibility
Extent to which employee behavior are guided by (and at times limited by) rules and procedures
- High formalization = employees have little discretion
- Low formalization = employees have more freedom
High formalization:
- Increased productivity
- Easier coordination
- Better control
Low formalization:
- Innovation
- Requires higher skill levels
- More flexibility
- Motivation
Example:
Banks: - Dealing with money- not creative - Formal opening hours- formal timetable - Image of safety, rationality, almost boredom- suits, short hair, clean shave Google: - Normal clothes- relaxed and creative - More trust between employee and company - Not a day-to-day situation, deadlines
Conclusion- organizational design
- Structures evolve over time by top managers, and they generally have a choice
- In line with the organization´s strategic and tactical objectives
- Redesigning an organization is a complex task and needs to be handled carefully
- It is important to remember that there is an informal structure that operates independently of any organizational chart
Functional structure
People are grouped together in departments by common activities, skills and resource use.
Functional structure- positive and negative aspects
POSITIVE ASPECTS:
- Economies of scale, top management control, excellent coordination within functions
- Efficient use of resources
- In depth skill specialization
NEGATIVE ASPECTS:
- Poor communication across functions
- Slow response to changes
- Loyalty more to function than customer or the company as a whole
Functional structure- when to use
- Stable, certain environment
- Small to medium size
- Routine technology
- Interdependence between functions
- Goals of efficiency, technical quality
Divisional structure
Grouped together based on a common product, customer or geographical region. Functions are split amongst the divisions.
Divisional structure- positive and negative aspects
POSITIVE ASPECTS:
- Flexible and more in touch with their customers, focusing on their needs.
- Excellent coordination across functions
- Quicker changes in an unstable environment
NEGATIVE ASPECTS:
- Duplication of resources
- Competition for resources among divisions
- More managers needed
- Poor coordination across divisions
- Less professional specialization by CEO
Divisional structure- when to use
- Unstable, uncertain environment
- Large size
- Routine technology
- Tech. interdependence between functions
- Goals of product specialization, innovation
Hybrid structure
Contains elements of both functional and divisional structure. This is more organic as the functional units helps information and ideas flow horizontally from division to division.
