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Robbins & Judge

Organizational Behavior
14th Edition

Foundations
Foundations of
of
Organization
Organization Structure
Structure
Kelli J. Schutte
William Jewell College

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Chapter
Chapter Learning
Learning Objectives
Objectives
After studying this chapter, you should be able to:

Identify the six elements of an organizations structure.


Identify the characteristics of a bureaucracy.
Describe a matrix organization.
Identify the characteristics of a virtual organization.
Show why managers want to create boundaryless
organizations.
Demonstrate how organizational structures differ, and
contrast mechanistic and organic structural models.
Analyze the behavioral implications of different
organizational designs.
Show how globalization affects organizational structure.
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What
What Is
Is Organizational
Organizational Structure?
Structure?
Organizational Structure
How job tasks are formally divided, grouped, and
coordinated
Key Elements:
1.

Work specialization

2.

Departmentalization

3.

Chain of command

4.

Span of control

5.

Centralization and decentralization

6.

Formalization

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1.
1. Work
Work Specialization
Specialization
The degree to which tasks in the organization are
subdivided into separate jobs
Division of Labor

Makes efficient use of employee skills


Increases employee skills through repetition
Less between-job downtime increases productivity
Specialized training is more efficient
Allows use of specialized equipment

Can create greater economies and efficiencies but not


always
E X H I B I T 15-1
E X H I B I T 15-1

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Work
Work Specialization
Specialization Economies
Economies and
and
Diseconomies
Diseconomies

Specialization can reach a point of diminishing returns


Then job enlargement gives greater efficiencies than
does specialization
E X H I B I T 15-2
E X H I B I T 15-2

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2.
2. Departmentalization
Departmentalization
The basis by which jobs are grouped together
Grouping Activities by:
Function
Product
Geography
Process
Customer

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3.
3. Chain
Chain of
of Command
Command
Authority

The rights inherent in a managerial position to give orders


and to expect the orders to be obeyed

Chain of Command

The unbroken line of authority that extends from the top of


the organization to the lowest echelon and clarifies who
reports to whom

Unity of Command

A subordinate should have only one superior to whom he or


she is directly responsible

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4.
4. Span
Span of
of Control
Control
The number of subordinates a manager can efficiently and effectively direct

Wider spans of management


increase organizational
efficiency
Narrow span drawbacks:
Expense of additional layers of
management
Increased complexity of vertical
communication
Encouragement of overly tight
supervision and discouragement
of employee autonomy
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Contrasting
Contrasting Spans
Spans of
of Control
Control

E X H I B I T 15-3
E X H I B I T 15-3

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5.
5. Centralization
Centralization and
and
Decentralization
Decentralization
Centralization
The degree to which decision making is concentrated at a
single point in the organization.

Decentralization
The degree to which decision making is spread throughout
the organization.

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6.
6. Formalization
Formalization
The degree to which jobs within the organization are
standardized.
High formalization
Minimum worker discretion in how to get the job done
Many rules and procedures to follow

Low formalization
Job behaviors are nonprogrammed
Employees have maximum discretion

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Common
Common Organization
Organization Designs:
Designs: Simple
Simple
Structure
Structure
Simple Structure
A structure characterized by a low degree of
departmentalization, wide spans of control, authority
centralized in a single person, and little formalization

E X H I B I T 15-4
E X H I B I T 15-4

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Common
Common Organizational
Organizational Designs:
Designs:
Bureaucracy
Bureaucracy
Bureaucracy
A structure of highly operating
routine tasks achieved through
specialization, very formalized
rules and regulations, tasks that
are grouped into functional
departments, centralized authority,
narrow spans of control, and
decision making that follows the
chain of command

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An
An Assessment
Assessment of
of Bureaucracies
Bureaucracies
Strengths
Functional economies of
scale
Minimum duplication of
personnel and equipment
Enhanced communication
Centralized decision
making

Weaknesses
Subunit conflicts with
organizational goals
Obsessive concern with
rules and regulations
Lack of employee
discretion to deal with
problems

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Common
Common Organizational
Organizational Designs:
Designs:
Matrix
Matrix

Matrix Structure

A structure that creates dual lines of authority and combines


functional and product departmentalization

Key Elements
Gains the advantages of functional and product
departmentalization while avoiding their weaknesses
Facilitates coordination of complex and interdependent
activities
Breaks down unity-of-command concept

E X H I B I T 15-5
E X H I B I T 15-5

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New
New Design
Design Options:
Options: Virtual
Virtual
Organization
Organization
A small, core organization
that outsources its major
business functions
Highly centralized with
little or no
departmentalization
Provides maximum
flexibility while
concentrating on what
the organization does
best
Reduced control over
key parts of the business

E X H I B I T 15-6
E X H I B I T 15-6

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New
New Design
Design Options:
Options: Boundaryless
Boundaryless
Organization
Organization

An organization that seeks to eliminate the chain of


command, have limitless spans of control, and replace
departments with empowered teams
T-form Concepts
Eliminate vertical (hierarchical) and horizontal (departmental)
internal boundaries
Breakdown external barriers to customers and suppliers

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Two
Two Extreme
Extreme Models
Models of
of Organizational
Organizational
Design
Design

E X H I B I T 15-7
E X H I B I T 15-7

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Four
Four Reasons
Reasons Structures
Structures Differ
Differ
1. Strategy
Innovation Strategy
A strategy that emphasizes the introduction of major new
products and services
Organic structure best

Cost-minimization Strategy
A strategy that emphasizes tight cost controls, avoidance of
unnecessary innovation or marketing expenses, and price
cutting
Mechanistic model best

Imitation Strategy
A strategy that seeks to move into new products or new
markets only after their viability has already been proven
Mixture of the two types of structure
E X H I B I T 15-8
E X H I B I T 15-8

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Why
Why Structures
Structures Differ
Differ
2. Organizational Size

As organizations grow, they become more mechanistic,


more specialized, with more rules and regulations

3. Technology

How an organization transfers its inputs into outputs

The more routine the activities, the more mechanistic the


structure with greater formalization
Custom activities need an organic structure

4. Environment

Institutions or forces outside the organization that


potentially affect the organizations performance
Three key dimensions: capacity, volatility, and complexity

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Three-Dimensional
Three-Dimensional Environment
Environment
Model
Model
Volatility

Complexity

Capacity

Capacity
The degree to which an environment can support growth

Volatility
The degree of instability in the environment

Complexity
The degree of heterogeneity and concentration among
environmental elements
E X H I B I T 15-9
E X H I B I T 15-9

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Organizational
Organizational Designs
Designs and
and Employee
Employee
Behavior
Behavior

Impossible to generalize due to individual differences in


the employees
Research findings
Work specialization contributes to higher employee
productivity, but it reduces job satisfaction.
The benefits of specialization have decreased rapidly as
employees seek more intrinsically rewarding jobs.
The effect of span of control on employee performance is
contingent upon individual differences and abilities, task
structures, and other organizational factors.
Participative decision making in decentralized organizations
is positively related to job satisfaction.

People seek and stay at organizations that match their


needs.
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Global
Global Implications
Implications
Culture and Organizational Structure
Many countries follow the U.S. model
U.S. management may be too individualistic

Culture and Employee Structure Preferences


Cultures with high-power distance may prefer mechanistic
structures

Culture and the Boundaryless Organization


May be a solution to regional differences in global firms
Breaks down cultural barriers, especially in strategic alliances
Telecommuting also blurs organizational boundaries

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Summary
Summary and
and Managerial
Managerial
Implications
Implications
Structure impacts both the attitudes and behaviors of
the people within it
Associated
with

Impact of Technology
Makes it easier to change structure to fit employee and
organizational needs
E X H I B I T 15-10
E X H I B I T 15-10

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All rights reserved. No part of this publication may be reproduced,


stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise,
without the prior written permission of the publisher. Printed in the
United States of America.

Copyright 2011 Pearson Education, Inc.


Publishing as Prentice Hall

Copyright 2011 Pearson Education, Inc. publishing


as Prentice Hall

15-25