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Chapter 8: Organization Structures and Design

Terms in this set (28)

Organizing

Organization Structure

Organization Chart
Arranges people and resources to work toward a goal

System of tasks, reporting relationships, and communication linkages

Describes the arrangement of work positions within an organization
Formal Structure

Informal Structure

Social Network Analysis
Official structure of the organization

Set of unofficial relationships among an organization's members

Identifies the informal structures and their embedded social relationships that are active in the organization
Departmentalization

Functional Structure

Work Process
Process of grouping people and jobs in work units

Groups together people with similar skills who perform similar tasks

Group of related tasks that collectively create a valuable work product
Process Structure

Matrix Structure

Team Structure
Groups jobs and activities that are part of the same process

Combines functional and divisional approaches to emphasize project teams

Uses permanent and temporary cross-functional teams to improve lateral relations
Cross-Functional Team

Project Teams

Network Structure
Brings together members from different functional departments

Convened for a particular task and disband once it is completed

Uses IT to link with networks of outside suppliers and service contractors
Boundaryless Organization

Virtual Organization

Organizational Deign
Eliminates internal boundaries among subsystems and external boundaries with the external environment

Uses IT and the Internet to engage a shifting network of strategic alliances

Process of creating structures that accomplish mission and objectives
Bureaucracy

Mechanistic Design

Organic Design
Emphasizes formal authority, order, fairness, and efficiency

Centralized, with many rules and procedures, clear cut division of labor, narrow spans of control and formal coordination

Decentralized, fewer rules and procedures. open division of labor, wide spans of control, personal coordination
Adaptive Organization

Subsystem

Differentiation
Operates with minimum bureaucratic features and encourages worker empowerment and teamwork

Work unit within a larger organization

Difference between subsystems in an organization
Integration

Chain of Command

Span of Control
Level of coordination achieved between subsystems in an organization

Links all persons with higher levels of authority

Number of subordinates directly reporting to a manager
Delegation

Empowerment

Centralization
Process of distributing and entrusting work to other persons

Allows others to make decisions and exercise discretion in their work

Concentration of authority for most decisions at the top level of an organization
Decentralization

Staff Positions
Dispersion of authority to make decisions throughout all organizational levels

Provide technical expertise for other parts of the organization
Basics of an organization's formal structure
-Division of work
-Supervisory relationships
-Communication channels
-Major subunits
-Levels of management
Why is social network analysis useful?
Used to redesign formal structures for better performance
Advantages of informal structure

Disadvantages of informal structure
-Increased efficiency
-Emotional support and friendships to satisfy social needs

-Susceptible to rumors
-Carry inaccurate information
-Divert work efforts
-Create resistance to change
Major types of organizational structures

Key point of functional structures
-Functional
-Divisional
-Matrix

-Each unit works within their area of expertise; if each unit does their job correctly, the entire business will operate successfully
Advantages of functional structures
-Assignments are consistent with knowledge and expertise
-Training and skill development
-Clear career paths
-Economies of scales with efficient use of resources
Disadvantages of functional structures
-Pinpointing responsibilities
-Functional chimneys problem
-Lack of cooperation
-Narrow perspectives
-Slow decision making (higher levels deal with issues)
Functional Chimneys Problem

Divisional Structure

Product Structure
Lack of communication and coordination across functions

Groups together people working on the same product, in the same area, with similar customers, or on the same processes

Groups together people and jobs focused on a single good or service
Geographical Structure

Customer Structure
Groups together people and jobs performed in the same location

Groups together people and jobs serving the same clients
Advantages of divisional structure
-Flexibility in responding to environmental changes
-Improved coordination across functional departments
-Clear points of responsibility
-Expertise is focused on specific customers, products, and regions
-Greater ease in changing size or closing down divisions
Disadvantages of divisional structure

Disadvantages of matrix structure
-Reduce economies of scale
-Increase costs through duplication of resources
-Create unhealthy rivalries between departments

-Power struggle between bosses
-Task confusion and conflicting work priorities with two-boss system
-Higher costs (adding more management)
Advantages of matrix system
-Cooperation across functions
-Improved decision making
-increased flexibility of positions to meet changing demand
-Better customer service (manager is always available)
-Better performance
-Improved strategic management (top managers can focus on solving more strategic issues)
Advantages of team structures

Disadvantages of team structures
-Breaks down barriers
-Improves speed and quality of work (sharing expertise)

-Conflicting loyalties
-Time management in group processes
Advantages of network structures

Disadvantages of network structures
-Less complex internal systems
-Reduced costs
-Easy to maintain contracts and business alliances with IT

-Can become complicated to manage the system
-Lack of loyalty
Requirements for a boundaryless organization
-Absence of hierarchy
-Empowerment of team members
-Use of technology
-Sharing knowledge
Types of organizational design

Trends in organizational design
-Mechanistic
-Organic

-Flat structures (less managers; less supervision)
-Delegation and empowerment
-Decentralization (through horizontal structure) and centralization (through IT)
-Reduced use of staff (lowering costs and increasing efficiency by employing fewer staff)
Characteristics of mechanistic organizational designs
-Predictable
-Centralized
-Many rules and procedures
-Narrow spans of control
-Specialized tasks
-Few teams
-Formal/Impersonal
Characteristics of organic organizational designs
-Adaptable
-Decentralized
-Few rules and procedures
-Wide spans of control
-Shared tasks
-Many teams
-Informal-Personal
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