Organizational Structure and Design

• Organizational Structure and Design are key components in week 5.

What is an Organization?

• A consciously coordinated social unit.
• Composed of a group of people.
• Functions on a relatively continuous basis.
• Achieves a common goal or set of goals.
• The goals span from profit to awareness, and welfare.
• Involves sets of people, more than its members.
• There is a plan and clear methodology outlined to achieve said goals.

Organizing and Organizational Structure

• Organizing arranges and structures work to accomplish organizational goals.
• Organizational Structure defines how job tasks are formally divided, grouped, and coordinated
• Structure includes degree of complexity, formalization, and centralization.
• Formal arrangement of jobs occur within the organization.

Organization Charts

• These charts include horizontal, matrix, and functional organization charts.

Elements of Organizational Design

• Work specialization divides work activities into separate job tasks.
• Departmentalization groups jobs.
• Chain of command is the line of authority clarifying who reports to whom.
• Span of control is the number of employees a manager can efficiently and effectively manage.
• Centralization relates to who, where, and how decisions are made in organizations.
• Formalization refers to the degree to which jobs within an organization are standardized
• Employee behavior is guided by rules and procedures.
• Boundary spanning forms relationships with people outside their formally assigned groups.

Work Specialization

• Dividing work activities into separate job tasks.
• Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.

Departmentalization

• The basis by which jobs are grouped.
• Functional departmentalization involves grouping jobs by functions performed.
• Product departmentalization involves grouping jobs by product line.
• Geographical departmentalization involves grouping jobs on the basis of territory or geography.
• Process departmentalization involves grouping jobs on the basis of product flow.
• Customer departmentalization involves grouping jobs on the basis of common customers, such as retail, wholesale, or government.

Chain of Command

• Indicates who reports to whom.
• Authority includes the rights inherent in a managerial position.
• Rights tell people what to do; and expect them to do it.
• Unity of Command dictates each employee should report to only one manager.

Span of Control

• This specifies the number of employees who can be effectively and efficiently supervised by a manager.

Centralization vs Decentralization

• Centralization is the degree to which decision-making is concentrated at upper levels of the organization.
• Decentralization gives employees power to provide inputs.
• Employee empowerment gives formal authority or power to employees.

Formalization

• Indicates the degree to which jobs within an organization are standardized.
• Includes the extent to which employee behavior is guided by rules and procedures.
• Formalization offers little discretion.
• Low formalization allows for mutual adjustments.

Boundary Spanning

• Occurs when individuals form relationships with people outside their formally assigned groups.
• Spanning can occur: within or outside the organization.
• The process allows for more collaboration.