Questions and Answers
What are the key elements involved in organizational design? Select all that apply.
What is the purpose of organizing within an organization?
Divides work to be done into specific jobs and departments, assigns tasks and responsibilities, coordinates tasks, clusters jobs into units, establishes relationships, establishes lines of authority, allocates resources.
Specialization in an organization entails dividing tasks into separate jobs completed by different individuals.
True
Overspecialization can lead to human diseconomies such as ___, fatigue, stress, poor quality, increased absenteeism, and higher turnover.
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Match the departmentalization type with its description:
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Study Notes
Organizational Structure
- Organizational structure refers to the formal arrangement of jobs within an organization.
Organizing
- Organizing is the process of clarifying jobs, working relationships, and resource allocation to achieve specified objectives.
- It involves dividing work into specific jobs and departments, assigning tasks and responsibilities, coordinating tasks, clustering jobs into units, establishing relationships, and allocating resources.
Purposes of Organizing
- Divides work into specific jobs and departments
- Assigns tasks and responsibilities
- Coordinates diverse organizational tasks
- Clusters jobs into units
- Establishes relationships among individuals, groups, and departments
- Establishes formal lines of authority
- Allocates and deploys organizational resources
Organizational Design
- Involves decisions about six key elements:
- Work specialization
- Departmentalization
- Chain of command
- Span of control
- Centralization and decentralization
- Formalization
Work Specialization
- The degree to which tasks are divided into separate jobs
- Overspecialization can result in human diseconomies (boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover)
Departmentalization
- Types:
- Functional
- Product
- Geographic
- Process
- Customer
- Matrix
Functional Departmentalization
- Advantages:
- Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations
- Coordination within functional area
- In-depth specialization
- Disadvantages:
- Poor communication across functional areas
- Limited view of organizational goals
Geographic Departmentalization
- Advantages:
- More effective and efficient handling of specific regional issues
- Serve needs of unique geographic markets better
- Disadvantages:
- Duplication of functions
- Can feel isolated from other organizational areas
Product Departmentalization
- Advantages:
- Specialization in particular products and services
- Managers can become experts in their industry
- Closer to customers
- Disadvantages:
- Duplication of functions
- Limited view of organizational goals
Process Departmentalization
- Advantages:
- More efficient flow of work activities
- Disadvantages:
- Can only be used with certain types of products
Customer Departmentalization
- Advantages:
- Customers' needs and problems can be met by specialists
- Disadvantages:
- Duplication of functions
- Limited view of organizational goals
Matrix Departmentalization
- Teams formed with individuals reporting to two or more managers (functional and project managers)
- Advantages:
- Oriented toward end results
- Professional identification is maintained
- Pinpoints product-profit responsibility
- Disadvantages:
- Conflict in organization authority
- Uncertainty in reporting relationships
- Requires the manager to be the most effective and efficient
Chain of Command
- The continuous line of authority that extends from upper levels to the lowest levels of the organization
- Clarifies who reports to whom
- Components:
- Authority
- Responsibility
- Unity of command
Span of Control
- The number of employees a manager can efficiently and effectively manage
- Affects:
- Managerial skills and abilities
- Employee characteristics
- Work characteristics
- Task similarity
- Task complexity
- Physical proximity
- Task standardization
Centralization and Decentralization
- Centralization:
- Decision-making concentrated at a single point
- Organizations where top managers make all decisions
- Decentralization:
- Decision-making pushed down to lower-level managers
- Employees provide input or make decisions
- Factors that influence centralization:
- Stable environment
- Inexperienced lower-level managers
- Decisions are significant
- Organization is facing a crisis
- Company is large
- Factors that influence decentralization:
- Complex and uncertain environment
- Capable and experienced lower-level managers
- Decisions are relatively minor
- Open corporate culture
- Geographically dispersed company
Formalization
- The degree to which jobs are standardized and employee behavior is guided by rules and procedures
- Formalized structures have many written rules and regulations
Organizational Design Decisions
- Organization structure is an important factor in operational effectiveness
- Mechanistic organization:
- Rigid and tightly controlled structure
- High specialization
- Rigid departmentalization
- Clear chain of command
- Narrow spans of control
- Centralization
- High formalization
- Organic organization:
- Highly adaptive and flexible structure
- Cross-functional teams
- Cross-hierarchical teams
- Free flow of information
- Wide spans of control
- Decentralization
- Low formalization
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Description
Understand the basics of organizational structure, including organizing, clarifying jobs, and resource allocation to achieve objectives.