Chapter 11 Designing Organizational Structure PDF

Management Fifteenth Edition, Global Edition Chapter 11 Designing Organizational Structure MGT 201 – Fundamentals of Management...

Management Fifteenth Edition, Global Edition Chapter 11 Designing Organizational Structure MGT 201 – Fundamentals of Management Alaa Hamade Copyright © 2021 Pearson Education Ltd. Elements of Organizational Design Organizing: management function that involves arranging and structuring work to accomplish the organization’s goals Organizational structure: the formal arrangement of jobs within an organization Organizational chart: the visual representation of an organization’s structure Organizational design: creating or changing an organization’s structure Copyright © 2021 Pearson Education Ltd. Elements of Organizational Design Organizational design: creating or changing an organization’s structure – Work specialization – Departmentalization – Chain of command – Span of control – Centralization and decentralization – Formalization Copyright © 2021 Pearson Education Ltd. Work Specialization Work specialization: dividing work activities into separate job tasks Copyright © 2021 Pearson Education Ltd. Departmentalization Departmentalization: the basis by which jobs are grouped together Copyright © 2021 Pearson Education Ltd. Departmentalization Departmentalization: the basis by which jobs are grouped together Copyright © 2021 Pearson Education Ltd. Departmentalization Departmentalization: the basis by which jobs are grouped together Copyright © 2021 Pearson Education Ltd. Chain of Command Chain of command: the line of authority extending from upper organizational levels to the lowest levels, which clarifies who reports to whom Authority: – Line authority: authority that entitles a manager to direct the work of an employee – Staff authority: positions with some authority that have been created to support, assist, and advise those holding line authority Copyright © 2021 Pearson Education Ltd. AUS Organizational Chart Copyright © 2021 Pearson Education Ltd. Chain of Command Responsibility: the obligation or expectation to perform any assigned duties Unity of command: the management principle that each person should report to only one manager Copyright © 2021 Pearson Education Ltd. Span of Control Span of control: the number of employees a manager can efficiently and effectively manage Copyright © 2021 Pearson Education Ltd. Centralization and Decentralization Centralization: the degree to which decision making is concentrated at upper levels of the organization Decentralization: the degree to which lower-level employees provide input or actually make decisions Employee empowerment: giving employees more authority (power) to make decisions Copyright © 2021 Pearson Education Ltd. Exhibit 11.5 Centralization or Decentralization More Centralization More Decentralization Environment is stable. Environment is complex, uncertain. Lower-level managers are not as capable or Lower-level managers are capable and experienced at making decisions as upper- experienced at making decisions. level managers. Lower-level managers do not want a say in Lower-level managers want a voice in decisions. decisions. Decisions are relatively minor. Decisions are significant. Organization is facing a crisis or the risk of Corporate culture is open to allowing company failure. managers a say in what happens. Company is small. Company is geographically dispersed. Effective implementation of company Effective implementation of company strategies depends on managers retaining strategies depends on managers having say over what happens. involvement and flexibility to make decisions. Copyright © 2021 Pearson Education Ltd. Formalization Formalization: how standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures Copyright © 2021 Pearson Education Ltd. Mechanistic and Organic Structures Mechanistic organization: an organizational design that’s rigid and tightly controlled Organic organization: an organizational design that’s highly adaptive and flexible Copyright © 2021 Pearson Education Ltd. Contingency Factors Strategy and Structure – An organization’s structure should facilitate goal achievement. Because goals are an important part of the organization’s strategies, it’s only logical that strategy and structure are closely linked. Size and Structure – There’s considerable evidence that an organization’s size affects its structure, but once an organization grows past a certain size, size has less influence on structure. Copyright © 2021 Pearson Education Ltd. Contingency Factors Technology and Structure – Unit production: the production of items in units or small batches – Mass production: the production of items in large batches – Process production: the production of items in continuous processes Environmental Uncertainty and Structure – In stable and simple environments, mechanistic designs can be more effective. – The greater the uncertainty, the more an organization needs the flexibility of an organic design. Copyright © 2021 Pearson Education Ltd.