IOP-Topic-2-Organizational-Structure-and-Systems.pdf

BLEPP 2024 Industrial /Organizational Psychology Lecturer: Lance Cary D. Fuentes, RPm, CHRP, CHRA  Topic 2: Organization Structure & Systems  Organizational Structures and Systems (20%) Evaluate the value and importance of knowing...

BLEPP 2024 Industrial /Organizational Psychology Lecturer: Lance Cary D. Fuentes, RPm, CHRP, CHRA  Topic 2: Organization Structure & Systems  Organizational Structures and Systems (20%) Evaluate the value and importance of knowing & understanding the various organizational models and systems Recognize the pros and 6 cons of the different types of organizational structures: functional, multi-divisional, flat, matrix, team, network, and hierarchical structures. Define the elements that create an organizational structure and their distinct relationships: job design, departmentation, delegation, span of control and chain of command. Apply your understanding of organizational design to appreciate organizational roles and performance Explain the importance of aligning the organizational structure with the business Apply your understanding of the business elements that must be aligned to ensure profitable performance and business success.  Organizational Structure The division of labor as well as the patterns of coordination, communication, workflow, and formal power that direct organizational activities. Division of Labor - Subdivision of work into separate jobs assigned to different people Coordinating Mechanisms - The processes that organization use in order to function. Coordinating Mechanisms in Organizations  Elements of Organization Structure 1. 1. Span of Control 2. 2. Centralization 3. 3. Formalization 4. 4. Departmentalization  Elements of Organization Structure Element #1: Span of Control – the number of people directly reporting to the next level in the hierarchy. Tall vs Flat Structures – Span of control is interconnected with organizational size and the number of layers in the organizational hierarchy. Element #2: Centralization– Centralization means that formal decision- making authority is held by a small group of people, typically those at the top; decentralization is dispersion of decision authority and power throughout the organization. Tall and Flat Organization  Elements of Organization Structure Element #3: Formalization – the degree to which organizations standardize behavior through rules, procedures, formal training and related mechanisms. Mechanic vs Organic structures - Mechanic Structure is an org structure with a narrow span of control and a high degree of formalization and centralization; organic structure has a wide span of control, little formalization, and decentralized decision making.  Elements of Organization Structure Element #4: Departmentalization – specifies how employees and their activities are group together. It is a fundamental strategy for coordinating organizational activities. Types of Departmentalization 1. Simple Structure – they employ only a few people and typically offer only one distinct product or service. There is minimal hierarchy, usually just employees reporting to owners.  Types of Departmentalization 2. Functional Structure – organizes employees around specific knowledge or other resources. 3. Divisional Structure – employees are organized around geographic areas, outputs, or clients. Three types of Divisional Structure: 1. Geographic Structure 2. Product Structure 3. Client Structure  Types of Departmentalization 4. Team-Based Structure – built around self-directed teams that complete an entire piece of work. 5. Matrix Structure – overlays two structures in order to leverage the benefits of both. 6. Network Structure – an alliance of several organizations for the purpose of creating a product or serving a client  External Environment Dynamic vs Stable Environments – Dynamic environments have a high rate of change, leading to novel situations and a lack of identifiable patterns; organic structures are better suited to this type of environment so that the organization can adapt more quickly to changes, but only if employees are experience and coordinated well. Complex vs Simple Environments - Complex environments have many elements, whereas simple environments have few things to monitor. As an example, a major university library operates in a more complex environment than a small-town public library. The university library’s clients require several types of services—book borrowing, online full-text databases, research centers, course reserve collections, and so on. A small-town public library has fewer of these demands placed on it. The more complex the environment, the more decentralized the organization should become. Decentralization is a logical response to complexity because decisions are pushed down to people and subunits with the necessary information to make informed choices.  External Environment Diverse vs Integrated Environments – Organizations located in diverse environments have a greater variety of products or services, clients, and regions. In contrast, an integrated environment has only one client, product, and geographic area. The more diversified the environment, the more the firm needs to use a divisional structure aligned with that diversity. If it sells a single product around the world, a geographic divisional structure would align best with the firm’s geographic diversity, Hostile vs Munificent Environments - Firms located in a hostile environment face resource scarcity and more competition in the marketplace. Hostile environments are typically dynamic ones because they reduce the predictability of access to resources and demand for outputs.  Organizational Size Larger organizations should have different structures from smaller organizations As the number of employees increases, job specialization increases due to a greater division of labor. The greater division of labor requires more elaborate coordinating mechanisms.  Technology Technology is another factor to consider when designing the best organizational structure for the situation. Technology refers to the mechanisms or processes by which an organization turns out its product or service  Organizational Strategy Organizational strategy refers to the way the organization positions itself in its setting in relation to its stakeholders, given the organization’s resources, capabilities, and mission. In other words, strategy represents the decisions and actions applied to achieve the organization’s goals. Although size, technology, and environment influence the optimal organizational structure, these contingencies do not necessarily determine structure. Instead, corporate leaders formulate and implement strategies that shape both the characteristics of these contingencies as well as the organization’s resulting structure. End