Organizational Theory - Organization Structure PDF

# Organizational Theory - Organization Structure ## Organizational Structure - Designates formal reporting relationships, including the number of levels in the hierarchy (horizontal or vertical) and the level of control of managers and supervisors. - Identifies the grouping of individuals into de...

# Organizational Theory - Organization Structure ## Organizational Structure - Designates formal reporting relationships, including the number of levels in the hierarchy (horizontal or vertical) and the level of control of managers and supervisors. - Identifies the grouping of individuals into departments, and those departments into the total organization. - Includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments. ## Organizational Hierarchy - **Vertical:** Specialized tasks, many rules (bureaucratic), strict communication and reporting systems, few teams. Centralized decision-making, top-down (Classical Management Style). - **Horizontal:** Shared tasks, empowerment, fewer rules, face-to-face communication, teams and task forces, flatter hierarchy of authority, decentralized decision-making (Human Relations Management Style). ## Information Processing **EXHIBIT 4.3** - The Relationship of Organizational Design to Efficiency Versus Learning Outcomes **Dominant Structural Approach** - **Vertical Structure is Dominant:** - Specialized Tasks - Strict hierarchy, many rules - Vertical communication and reporting systems - Few teams, task forces, or integrators - Centralized decision-making - **Horizontal Structure is Dominant:** - Shared tasks, empowerment - Relaxed hierarchy, few rules - Horizontal communication, face-to-face - Many teams and task forces - Decentralized decision-making ## Organization Design - As organizations become more complex, the design often changes, mostly affecting:: - **Required work activities:** Assigning departments and divisions to do the work. - **Reporting relationships:** Chain of command. - **Departmental grouping:** Organizing the actual employees into groups/department - Functional, Divisional, Multi-focused, Horizontal, Virtual - **Most Common?** - **Most Recent Approach?** ## Departmental Grouping - **Functional:** Grouping departments into similar functions or work processes, certain skills - for example, Marketing Department, Legal Department, Human Resources Department - **Divisional Grouping:** Grouping departments according to what the organization produces - for example Amazon has a manufacturing division, shipping division, Prime TV division, Alexa division. - **Multi-focused Grouping:** Combination (matrix) of functional and divisional - global companies. - **Horizontal Grouping:** Employees are organized around core work processes - end-to-end work, information, material flows. Employees work together from start to finish, or a product/service. - **Virtual Network Grouping:** The most recent approach - departments are electronically connected to share information, help in completing tasks. Departments can be anywhere in the world. ## Concerns with Departmental Grouping - Integration - conflict of goals, competition. - Co-ordination - bigger the size of the organization, slower response to environmental changes - need to coordinate all departments, and decisions pile up. - Lack of Innovation if coordination is slow. - Communication - do employees know all goals, or are they restricted. - Who is authorized to make the decisions? - With Virtual, managers do not have hands-on control over many activities and employees. - Duplication of departments (Divisions)- R&D spread across divisions, rather than one central department. - Product/service lines start operating in silos - Example Trent Peterborough vs. Trent Oshawa - competition rather than co-operation. ## Holacracy Team Structure - COVID has accelerated the discussions of Holacracy - people are working from home (decentralized networks). - Holacracy - flattening hierarchy in organizations, and getting rid of managers. Workers self-manage and self-organize. - Zappos (article) - "no job titles, no managers, and no hierarchies". - What are the other benefits of Holacracy? ## Symptoms of Structural Deficiency - Symptoms (tell-tale signs that structure is out of alignment with organization needs) of Structural Deficiency: - Decision making is delayed or lacking in quality - information not reaching the right people, inadequate information. - Organization does not respond innovatively to a changing environment - lack of coordination, clear responsibilities. - Employee performance declines, and goals are not being met - goals are not clear, responsibilities not clear, lack of coordination. - "Too much" conflict - conflicting goals. ## New Directions - **Outsourcing:** Some organizations choose to "contract out" (outsource) some of their work activities, departments - such as Human Resources, Legal, IT, Accounting, Marketing, Distribution, even Manufacturing. - More easily achievable with virtual network structure. - **Metaphors:** How to understand organizations and restructure them accordingly. **EXHIBIT 4.22** - **Morgan's Eight Metaphors:** - **Machines:** Efficiency, waste, maintenance, order, clockwork, cogs in a wheel, programs, inputs and outputs, standardization, production, measurement and control, design. - **Organisms:** Living systems, environmental conditions, adaptation, life cycles, recycling, needs, homeostasis, evolution, survival of the fittest, health, illness. - **Brains:** Learning, parallel information processing, distributed control, mindsets, intelligence, feedback, requisite variety, knowledge networks. - **Cultures:** Society, values, beliefs laws, ideology, rituals, diversity, traditions, history, service, shared vision and mission, understanding, qualities, families. - **Political Systems:** Interests and rights, power, hidden agendas and backroom deals, authority, alliances, party-line, censorship, gatekeepers, leaders. Conflict management. - **Psychic prisons:** Conscious and unconscious processes, repression and regression, ego, denial, protection, coping and defence mechanisms, pain and pleasure principle, dysfunction. - **Flux and transformation:** Constant Change, dynamic equilibrium, flow, self-organization, systemic wisdom, attractors, chaos, complexity, butterfly effect, emergent properties, dialectics, paradox. - **Instruments of Domination:** Alienation, repression, imposing values, compliance, charisma, maintenance of power, force, exploitation, divide and rule, discrimination, corporate interest.