Organizational Structure

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Organizational Structure Design
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Organizational Structure design

• Organizational Structure
• How job tasks are formally divided, grouped,
  coordinated
• Organizational Design
• How organizational structures are arranged and
  incorporated
• Why?

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Organizational Structure

• 6 elements to address for a proper organizational
  structure
• Work specialization
• Departmentalization
• Chain of command
• Span of Control
• Centralization or decentralization
• Formalization

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Organizational Structure

• 1. Work specialization
• Division of labor
• Jobs broken into steps with multiple people doing
  their individual part to make the entire product
• Assembly lines, McDonalds

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Organizational Structure

• 1. Work specialization
• Advantages
• Used to increase productivity
• Allows skill building on the job
• Disadvantages
• Good to a point then diminishing returns
• Boredom, absenteeism, stress, high turnover

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Organizational Structure

• 2. Departmentalization
• Grouping of jobs according to (5)
• Function
• Product
• Geography

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Organizational Structure

• 2. Departmentalization
• Grouping of jobs according to
• Process
• Customer

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Organizational Structure

• 3. Chain of command
• Unbroken line of authoritywho reports to whom?
• 2 key concepts
• Authority
• Unity of Command

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Organizational Structure

• 3. Chain of command
• Seeing less chain of command with empowerment
• Example

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Figure 5.2 Sample Bureaucracy
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Organizational Structure

• 4. Span of Control
• How many people can a manager effectively
  supervise?
• Small span of control supervise smaller number
  of people
• Larger span of control supervise larger number
  of people

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Figure 5.2 Small Span of Control
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Figure 5.2 Large Span of Control
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Organizational Structure

• 4. Span of Control
• Is it better to operate with a smaller or larger
  span of control?
• What are advantages disadvantages of each?

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Organizational Structure

• 4. Span of Control
• Wider fewer managers, more ees reporting to
  them
• Reduces cost, speeds decision making
• Get closer to the customer
• Empower employees
• Fewer layers of employees
• Invest in training staff
• Easier to supervise a lot of good staff than bad
  ones

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Organizational Structure

• 4. Span of Control
• Smaller more managers with fewer ees
• Tight managerial control
• Increase cost of managers
• Added managers slows communication
• Encourages micro-managing discourages ee
  autonomy

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Organizational Structure

• 5. Centralization or decentralization
• Degree to which decision making is concentrated
  at a single point in the organization

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Organizational Structure

• Centralization
• Top managers make all the decisions
• Consistency in decision making
• Slow processmove up the ladder

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Organizational Structure

• Decentralization
• Decision making is pushed down to mgrs closest to
  the action
• Quicker actions taken
• More people provide input
• EEs less likely to feel alienated from decision
  makers
• Mgrs closer to situation

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Organizational Structure

• 6. Formalization
• Degree to which jobs are standardized
• EE has minimal discretion in how, what when to
  do things
• Policies are strictly followed
• Explicit job descriptions
• Less formalization increases freedom

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Organizational Structure

• Rank from highly formalized to minimally
  formalized
• Sports programmers
• Hotel maid service
• CEO
• Flower bed landscapers

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How does structure impact management?
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• Manager 1 Decentralized geographically wide
  span of control ( 6 people) decentralized
  decision making, low formalization

• Manager 2 Departmentalized by formal functions
  small span of control (3 people) centralized
  decision making

• What does this organization look like?

• What does this organization look like?

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Organizational Design

• Simple Structure
• Bureaucracy
• Team Based Structure
• Matrix Structure

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Organizational Design

• How organizational structures are arranged and
  incorporated
• Design your org around functional
  departmentalization, small span of control,
  decentralized decision making.
• What will it look like?

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Organizational Design

• Simple structure (entrepreneurial start up)
• Low degree of departmentalization, wide span of
  control, centralized authority, little
  formalization
• Flat organization
• Fast, flexible, inexpensive, clear accountability
• Info overload at the top
• Difficult to use in a large organization

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Figure 5.1 Sample Simple Structure
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Organizational Design

• Bureacracy
• Highly standardized operating tasks achieved
  through specialization
• Formalized rules
• Tasks grouped by function
• Centralized authority
• Narrow span of control
• Decision making follows the chain of command

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Organizational Design

• Bureacracy
• Strength ability to perform standardized
  activities efficiently
• Functions well with less talented less costly
  ees
• Resistant to change
• Close adherence to rules, minimizes decision
  making
• Put like minds together

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Organizational Design

• Team Based Structures
• Breaks down dept barriers
• Org is more horizontal
• Decentralizes decision making to team level
• Requires ees be generalists vs. specialists
• Naperville Park District
• Group structures vs team structures

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Figure 5.3 Group vs. Team Structure
Group Structure
Team Structure
Group Leader
Landscaping
Marketing
Maintenance
Recreation
Registration
Sports
Common goal
Special events
Outdoor Programs
Marketing
Volunteers
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Organizational Design

• Matrix Structure
• Combines functional product departmentalization
• Assigns specialists to specific functional
  departments to work with interdisciplinary teams
  led by project leaders
• Breaks unity of command concept

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Departments Marketing Accounting Registration Hum
an resources Arts Events Sports Maintenance
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Organizational Charts
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Terms

• Assignment of tasks
• Distribution of specific responsibilities
• Based on specialization of competencies
• Division of labor
• Delineation of responsibilities for a specific
  job
• Written purpose for a jobjob description
• More general than assignment of tasks

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Terms

• Unity of Command
• One identifiable supervisor
• TR specialist managing nurse on the floor
  medical director
• Delegation of authority
• Entrusting work to ees
• Giving ees decision making authority

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Reading Job Descriptions

• Division of labor
• Unity of command
• Consistency in levels on the chart
• Director, manager, coordinator, supervisor.

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Notice Functional departmentalization, small
span of control, unity of command, division of
labor