Basic Organization Designs

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Basic Organization Designs

• BSM 12

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ORGANIZING

• The function of management that creates the
  organizations structure

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INTRODUCTION

• Once decisions regarding corporate strategies are
  made, an effective structure must be put in place
  to allow achievement of those goals
• When managers develop or change the
  organizations structure, they are engaging in
  organization design.
• Decisions must be made about how specialized jobs
  should be allocated, the rules to guide
  employees behaviours, and at what level
  decisions are to be made.

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• Organization design decisions are usually made by
  senior managers.
• Organization design applies to any type of
  organization.
• It is important to understand the process so we
  understand why we are grouped as we are.

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Organization Structure
Organization Design
The framework for dividing, assigning, and
coordinating work
Developments in or changes to the structure of an
organization
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Key Elements of Organization Structure
Work Specialization
Authority and Responsibility
Chain of Command
Centralization vs. Decentralization
Departmentalization
Span of Control
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1. Work specialization

• jobs are broken down into a number of steps and
  each step is completed by a separate individual
• example one person installs only motherboards
  and/or hard disk drives in a computer assembly
  line
• advantage efficient use of diversity of skills
  that workers have
• disadvantage division of labour may cause
  boredom, fatigue or stress leading to low
  production, poor work quality, increased
  absenteeism and high staff turnover

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2. Chain of command

• the principle that no person should report to
  more than one boss

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3. Span of control

• refers to the number of subordinates a manager
  can direct efficiently and effectively
• Factors that will influence how many
• level of management top managers need a smaller
  span than middle, etc.
• the more training and experience employees have,
  the less direct supervision they require
• similarity of tasks, difficulty of tasks, how
  close employees are physically, degree of
  standardization

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4. Authority and responsibility

• an obligation to perform assigned duties
• no one should be held responsible for something
  over which he/she has no authority

• the rights, that come with a managerial position,
  to give orders and expect them to be obeyed
• related to ones position--not the
  characteristics of the individual manager

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Two forms of authority

• Line authority the level of authority that
  entitles a manager to direct the work of an
  employee
• A line manager directs the work of employees and
  makes certain decisions without consulting anyone
• Staff authority positions created to assist,
  support, and advise those holders of line
  authority

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Authority vs Power

• A right based on a position in an organization

• An individuals capacity to influence decisions

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Example

• Administrative assistants (secretaries) are
  powerful in a company even though they have
  little authority. How and why?

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How and why?

• They are gatekeepers for bosses and can influence
  who bosses see and when.
• They are relied up to pass information on to
  bosses and can control what they hear.

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Coercive
Referent
Reward
Power
Expert
Legitimate
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Five sources of power

1. Coercive power based on fear
2. Reward power based on the ability to distribute
   anything others may value
3. Legitimate power based on ones position in the
   formal hierarchy
4. Expert power based on ones special skills or
   knowledge
5. Referent power based on identification with a
   person who has desirable resources or personal
   traits

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5. Centralization vs decentralization

• Centralization is a function of how much
  decision-making authority is pushed down to lower
  levels in an organization. The more centralized
  an organization is, the higher is the level at
  which decisions are made.
• Decentralization is the pushing down of
  decision-making authority to the lowest levels of
  an organization

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The Degree of Centralization
Higher
Lower
Decentralization
Employee Empowerment
Top Management Control
Centralization
Higher
Lower
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6. Departmentalization

• Coordination of specialists together in
  departments under the direction of a manager as a
  result of work specialization

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Five Ways to Departmentalize
Functional
Product
Customer
Process
Geographic
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Functional

• Grouping of activities by functions performed

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Product

• Grouping of activities by products produced

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Customer or client

• Grouping of activities by common customers

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Geographic

• Grouping of activities by territory or location

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Process

• Grouping of activities by work or customer flow

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Contemporary View

• Most large organizations continue to use most or
  all of the departmental groups
• Example Black and Decker
• Divisions are organized around function
• Manufacturing around processes
• Sales around geographic
• Sales regions around customer groupings
• 80 of big firms are using teams
• There is no single ideal organization structure

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Line vs Staff Authority
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