Foundations of organization structure - Setyabudi Indartono
FOUNDATIONS OF ORGANIZA TION STRUCTU RE Prof. : Vivian Chen Reporter : Arthur Chung OUTLINE
What is organization structure ? Organization structure six key ele ments . Common organizational design . New design option . Why do structure differ ? Organization designs and employe e behavior . Summary . WHAT IS ORGANIZATIONAL STRUCTURE ? ORGANIZATIONAL STRUCTURE
SIX KEY ELEMENTS Work Specialization . Departmentalization . Chain of Command . Span of Control . Centralization and Decentralization . Formalization . WORK SPECIALIZATION
Definition : The degree to which tasks in the organizatio n are subdivided into separate jobs . ( or divi sion of labor ) The essence of work specialization is that rather than entire job being done by one individual , it is broken down into a numb
er of steps , with each step being comple ted by a separate individual . In essence , individuals specialize in doin g part of an activity rather than the entir e activity . ECONOMIES AND DISECONOM IES OF WORK SPECIALIZATION DEPARTMENTALIZATION Definition : The Basis by which jobs are grouped togeth
er . Kinds of Departmentalization Functions . Product of the organization produces . Geography or territory . Particular type of customer the organization seeks to reach . CHAIN OF COMMAND
Definition : Authority The unbroken line of the authority that extends fro m the top of the organization to the lowest echelon and clarifies who reports to whom . The right inherent in a managerial position to give o
rders and to expect to the orders to be obeyed . The unity-of-command principle helps preserve the concept of an unbroken line of authority . Unity-of-command The idea that a subordinate should have only one s uperior to whom he pr she is directly responsible . SPAN OF CONTROL Definition : The
number of subordinates a manager can efficiently and effectively direct . CENTRALIZATION AND DE CENTRALIZATION Definition : The degree to which decision making is con centrated at a single point in the organizati on . ( The rights inherent in ones position ) , decentralization is oppositive . FORMALIZATION
Definition : The degree to which jobs within the organiz ation are standardized . COMMON ORGANIZATIONA L DESIGNS(1) The Simple Structure : A structure characterized by a low degree of depart
mentalization , wide spans of control , authority cen tralized in a single person , and little formalization . The Strength : 1. 2. 3. 4. 5. Simplicity . Fast .
Flexible . Inexpensive to maintain . Accountability is clearly . The Weakness : 1. Its difficult to maintain in anything other than sma ll organizations . COMMON ORGANIZATIONA L DESIGNS(2) The Bureaucracy : A
structure with highly routine operating tasks achieved through speci alization , very formalization rules and regulations , tasks that are gro uped into functional departments , centralized authority , narrow span s of control , and decision making that follows the chain of command . The Strength : The ability to perform standardized activities in a highly efficient ma nner . 1.
The Weakness : It is illustrated in the following dialogue among four executives in on e company : 1. 1. 2. 3. 4. 2. Ya know , nothing happens in this happens until we produce something . Wrong . What are you talking about ?
Nothing happens here until we sell something . It is something weve all experienced at one time or another when h ave to deal with people who work in these organizations : obsessive concern with following rules . COMMON ORGANIZATIONA L DESIGNS(3) The Matrix Structure : A structure that creates dual lines of authority and combines fu nctional and product departmentalization .
The Strength : 1. 2. 3. It lies in putting like specialists together , which minimizes the number necessary while following the pooling and sharing of specialized resources across products. It lies in its ability to facilitate coordination when the organiza tion has a multiplicity of the complex and interdependent acti
vities . It facilitates the efficient allocation of specialists . The Weakness : 1. 2. The difficulty of coordinating the tasks of diverse functional sp ecialists so that their activities are completed on time and wit hin budget . Ii lies in the confusion it creates , its propensity to foster powe r struggles , and the stress it places on individuals . NEW DESIGN OPTIONS TEAM STRUCTURE
Definition: 1. The use of teams as the central device to coordinate work activities . NEW DESIGN OPTIONS VIRTUAL STRUCTURE Sometimes called the network or modul ar organization . Definition : A
small , core organization that outsources major business functions . Advantage : Flexibility . NEW DESIGN OPTIONS BOUNDARYLESS STRUCTURE Definition : An
organization that seeks to eliminate the chain of command , have limitless spans of control , and replace departments with emp owered teams . WHAT DO STRUCTURE DIF FER ? (1) Mechanistic Model : A structure characterized by extensive depar tmentalization , high formalization , a limited information network , and centralization .
Organic Model : A structure that is a flat , uses cross-hierarchi cal and cross-functional teams , has low form alization , possesses a comprehensive inform ation network , and relies on participative de cision making . MECHANISTIC MODEL V.S. ORGANIC MODEL WHAT DO STRUCTURE DIFFER ? (2)
STRATEGY Innovation Strategy : A strategy that emphasizes the introduction of major new products and services . Cost-Minimization Strategy : A strategy that emphasizes tight cost control s, avoidance of unnecessary innovation or m
arketing expenses , and price cutting . Imitation Strategy : A strategy that seeks to move into new prod ucts or new markets only after their viability has already been proven . WHAT DO STRUCTURE DIFFER ? (2) STRATEGY WHAT DO STRUCTURE DIFFER ? (3) ORGANIZATION SIZE
There is no considerable evidence to sup port the idea that an organizations size affects its structure . WHAT DO STRUCTURE DIFFER ? (4) TECHNOLOGY The term of technology refers to how an organization transfer its inputs into outp uts . WHAT DO STRUCTURE DIFFER ? (5) ENVIRONMENT
An organizations envir onment is composed of institutions or forces ou tside the organization t hat potentially affect th e organizations perfor mance . Three-Dimensional Mod el of the Environment Capacity : support growt
h. Volatility : Dynamic or st able . Complex : Scarce or Abu ndant . ORGANIZATIONAL DESIGN AND EMPLOYEE BEHAVIOR To Maximize employee performance and satisfaction , individual differences , such as experience , personality , and the wor
k task , should be taken into account . In addition , national culture influences t he preference for structure , so it , too , n eed to be considered . SUMMARY THANK YOU FOR TOUR LIS TENING .
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