The Organizational System

What is Structure?
The degree of complexity, formalization and centralization in the organization. Complexity is the degree of vertical, horizontal and spatial differentiation in an organization Formalization is the degree to which jobs within the organization are standardized. Centralization is the degree to which decision making in concentrated at a single point in the organization

Classical View of Structure

Division of Labour Specialization; breaking jobs down into simple and repetitions tasks Unity of Command a subordinate should have only one superior to whom he or she is directly responsible. Responsibility - an obligation to perform Line Authority authority to direct the work of a subordinate

Classical View of Structure

Chain of Command the superior-subordinate authority chain that extends from the top of the organization to the lowest echelon Staff Authority positions that support, assist and advise line managers Span of Control the number of subordinates a manger can efficiently and effectively divert Departmentation: grouping of activities on some common basis

Departmentation by Function

Plant Manager Manger Engineering Manager Accounts Manger Manufacturing Manger Personal Manager Purchase

Departmentalization by Product

President VP (Fuels) VP (Lubricants & Waxes) Marketing Planning Supply & distribution Manufacturing VP (chemicals)

Departmentalization by Customer

Manager

Loans

FEX

SA

TDR

Departmentalization by Geography

VP (Sales) Sales Manager Western Region

Sales Manager Sales Manager Southern Region Northern Region

Sales Manager Eastern Region

Departmentalization by Process

Plant Manager

Cast Department Manager

Press Department Manager

Tube Department Manager

Finishing Department Manager

Inspectio packing & Shippin Dept Manage

The coming of the New Organization

Rapid and unexpected change Increasing diversity Change in managerial behaviour Adoption to computer technology

The Mechanistic Structure

The Mechanistic Structure

High horizontal differentiation Rigid hierarchical relationships Fixed duties High formalization Formalized communication channels Centralized decision authority

The Organic Structure

The Organic Structure..

Low horizontal differentiation Collaboration (both horizontal and vertical) Adaptable duties Low formalization Informal communication Decentralized decision authority

Why do Structures Differ?

Strategy Strategy Innovation Structural Option Organic: loose structures; low division of labour, low formalization, decentralized.

Cost Mechanistic: tight control; extensive minimization division of labour, high formalization, high centralization. Initiation Mechanistic and Organic: mix of loose and tight properties; tight controls for current activities, loose controls for newer undertakings.

Why do Structures Differ?.....

Size
Increase in the number of employees results in
High complexity High formalization decentralization

Why do Structures Differ?....

Technology Unit Production Low vertical Structural characteristics differentiation
Low horizontal differentiation Low formalization

Mass Production
Moderate vertical differentiation High horizontal differentiation High formalization Mechanistic

Process Production
High vertical differentiation Low horizontal differentiation Low formalization

Most effective Organic structure

Organic

Technology
Task variability

Few Exceptions
Routine

Many Exceptions
Engineering

Well-defined Problem Analyzability Ill-defined

1 3
Craft

2 4
Non routine

Technology
Input A B C D Output A. Long-linked Technology
Transformational Process

Client A

Client B

B. Mediating Technology
Resources A B C D

Transformational Process

Output

Feedback

C. Intensive Technology

Why do Structures Differ?..... Stable

Environment
Abundant

simple

Complex

Scarce
Dynamic Three Dimensional Model of the Environment

Why do Structures Differ?...

Power control
An organization structure is the result of power struggle by internal constituencies who are seeking to further their interests

Mintzberg`s five design configurations

The operating core: Employees who perform the basic work related to the production of products and services The strategic apex: Top level managers who are charged with the overall responsibility of the organization The middle level: Managers who connect the operating core to the strategic apex The technosturcture: Analysts who have the responsibility for effecting certain forms of standardization in the organization The support staff: People who fill the staff units, who provide indirect services for the organization

Basic Elements

Basic Subunits SubunitExample positions from a manufacturing firm.

Strategic Apex: Board of Directors, Chief Executive Officer Techno structure: Strategic Planning, Personnel Training, Operations Research, Systems Analysis and Design Support Staff: Legal Counsel, Public Relations, Payroll, Mailroom Clerks, Cafeteria Workers Middle Line: VP Operations, VP Marketing, Plant Managers Sales Managers Operating Core: Purchasing Agents, Machine Operators, Assemblers, Sales Persons, Shippers

The Simple Structure

Low complexity Low formalization Centralized authority

The Machine Bureaucracy

High in complexity, formalization and centralization Key part is technostructure

The Professional Bureaucracy

High in complexity, formalization Low centralization

The Divisional Structure

A set of autonomous units coordinated by central headquarters

The Adhocracy
A structure characterized as low in complexity, formalization centralization

Programs Academic departments

Under graduate

Masters Ph.D. Research The Matrix Structure Executive programs

Community service programs

Accounting Administrati ve Studies Economics

Finance
Marketing

Matrix Structure for a College of Business Administration