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Chapter 9

OrganizationalStructureandDesign

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

OUTLINE
DefiningOrganizationalStructure

Workspecialization
Departmentalization
ChainofCommand
SpanofControl
Centralizevs.Decentralize
Formalization

Org.DesignDecisions

MechanisticandOrganic
ContingencyFactors
CommonDesigns

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

Defining Organizational Structure

OrganizationalStructure

Theformalarrangementofjobswithinanorganization

OrganizationalDesign

Aprocessinvolvingdecisionsaboutsixkeyelements:
1.
2.
3.
4.
5.
6.

Workspecialization
Departmentalization
Chainofcommand
Spanofcontrol
Centralizationanddecentralization
Formalization

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

Exhibit 9.1 Purposes of Organizing


Divides work to be done into specific jobs and
departments
Assigns tasks and responsibilities associated with
individual jobs
Coordinates diverse organizational tasks
Clusters jobs into units
Establishes relationships among individuals,
groups, and departments
Establishes formal lines of authority
Allocates and deploys organizational resources
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

Organizational Structure
WorkSpecialization
Thedegreetowhichtasksintheorganizationare
dividedintoseparatejobswitheachstep
completedbyadifferentperson
Overspecializationcanresultinhumandiseconomies
fromboredom,fatigue,stress,poorquality,increased
absenteeism,andhigherturnover

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

Departmentalization by Type
Functional
Groupingjobsby
functionsperformed

Product
Groupingjobsby
productline

Geographical

Process
Groupingjobsonthe
basisofproductor
customerflow

Customer
Groupingjobsbytype
ofcustomerandneeds

Groupingjobsonthe
basisofterritoryor
geography
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

Exhibit 9.2a Functional


Departmentalization
Plant Manager

Manager,
Engineering

Manager,
Accounting

Manager,
Manufacturing

Manager,
Human Resources

Manager,
Purchasing

+ Efficiencies from putting together similar specialties and


people with common skills, knowledge, and orientations
+ Coordination within functional area
+ In-depth specialization
Poor communication across functional areas
Limited view of organizational goals

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

Exhibit 9.2b Geographical


Departmentalization
Vice President
for Sales
Sales Director,
Western Region

Sales Director,
Prairies Region

Sales Director,
Central Region

Sales Director,
Eastern Region

+ More effective and efficient handling of specific


regional issues that arise
+ Serve needs of unique geographic markets better
Duplication of functions
Can feel isolated from other organizational areas

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

Exhibit 9.2c Product Departmentalization


Bombardier, Ltd.

Mass Transit Sector

Mass Transit
Division

Recreational
Products Division

+
+
+

Recreational and
Utility Vehicles
Sector

BombardierRotax
(Vienna)

Rail Products
Sector

Rail and Diesel


Products Division

Logistic
Industrial
BombardierRotax
Equipment Division Equipment Division (Gunskirchen)

Allows specialization in particular products and services


Managers can become experts in their industry
Closer to customers
Duplication of functions
Limited view of organizational goals

Source: Bombardier Annual Report.

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

Exhibit 9.2d Process


Departmentalization
Plant
Superintendent
Sawing
Departme
nt
Manager

Planing
and
Milling
Departme
nt
Manager

Assembling
Department
Manager

Lacquering
and
Sanding
Departme
nt
Manager

Finishing
Department
Manager

Inspection
and
Shipping
Department
Manager

+ More efficient flow of work activities


Can only be used with certain types of products

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

10

Exhibit 9.2e Customer


Departmentalization
Director
of Sales
Manager,
Retail Accounts

Manager,
Wholesale Accounts

Manager,
Government Accounts

+ Customers needs and problems can be met by specialists


Duplication of functions
Limited view of organizational goals

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

11

Group Exercise
Thinkofaplacewhereyouhave(ordo)
work(ed).Lookingatthevariousformsof
departmentalizationchooseanexamplefrom
oneofyourgroupmembersplacesof
employmentandanswerthefollowing:
Whichwouldhavebeen(wouldbe)themost
appropriatemodelofdepartmentalizationforthis
workplace?Whyexplainyourrationale?
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

12

Organizational Structure (contd)


ChainofCommand
Thecontinuouslineofauthoritythatextendsfromupper
levelsofanorganizationtothelowestlevelsofthe
organizationandclarifieswhoreportstowhom

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

13

Organizational Structure (contd)


Authority
Therightsinherentinamanagerialpositiontotellpeoplewhatto
doandtoexpectthemtodoit
Responsibility
Theobligationorexpectationtoperform.Responsibilitybrings
withitaccountability(theneedtoreportandjustifyworkto
managerssuperiors)
UnityofCommand
Theconceptthatapersonshouldhaveonebossandshouldreport
onlytothatperson
Delegation
Theassignmentofauthoritytoanotherpersontocarryoutspecific
duties
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

14

Organizational Structure (contd)


LineandStaffAuthority
Linemanagersareresponsiblefortheessential
activitiesoftheorganization,including
productionandsales.Linemanagershavethe
authoritytoissueorderstothoseinthechainof
command
Thepresident,theproductionmanager,andthesales
managerareexamplesoflinemanagers

Staffmanagershaveadvisoryauthority,and
cannotissueorderstothoseinthechainof
command(exceptthoseintheirowndepartment)
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

15

Organizational Structure (contd)


SpanofControl

Thenumberofemployeeswhocanbeeffectivelyand
efficientlysupervisedbyamanager
Widthofspanisaffectedby:

Skillsandabilitiesofthemanagerandtheemployees
Characteristicsoftheworkbeingdone
Similarityoftasks
Complexityoftasks
Physicalproximityofsubordinates
Standardizationoftasks
Sophisticationoftheorganizationsinformationsystem
Strengthoftheorganizationsculture
Preferredstyleofthemanager

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

16

Exhibit 9.3 Contrasting Spans of


Control
Members at Each Level
Organizational Level

(Highest) Assuming Span of 4

Assuming Span of 8

1
2

1
4

1
8

3
4
5
6

16
64
256
1024

64
512
4096

4096

(Lowest)

Span of 4:
Employees:
= 4096
Managers (level 16)= 1365

Span of 8:
Employees:
= 4096
Managers (level 14) = 585

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

17

Organizational Structure (contd)


Centralization
Thedegreetowhichdecisionmakingisconcentratedata
singlepointintheorganization
Organizationsinwhichtopmanagersmakeallthedecisions
andlowerlevelemployeessimplycarryoutthoseorders

Decentralization
Thedegreetowhichlowerlevelemployeesprovideinput
oractuallymakedecisions
EmployeeEmpowerment
Increasingthedecisionmakingdiscretionofemployees
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

18

Figure 9.4a Factors that Influence


the Amount of Centralization
MoreCentralization

Environmentisstable
Lowerlevelmanagersarenotascapableorexperienced
atmakingdecisionsasupperlevelmanagers
Lowerlevelmanagersdonotwanttohaveasayin
decisions
Decisionsaresignificant
Organizationisfacingacrisisortheriskofcompany
failure
Companyislarge
Effectiveimplementationofcompanystrategiesdepends
onmanagersretainingsayoverwhathappens

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

19

Figure 9.4b Factors that Influence


the Amount of Decentralization
MoreDecentralization

Environmentiscomplex,uncertain
Lowerlevelmanagersarecapableandexperiencedat
makingdecisions
Lowerlevelmanagerswantavoiceindecisions
Decisionsarerelativelyminor
Corporatecultureisopentoallowingmanagerstohavea
sayinwhathappens
Companyisgeographicallydispersed
Effectiveimplementationofcompanystrategiesdepends
onmanagershavinginvolvementandflexibilitytomake
decisions

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

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Organizational Structure (contd)


Formalization
Thedegreetowhichjobswithintheorganization
arestandardizedandtheextenttowhich
employeebehaviourisguidedbyrulesand
procedures.

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

21

Organizational Design Decisions


MechanisticOrganization
Arigidandtightly
controlledstructure

OrganicOrganization
Highlyflexibleand
adaptablestructure

Mechanistic
High Specialization
Rigid Departmentalization
Clear Chain of Command
Narrow Spans of Control
Centralization
High Formalization

Organic
Cross-Functional Teams
Cross-Hierarchical Teams
Free Flow of Information
Wide Spans of Control
Decentralization
Low Formalization

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

22

Structural Contingency Factors


Structuraldecisionsareinfluencedby:
Overallstrategyoftheorganization
Organizationalstructurefollowsstrategy

Sizeoftheorganization
Firmschangefromorganictomechanisticorganizationsas
theygrowinsize

Technologyusebytheorganization
Firmsadapttheirstructuretothetechnologytheyuse

Degreeofenvironmentaluncertainty
Dynamicenvironmentsrequireorganicstructures;mechanistic
structuresneedstableenvironments
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

23

Structural Contingency Factors


(contd)

StrategyFrameworks:
Innovation

Pursuingcompetitiveadvantagethroughmeaningfuland
uniqueinnovationsfavoursanorganicstructuring

Costminimization
Focusingontightlycontrollingcostsrequiresa
mechanisticstructurefortheorganization

Imitation
Minimizingrisksandmaximizingprofitabilityby
copyingmarketleadersrequiresbothorganicand
mechanisticelementsintheorganizationsstructure
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

24

Structural Contingency Factors


(contd)

StrategyandStructure

Achievementofstrategicgoalsisfacilitatedby
changesinorganizationalstructurethat
accommodateandsupportchange

SizeandStructure
Asanorganizationgrowslarger,itsstructure
tendstochangefromorganictomechanisticwith
increasedspecialization,departmentalization,
centralization,andrulesandregulations
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

25

Structural Contingency Factors


(contd)

TechnologyandStructure

Organizationsadapttheirstructurestotheir
technology
Routinetechnology=mechanisticorganizations
Nonroutinetechnology=organicorganizations

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

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Common Organizational Designs


TraditionalDesigns
SimpleStructure
Lowdepartmentalization,widespansofcontrol,centralized
authority,littleformalization

FunctionalStructure
Departmentalizationbyfunction
Operations,finance,humanresources,andproductresearchand
development

DivisionalStructure
Composedofseparatebusinessunitsordivisionswithlimited
autonomyunderthecoordinationandcontroloftheparent
corporation
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

27

Exhibit 9.7 Strengths and


Weaknesses of Common Traditional
Organizational Designs

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

28

Organizational Designs (contd)


ContemporaryOrganizationalDesigns
TeamStructures
Theentireorganizationismadeupofworkgroupsor
selfmanagedteamsofempoweredemployees

MatrixStructures
Specialistsfordifferentfunctionaldepartmentsare
assignedtoworkonprojectsledbyprojectmanagers
Matrixparticipantshavetwomanagers

ProjectStructures
Employeesworkcontinuouslyonprojects,movingonto
anotherprojectaseachprojectiscompleted
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

29

Exhibit 9.8 Contemporary


Organizational Designs

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

30

Exhibit 9.9 A Matrix Organization


in an Aerospace Firm
Design
Engineering

Manufacturing

Contract
Administration

Purchasing

Accounting

Human
Resources (HR)

Alpha
Project

Design
Group

Manufacturing
Group

Contract
Group

Purchasing
Group

Accounting
Group

HR
Group

Beta
Project

Design
Group

Manufacturing
Group

Contract
Group

Purchasing
Group

Accounting
Group

HR
Group

Gamma
Project

Design
Group

Manufacturing
Group

Contract
Group

Purchasing
Group

Accounting
Group

HR
Group

Omega
Project

Design
Group

Manufacturing
Group

Contract
Group

Purchasing
Group

Accounting
Group

HR
Group

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

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Organizational Designs (contd)


ContemporaryOrganizationalDesigns(contd)
BoundarylessOrganization
Aflexibleandanunstructuredorganizationaldesignthat
isintendedtobreakdownexternalbarriersbetweenthe
organizationanditscustomersandsuppliers
Removesinternal(horizontal)boundaries:
Eliminatesthechainofcommand
Haslimitlessspansofcontrol
Usesempoweredteamsratherthandepartments

Eliminatesexternalboundaries:
Usesvirtual,network,andmodularorganizational
structurestogetclosertostakeholders
Chapter 9, Stephen P. Robbins, Mary Coulter, and
Nancy Langton, Management, Eighth Canadian

32

Removing Boundaries
VirtualOrganization

Anorganizationthatconsistsofasmallcoreoffulltime
employeesandthattemporarilyhiresspecialiststowork
onopportunitiesthatarise

NetworkOrganization

Asmallcoreorganizationthatoutsourcesitsmajor
businessfunctions(e.g.,manufacturing)inorderto
concentrateonwhatitdoesbest

ModularOrganization

Amanufacturingorganizationthatusesoutsidesuppliers
toprovideproductcomponentsforitsfinalassembly
operations

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

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Organizational Designs (contd)


LearningOrganization
Anorganizationthathasdevelopedthecapacityto
continuouslylearn,adapt,andchangethroughthepractice
ofknowledgemanagementbyemployees
Organizational Design
Boundaryless
Teams
Empowerment

Organizational Culture
Strong Mutual Relationships THE LEARNING
Sense of Community
ORGANIZATION
Caring
Trust
Leadership
Shared Vision
Collaboration

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

Information Sharing
Open
Timely
Accurate

34

Thanks!

Chapter 9, Stephen P. Robbins, Mary Coulter, and


Nancy Langton, Management, Eighth Canadian

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