Chapter 13 Organizational Design and Structure

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Chapter Objectives
Understand the relationship between organizational design and an organizations structure Explain the main contingencies affecting the process of organizational design and differentiate between a mechanistic and an organic structure

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Chapter Objectives
Cite the advantages of grouping people into functions and divisions and distinguish between the main forms of organizational structure from which an organization can choose Explain why coordination becomes a problem with the growth of an organization and differentiate between the three main methods it can use to overcome this problem and link its functions and divisions
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Chapter Objectives
Gain an understanding of the enormous impact modern information technology has had on the process of organizational design and structure both inside organizations and between them

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Opening Case: A New Approach to Organizing at Sun Life

Why did Sun Life Change Its Structure? Rigid and bureaucratic structure Customer response too slow Reorganization into series of crossfunctional product teams

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Designing Organizational Structure

Organizational Structure: Formal system of task and job reporting relationships Organizational Design: Arrangement of tasks and job relationships that comprise the organizational structure

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Figure 16.1 Contingencies Affecting Organizational Design

Organizations Environment Organizations Technology

Organizational Design

HR and Employment Relationships

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Routine vs Complicated Technology

Task Variety

Task Analyzability

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Kinds of Technology

SmallBatch MassProduction ContinuousProcess

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Small Batch Production

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Organic and Mechanistic Structures

Organic Dynamic, flexible Empowered teams Continuous improvement Norms and values Mechanistic Formal, controlling Centralized decisionmaking Clearly defined tasks Rules and regulations

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The Functional Structure

Advantages Coordination Communication Skill Improvement Motivation Controlling Disadvantages Limited growth under existing structure Limits to number of products and services Coordination difficulties at larger size

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Figure 16.2 Dells Functional Structure

CEO Michael Dell

Manufacturing

Sales

Product Development

Customer Service

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Divisional Structures
Product Market Geographic

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Figure 16.3 Product Structure

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Figure 16.3 Market Structure

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Figure 16.3 Geographic Structure

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The Divisional Structure

Advantages As size and complexity of organization increases, Coordination Communication Motivation Autonomy Disadvantages Increased costs Duplication of functions Miscommunication across divisions Competition for resources Conflict

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The Matrix Structure

Complex network of reporting relationships among product teams and functions People and resources grouped by Function Product

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Figure 16.4 A Matrix Structure

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The Matrix Structure

Advantages Coordination Fast new product development Communication Cooperation Innovation Creativity Autonomy
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Disadvantages Role conflict Role ambiguity Stress Unclear individual contributions to team performance

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Techniques for Enhancing Coordination

Allocation of Authority Mutual Adjustment and Integrating Mechanisms Standardization

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Allocation of Authority
Span of control Tall and Flat Hierarchies Chain of Command Centralization versus Decentralization

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Figure 16.5 A Wide Span of Control

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Figure 16.5 A Narrow Span of Control

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Figure 16.6 Flat Organizational Structure

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Figure 16.6 Tall Organizational Structure

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Mutual Adjustment and Integrating Mechanisms

Direct contact Liaison roles Teams and task forces Cross-functional teams

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Figure 16.7 Using a Team to Increase Coordination

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Figure 16.8 A Cross-Functional Team Structure

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Cross-functional Team Structure at Chrysler

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Standardization
Standardizing inputs Standardizing conversion processes Formalization Standardizing outputs

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The Effects of IT

Virtual Organizations

Network Structure

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