Slide #1.

ORGANIZATIONAL BEHAVIOR
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Slide #2.

OBJECTIVES LEARNING After studying chapter 15 and listening to class lecture,you should be able to: 1. Identify the six key elements that define an organization’s structure. 2. Explain the characteristics of a bureaucracy. 3. Describe a matrix organization. 4. Explain the characteristics of a virtual organization. 5. Summarize why managers want to create boundaryless organizations. 6. Contrast mechanistic and organic structural models. 7. List the factors that favor different organizational structures. 8. Why do structures differ?
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Slide #3.

What What Is Is Organizational Organizational Structure? Structure? Key KeyElements: Elements: • • Work Workspecialization specialization • • Departmentalization Departmentalization • • Chain Chainof ofcommand command • • Span Spanof ofcontrol control • • Centralization Centralizationand and decentralization decentralization • • Formalization Formalization
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Slide #4.

What Determines Organizational Structure?  To what degree are tasks subdivided into separate jobs?  On what basis will jobs be grouped together?  To whom do individuals and groups report?  How many individuals can a manager efficiently and effectively direct?  Where does decision-making authority lie?  To what degree will there be rules and regulations to direct employees and managers?
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Slide #5.

Key KeyDesign DesignQuestions Questionsand andAnswers Answersfor for Designing Designingthe the Proper ProperOrganization OrganizationStructure Structure
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Slide #6.

Strategy Organization Size Why Do Structures Differ? Technology Environment
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Slide #7.

Common Common Organization Organization Designs Designs AASimple SimpleStructure: Structure: Jack JackGold’s Gold’sMen’s Men’sStore Store
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Slide #8.

Organizational Chart of a Manufacturing Firm Board Board member member Board Board member member Board Board member member Board Board member member Chief Chief Executive Executive Officer Officer Legal Legal counsel counsel President President V.P V.PSales/ Sales/ Marketing Marketing Industrial Industrial Products Products DirectorDirectorSales Sales Western Western Region Region Industrial Industrial Products Products Sales Sales Manager Manager V.P V.PHuman Human Resources Resources Industrial Consumer Industrial Consumer Products Products Products Products DirectorDirectorDirectorDirectorHuman Sales Human Sales Resources Resources Eastern Eastern Region Region Industrial Industrial Products Products Sales Sales Manager Manager Consumer Consumer Products Products DirectorDirectorHuman Human Resources Resources V.P V.P Production Production Industrial Industrial Products Products DirectorDirectorProduction Production V.P V.PResearch Research and Development and Development Consumer Consumer Industrial Industrial Consumer Consumer Products Products Products Products Products Products DirectorDirectorDirectorDirectorDirectorDirectorProduction R&D Production R&D R&D R&D Western Western Eastern Eastern Region Region Region Region Consumer Consumer Consumer Consumer etc. Products Products etc. etc. etc. etc. etc. etc. etc. Products Products Sales Sales Sales Sales Manager Manager Manager Manager etc. etc. etc. etc. etc. etc. etc. etc. etc. etc. etc. etc.
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Slide #9.

Tall versus Flat Organizations Flathierarchy hierarchy Flat Tallhierarchy hierarchy Tall Tall Organization Chief Chief Executive Executive Flat Organization Chief Chief Executive Executive Relatively wide span of control Relatively narrow span of control
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Slide #10.

A Product Organization Chief Chief Executive Executive Officer Officer President President Product Product Group Group11 ProPro- Sales Sales duction duction R&D R&D Product Product Group Group22 ProProAcctg. Acctg. duction Sales Sales duction R&D R&D Product Product Group Group33 ProProAcctg Acctg duction Sales Sales duction R&D R&D Acctg. Acctg.
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Slide #11.

A Horizontal Organization Overall Manager Adviser Adviser Adviser Team responsible for core process (e.g., generating and fulfilling orders) Objective: Reduced cycle time Team responsible for core process (e.g., product development) Objective: More new products Team responsible for core process (e.g., flow of materials) Objective: Enhanced product quality
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Slide #12.

Common Common Organization Organization Designs Designs
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Slide #13.

The The Bureaucracy Bureaucracy  Strengths – Functional economies of scale – Minimum duplication of personnel and equipment – Enhanced communication – Centralized decision making  Weaknesses – Subunit conflicts with organizational goals – Obsessive concern with rules and regulations – Lack of employee discretion to deal with problems
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Slide #14.

Decentralization: Benefits When Low and When High Low Decentralization (High Centralization) High Decentralization (Low Centralization) Eliminates the additional responsibility not desired by people performing routine jobs Can eliminate levels of management, making a leaner organization Permits crucial decisions to be made by individuals who have the “big picture” Promotes greater opportunities for decisions to be made be people closest to problems Table 12-1
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Slide #15.

The Matrix Structure Cross-Functional Coordination Clear Accountability Dual Chain of Command Allocation of Specialists
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Slide #16.

Matrix MatrixStructure Structure(College (Collegeof ofBusiness BusinessAdministration) Administration) (Director) (Dean) Employee
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Slide #17.

A Matrix Organization Functional authority Project authority President President Farm FarmMachinery Machinery Division Division Production Production department department Legal Legal department department Engineering Engineering department department Accounting Accounting department department Project Project Alpha Alpha manager manager Production Production support support group group Legal Legal support support group group Engineering Engineering support support group group Accounting Accounting support support group group Project Project Beta Beta manager manager Production Production support support group group Legal Legal support support group group Engineering Engineering support support group group Accounting Accounting support support group group Project Project Gamma Gamma manager manager Production Production support support group group Legal Legal support support group group Engineering Engineering support support group group Accounting Accounting support support group group
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Slide #18.

Mechanistic vs. Organic Designs Structure Dimension Mechanistic Organic Stability Change unlikely Change likely Specialization Many specialists Many generalists Formal rules Rigid rules Considerable flexibility Authority Centralized in a few top people Decentralized, diffused throughout the organization Table 12-2
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Slide #19.

Mechanistic Mechanistic Versus Versus Organic Organic Models Models
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Slide #20.

AAVirtual Virtual Organization Organization
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Slide #21.

Organization Organization Structure: Structure: Its Its Determinants Determinants and and Outcomes Outcomes
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Slide #22.

New New Design Design Options Options Concepts: Concepts: Provides Providesmaximum maximum flexibility flexibilitywhile while concentrating concentratingon onwhat what the theorganization organizationdoes does best. best. Disadvantage Disadvantageisisreduced reduced control controlover overkey keyparts partsof of the thebusiness. business.
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Slide #23.

What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Division Divisionof oflabor: labor: • • Makes Makesefficient efficientuse useof of employee employeeskills skills • • Increases Increasesemployee employeeskills skills through throughrepetition repetition • • Less Lessbetween-job between-job downtime downtimeincreases increases productivity productivity • • Specialized Specializedtraining trainingisis more moreefficient efficient • • Allows Allowsuse useof ofspecialized specialized equipment equipment
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Slide #24.

Economies Economies and and Diseconomies Diseconomies of of Work Work Specialization Specialization EXHIBIT 15-2
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Slide #25.

What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Grouping GroupingActivities ActivitiesBy: By: • • Function Function • • Product Product • • Geography Geography • • Process Process • • Customer Customer
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Slide #26.

What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d) Concept: Concept: Wider Widerspans spansof of management managementincrease increase organizational organizationalefficiency. efficiency. Narrow NarrowSpan SpanDrawbacks: Drawbacks: • •Expense Expenseof ofadditional additional layers layersof ofmanagement. management. • •Increased Increasedcomplexity complexityof of vertical verticalcommunication. communication. • •Encouragement Encouragementof ofoverly overly tight tightsupervision supervisionand and discouragement discouragementof of employee autonomy. employee autonomy.
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Slide #27.

Contrasting Contrasting Spans Spans of of Control Control EXHIBIT 15-3
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Slide #28.

What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d)
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Slide #29.

Common Common Organization Organization Designs Designs (cont’d) (cont’d) Key KeyElements: Elements: ++Gains Gainsadvantages advantagesof of functional functionaland andproduct product departmentalization departmentalizationwhile while avoiding avoidingtheir their weaknesses. weaknesses. ++Facilitates Facilitatescoordination coordinationof of complex complexand and interdependent interdependentactivities. activities. ––Breaks Breaksdown downunity-ofunity-ofcommand commandconcept. concept.
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Slide #30.

New New Design Design Options Options Characteristics: Characteristics: • •Breaks Breaksdown down departmental departmentalbarriers. barriers. • •Decentralizes Decentralizesdecision decision making to the team making to the teamlevel. level. • •Requires Requiresemployees employeesto to be generalists as well be generalists as wellas as specialists. specialists. • •Creates Createsaa“flexible “flexible bureaucracy.” bureaucracy.”
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Slide #31.

New New Design Design Options Options (cont’d) (cont’d) T-form T-formConcepts: Concepts: Eliminate Eliminatevertical vertical (hierarchical) (hierarchical)and and horizontal horizontal(departmental) (departmental) internal internalboundaries. boundaries. Breakdown Breakdownexternal external barriers barriersto tocustomers customersand and suppliers. suppliers.
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Slide #32.

Why Why Do Do Structures Structures Differ? Differ?
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Slide #33.

Why Why Do Do Structures Structures Differ? Differ?
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Slide #34.

Why Why Do Do Structures Structures Differ? Differ? –– Strategy Strategy
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Slide #35.

The The Strategy-Structure Strategy-Structure Relationship Relationship EXHIBIT 15-9
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Slide #36.

Why Why Do Do Structures Structures Differ? Differ? –– Technology Technology Characteristics Characteristicsof ofroutineness routineness(standardized (standardizedor or customized) customized)ininactivities: activities: • •Routine Routinetechnologies technologiesare areassociated associatedwith withtall, tall, departmentalized departmentalizedstructures structuresand andformalization formalizationinin organizations. organizations. • •Routine Routinetechnologies technologieslead leadto tocentralization centralizationwhen when formalization formalizationisislow. low. • •Nonroutine Nonroutinetechnologies technologiesare areassociated associatedwith withdelegated delegated decision decisionauthority. authority.
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Slide #37.

Why Why Do Do Structures Structures Differ? Differ? –– Environment Environment Key KeyDimensions: Dimensions: • • Capacity: Capacity:the thedegree degreeto to which whichan anenvironment environment can cansupport supportgrowth. growth. • • Volatility: Volatility:the thedegree degreeof of instability instabilityininthe the environment. environment. • • Complexity: Complexity:the thedegree degree of ofheterogeneity heterogeneityand and concentration concentrationamong among environmental environmental elements. elements.
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Slide #38.

What What Is Is Organizational Organizational Structure? Structure? (cont’d) (cont’d)
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Slide #39.

The The Three Three Dimensional Dimensional Model Model of of the the Environment Environment Volatility Capacity Complexity EXHIBIT 15-10
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Slide #40.

Organizational Organizational Designs Designs and and Employee Employee Behavior Behavior Research ResearchFindings: Findings: • • Work Workspecialization specializationcontributes contributesto tohigher higheremployee employee productivity, productivity,but butititreduces reducesjob jobsatisfaction. satisfaction. • • The Thebenefits benefitsof ofspecialization specializationhave havedecreased decreasedrapidly rapidlyas as employees employeesseek seekmore moreintrinsically intrinsicallyrewarding rewardingjobs. jobs. • • The Theeffect effectof ofspan spanof ofcontrol controlon onemployee employeeperformance performanceisis contingent contingentupon uponindividual individualdifferences differencesand andabilities, abilities,task task structures, structures,and andother otherorganizational organizationalfactors. factors. • • Participative Participativedecision decisionmaking makinginindecentralized decentralized organizations organizationsisispositively positivelyrelated relatedto tojob jobsatisfaction. satisfaction.
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