The Organizational System

1
The Organizational System

• Organizational Structure
• Organizational Designs

2
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

3
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

4
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

5
Departmentation by Function
6
Departmentalization by Product
7
Departmentalization by Customer
8
Departmentalization by Geography
9
Departmentalization by Process
10
The coming of the New Organization

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

11
The Mechanistic Structure
12
The Mechanistic Structure

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

13
The Organic Structure
14
The Organic Structure..

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

15
Why do Structures Differ?

• Strategy

16
Why do Structures Differ?.....

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

17
Why do Structures Differ?....

• Technology

18
Technology
Task variability
Few Exceptions
Many Exceptions
Routine
Engineering
Well-defined
Problem Analyzability
1
2
Non routine
Craft
3
4
Ill-defined
19
Technology
B
C
D
A
Input
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
20
Why do Structures Differ?.....
Stable
Environment
Abundant
Complex
simple
Scarce
Dynamic
Three Dimensional Model of the Environment
21
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

22
Mintzbergs 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

23
Basic Elements
24
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

25
The Simple Structure

• Low complexity
• Low formalization
• Centralized authority

26
The Machine Bureaucracy

• High in complexity, formalization and
  centralization
• Key part is technostructure

27
The Professional Bureaucracy

• High in complexity, formalization
• Low centralization

28
The Divisional Structure

• A set of autonomous units coordinated by central
  headquarters

29
The Adhocracy

• A structure characterized as low in complexity,
  formalization centralization

30
The Matrix Structure
Programs
Academic departments
Matrix Structure for a College of Business
Administration