Why is organizational structure important?
What is it?
Why do organizations adopt different structural arrangements? Why do these change over time?
Definition how an organization arranges people and activities in order to meet its goals 1) Differentiation (specialization and division of labor) 2) Integration
Dimensions of Structure
Specialization / Division of Labor
* Division of labor: degree to which tasks are subdivided into separate jobs * The more tasks are divided into separate, narrowly-defined jobs, greater degree of specialization Pros
* Employees develop expertise/skills
* Can be boring and de-motivating
* May reduce adaptability to change
Chain of Command – Configuration of reporting relationships within organizations (i.e., who reports to whom) Determines formal authority
Span of Control – Number of employees that report to a given supervisor Flat vs. Tall Hierarchy – flat has narrow span of control Tall has wide span of control
Centralization – Extent to which decision-making authority is centralized in a few individuals vs. spread out Benefits of centralized vs. de-centralized – is decentralization always good?
Formalization – Extent to which organization relies on rules and procedures High formalization – specific procedures to follow for any situation, procedures are documented in written form, job descriptions are specific and documented
Types of Structures
* Functional Structure – grouped by skills/functions
* Divisional Structure – formed by basis of organizational outputs, geography or consumer type, product – tends to be appropriate for moderately dynamic environments, moderate uncertainty, larger organizations with multiple products, markets Strengths/Weaknesses of Functional vs. Divisional
* Matrix Structure – organized by functional and divisional – vertical structure is functional, horizontal structure is divisional. More...
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