CHAPTER 13 - FOUNDATIONS OF ORGANIZATION STRUCTURE
After reading this chapter, students should be able to:
1. Identify the six key elements that define an organization’s structure. 2. Describe a simple structure.
3. Explain the characteristics of a bureaucracy.
4. Describe a matrix organization.
5. Explain the characteristics of a “virtual” organization. 6. Summarize why managers want to create boundaryless organizations. 7. List the factors that favor different organization structures. 8. Explain the behavioral implications of different organization structures.
I. WHAT IS ORGANIZATION STRUCTURE?
A. Defined (ppt 4)
1. An organization structure defines how job tasks are formally divided, grouped, and coordinated. 2. Six key elements—work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization. a) See Exhibit 13-1. (ppt 5)
B. Work Specialization (ppt 6)
1. Early in the twentieth century, Henry Ford became rich and famous by building automobiles on an assembly line. a) By breaking jobs up into small standardized tasks, which could be performed over and over again, Ford was able to produce cars at the rate of one every ten seconds, while using employees who had relatively limited skills. 2. The term work specialization or division of labor describes the degree to which tasks in the organization are subdivided into separate jobs. 3. By the late 1940s most manufacturing jobs in industrialized countries were being done with high work specialization. a) Management saw this as a means to make the most efficient use of employees’ skills. b) Employee skills at performing a task successfully increase through repetition. c) Training for specialization is more efficient from the organization’s perspective. It is easier and less costly to find and train workers to do specific and repetitive tasks than to do a broad range of diverse tasks. 4. For much of the first half of this century, managers viewed work specialization as an unending source of increased productivity but, by the 1960s, there was increasing evidence that a good thing can be carried too far. a) The point was reached of human diseconomies—boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover—which more than offset the economic advantages. b) See Exhibit 13-2.
5. Managers then began to increase productivity by enlarging the scope of job activities and by giving employees a variety of activities to do, allowing them to do a whole job, and so on. 6. Today managers recognize the economies work specialization provides as well as the problems it creates when it’s carried too far.
C. Departmentalization (ppt 7)
1. Grouping jobs together so that common tasks can be coordinated. 2. One of the most popular ways is by functions performed. a) The major advantage—is economies of scale by placing people with common skills and orientations into common units. 3. Tasks can also be departmentalized by the type of product the organization produces. a) The major advantage to this type of grouping is increased accountability for product performance, since all activities related to a specific product are under the direction of a single manager. 4. Another departmentalization is on the basis of geography or territory. a) If an organization’s customers are scattered over a large geographical area, then this form of departmentalization can be valuable. 5. Process departmentalization groups people by the specific phase they perform in the production process. a) Because each process requires different skills, this method offers a basis for the homogeneous categorizing of activities. 6. A...
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