Organizational behavior 4th by MShean chap015

Features of Simple Structures• Minimal hierarchy -- staff reports directly to owner • Roles are fairly loosely defined for flexibility • Informal communication for coordination • Centra

Organizational

Organizational

Courtesy of Nitro Group

Nitro’s Structural Advantage

Boutique advertising firm Nitro relies on an organizational structure that keeps it nimble and responsive to customer needs Founded in Shanghai, Nitro is a virtual global

agency in which each local office has account service staff, but a global creative swat team is parachuted in as

Division of Labor

to different people

becomes more complex

Courtesy of Nitro Group

Forms of Work Coordination

• Informal communication

– Sharing information – High media-richness

– Important in teams – Integrator roles in larger firms

• Formal hierarchy

– Direct supervision – Common in larger firms – Problems costly, slow, less popular today with workforce

• Standardization

– Processes formal instructions – Outputs clear goals/output measures

Structure Elements

Span of Control

Centralization

alization

Department-Formalization

Elements of Organizational Structure

through direct supervision

• Wider span of control

possible with other coordinating

mechanisms present

Trend Toward Flatter Structures

• Firms moving toward

flatter structures

– Cuts costs – Puts decision makers closer

to front-line information

– Supports empowerment

• Problem: risk of cutting too

much middle management

Formal decision making authority is held

by a few people, usually at the top

behavior through rules, procedures, formal training,

and related mechanisms.

more regulated

– Reduces organizational flexibility

– Work rules can undermine productivity

– Employees feel disempowered

– Rules become focus of attention

Mechanistic vs Organic Structures

Features of Simple Structures

• Minimal hierarchy staff reports directly to

owner

• Roles are fairly loosely defined for flexibility

• Informal communication for coordination

• Centralized structure owner makes most

decisions

Organizes employees around specific knowledge or other resources

(marketing, production)

CEO

Finance Production Marketing

Functional Organizational Structure

Evaluating Functional Structures

• Benefits

• Limitations

Organizes employees around outputs, clients, or geographic areas

Divisional Structure

CEO

Consumer Products

Lighting Products

Medical Systems

Evaluating Divisional Structures

• Benefits

– Building block structure accommodates growth

– Better coordination in diverse markets

• Limitations

– Duplication, inefficient use of resources

– Specializations are dispersed, creating silos of knowledge – Difficult to determine which divisional structure should have

priority

Bioware’s Matrix Structure

Ray Muzyka (left) and Greg

Zeschuk (right) adopted a

matrix organizational structure

for their electronic games

company, Bioware, because it

balances the need for

teamwork and information

sharing.

Project B Manager

Project A Manager

Engineering Marketing Design

Matrix Structure (Project-based)

CEO

Employees ( ) are temporarily assigned to a specific project team and have a permanent functional unit

Evaluating Matrix Structures

– Uses resources and expertise effectively

– Improves communication,flexibility, innovation – Focuses specialists on clients and products – Supports knowledge sharing within specialty across

W L Gore’s Team-Based Structure

W L Gore & Associates Inc

has an extreme team-based

organizational structure that

eliminates the traditional

hierarchy Associates are

organized around self-directed

teams at dozens of

manufacturing and sales

offices around the world.

Team-Based Structure Features

processes

management levels

divisionalized structure

Evaluating Team-Based Structures

– Responsive, flexible

– Lower admin costs

– More informed decisions

– Interpersonal training costs

– Slower during team development

– Stress due to ambiguous roles

– Problems with supervisor role

changes

Core Firm

Product developmen

t partner (U.S.A.)

Call center partner (India)

Accounting partner (Canada)

Package design partner (UK) Assembly

partner

Network Organizational Structure

Network Structure v Virtual Corp.

• Network structure

creating a product or serving a client

• Virtual corporation

partnership teams to provide customized products or services, usually to specific clients, for a limited time

Evaluating Network Structures

• Benefits

resources as needed from partnerships

• Limitations

facilities and talent

External Environment & Structure

Dynamic

• High rate of change

• Use team-based, network, or

other organic structure

• Few environmental elements

• Less need to decentralize

• Several products, clients,

regions

• Use divisional form aligned

with the diversity

• Single product, client, place

• Use functional structure, or geographic division if global

Effects of Organizational Size

• As organizations grow, they have:

Technology and Structure

• Technology

turns out its product or service

High Analyzability

Low Analyzability

High Low

Scientific Research

Assembly Line

Skilled Trades

Engineering Projects

Technology and Structure

• Cost leadership strategy

pricing

Organizational

Organizational

Chapter 15 Extras

General Motors’ IT Matrix Structure