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16-1 ©2005 Prentice Hall
Chapter 16:16:Organizational Organizational
Design and Design and StructureStructure
UnderstandingAnd
ManagingOrganizational
Behavior 4th Edition
JENNIFER GEORGE JENNIFER GEORGE & GARETH JONES& GARETH JONES
16-2 ©2005 Prentice Hall
Chapter Objectives
Understand the relationship between organizational design and an organization’s structure
Explain the main contingencies affecting the process of organizational design and differentiate between a mechanistic and an organic structure
16-3 ©2005 Prentice Hall
Chapter Objectives
Cite the advantages of grouping people into functions and divisions and distinguish between the main forms of organizational structure from which an organization can choose
Explain why coordination becomes a problem with the growth of an organization and differentiate between the three main methods it can use to overcome this problem and link its functions and divisions
16-4 ©2005 Prentice Hall
Chapter Objectives
Gain an understanding of the enormous impact modern information technology has had on the process of organizational design and structure both inside organizations and between them
16-5 ©2005 Prentice Hall
Opening Case: A New Approach to Organizing at Sun Life
Why did Sun Life Change Its Structure? Rigid and bureaucratic structure Customer response too slow Reorganization into series of cross-
functional product teams
16-6 ©2005 Prentice Hall
Designing Organizational Structure
Organizational Structure: Formal system of task and job reporting relationships
Organizational Design: Arrangement of tasks and job relationships that comprise the organizational structure
16-7 ©2005 Prentice Hall
Figure 16.1 Contingencies Affecting Organizational Design
Organization’s Environment Technology HR and Employment Relationships
16-8 ©2005 Prentice Hall
Routine vs Complicated Technology
Task Variety Task Analyzability
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Kinds of Technology
Small Batch Mass Production Continuous Process
16-10 ©2005 Prentice Hall
Organic and Mechanistic Structures
Organic Dynamic, flexible Empowered teams Continuous
improvement Norms and values
Mechanistic Formal, controlling Centralized decision-
making Clearly defined tasks Rules and
regulations
16-11 ©2005 Prentice Hall
The Functional Structure
Advantages Coordination Communication Skill Improvement Motivation Controlling
Disadvantages Limited growth under
existing structure Limits to number of
products and services
Coordination difficulties at larger size
16-12 ©2005 Prentice Hall
Divisional Structures
Product Market Geographic
16-13 ©2005 Prentice Hall
The Divisional Structure
Advantages As size and complexity
of organization increases, – Coordination– Communication– Motivation– Autonomy
Disadvantages Increased costs Duplication of functions Miscommunication
across divisions Competition for
resources Conflict
16-14 ©2005 Prentice Hall
The Matrix Structure
Complex network of reporting relationships among product teams and functions
People and resources grouped by – Function– Product
16-15 ©2005 Prentice Hall
The Matrix Structure
Advantages Coordination Fast new product
development Communication Cooperation Innovation Creativity Autonomy
Disadvantages Role conflict Role ambiguity Stress Unclear individual
contributions to team performance
16-16 ©2005 Prentice Hall
Techniques for Enhancing Coordination
Allocating Authority Mutual Adjustment and Integrating
Mechanisms Standardization
16-17 ©2005 Prentice Hall
Allocating Authority
Span of control Tall and Flat Hierarchies Chain of Command Centralization versus Decentralization
16-18 ©2005 Prentice Hall
Mutual Adjustment and Integrating Mechanisms
Direct contact Liaison roles Teams and task forces Cross-functional teams
16-19 ©2005 Prentice Hall
Standardization
Standardizing inputs Standardizing conversion processes
– Formalization Standardizing outputs
16-20 ©2005 Prentice Hall
The Effects of IT
Virtual organizations Network structure