Chapter 15: Foundations of Organization Structure
What are you responsible to learn?
Identify the six key elements that define an
Explain the characteristics of a bureaucracy
Describe a matrix organization
Explain the characteristics of a “virtual”
Summarize why managers want to create boundaryless organizations
Contrast mechanistic and organic structural
List the factors that favor different
Explain the behavioral implications of different
how job tasks are formally divided, grouped, and coordinated.
there are six key elements that managers need to address when they design an
Work specialization - the degree to which tasks in the organization are subdivided into
separate jobs. Division of labor and the early auto assembly plants in the US are examples of this.
Departmentalization - the basis by which jobs are grouped together. The most common ways of doing this is by function (e.g., manufacturing,
marketing) type of product, geography or territory (e.g. east coast office,
west coast office)
Chain of command - the unbroken line of authority that extends from the top of the organization
to the lowest echelon and clarifies who reports to whom.
Span of control - the number of subordinates
a manager can efficiently and effectively direct.
Centralization/Decentralization - the degree to which decision making is concentrated at a single point in the organization. Decentralization is when decision discretion
is pushed down to lower-level employees.
Formalization - the degree to which jobs within the organization
Common Organizational Designs
- The Simple Structure
- The Bureaucracy
New Design Options
The Team Structure – the use of teams as the central device to coordinate work activities.
The Virtual Organization – a small, core organization that
out sources major business functions
The Boundaryless Organization – an organization that seeks to eliminate the chain
of command, have limitless spans of control, and replace departments with
Why Do Structures Differ?
Consider the mechanistic model and
the organic model. The mechanistic model
is characterized by extensive departmentalization, high formalization, a
limited information network, and centralization. The organic model is flat, uses
cross-hierarchical and cross-functional teams, has low formalization, possesses
a comprehensive information network, and relies on participative decision
– Innovation, cost minimization, and imitation.
– An organization’s size significantly affects its
– The relationship isn’t linear,
rather size affects structure at a decreasing rate.
– How an organization transfers its inputs into outputs
– Every organization has at least one technology for
converting financial, human, and physical resources into products or services
– The common theme that differentiates technologies is
their degree of routineness.
institutions or forces outside the organization that potentially affect
the organization’s performance.
Designs and Employee Behavior
It is difficult to generalize what
will work best for all employees. For example, work specialization may lead to
higher productivity but can reduce job satisfaction. Individual differences, experience, and the
work task are key.
Summary and Implications for Managers
An organization’s internal
structure contributes to explaining and predicting behavior.
An organization’s structure reduces
ambiguity for employees.
The specific effect of structural
designs on performance and satisfaction I moderated by employees’ individual
preferences and cultural norms.
Managers should be reminded that
structural variables like work specialization, span of control, formalization,
and centralization are objective characteristics that can be measured by
organizational researchers. However,
most employees do not perceive structure the same way as researchers do. Instead, they observe in an “unscientific”
fashion (see “implicit models of organizational structure” p. 447).