《Contemporary Management》chpt 8 Organizational Structure

8 Organizational Structure CThe McGraw-Hill Companies, Inc, 2000

8-1 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Organizational Structure 8

8-2 Designing organizational Structure oOrganizing: the process by which managers establish working relationships among employees to achieve goals. Organizational Structure: formal system of task reporting relationships showing how workers use resources Organizational design: managers make specific choices resulting in a given organizational structure Successful organizational design depends on the organizations unique situation " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-2 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Designing Organizational Structure ⚫Organizing: the process by which managers establish working relationships among employees to achieve goals. ◼ Organizational Structure: formal system of task & reporting relationships showing how workers use resources. ◼ Organizational design:managers make specific choices resulting in a given organizational structure. ⚫Successful organizational design depends on the organization’s unique situation

8-3 Factors Affecting Organizational Design Figure 8.1 Environment Determine design Strategy or organizational Technology structure Human Resources " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-3 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Factors Affecting Organizational Design Environment Strategy Human Resources Technology Determine design or organizational structure Figure 8.1

8-4 Determinants of structure The environment: The quicker the environment changes, the more problems face managers e Structure must be more flexible when environmental change Is rapid a Usually need to decentralize authority Strategy: Different strategies require the use of different structures o a differentiation strategy needs a flexible structure low cost may need a more formal structure o Increased vertical integration or diversification also requires a more flexible structure " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-4 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Determinants of Structure The environment: The quicker the environment changes, the more problems face managers. ◆ Structure must be more flexible when environmental change is rapid. ◼ Usually need to decentralize authority. Strategy: Different strategies require the use of different structures. ◆ A differentiation strategy needs a flexible structure, low cost may need a more formal structure. ◆ Increased vertical integration or diversification also requires a more flexible structure

8-5 Determinants of structure Technology: The combination of skills, knowledge, tools equipment, computers and machines used in the organization o More complex technology makes it harder for managers to regulate the organization. Technology can be measured by a Task Variety: new problems a manager encounters Task Analyzability: programmed solutions available to a manager to solve problems High task variety and low analyzability present many unique problems to managers a Flexible structure works best in these conditions Low task variety and high analyzability allow managers to rely on established procedures " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-5 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Determinants of Structure ◼ Technology:The combination of skills, knowledge, tools, equipment, computers and machines used in the organization. ◆ More complex technology makes it harder for managers to regulate the organization. Technology can be measured by: ◼ Task Variety: new problems a manager encounters. ◼ Task Analyzability: programmed solutions available to a manager to solve problems. ◆ High task variety and low analyzability present many unique problems to managers. ◼ Flexible structure works best in these conditions. ◆ Low task variety and high analyzability allow managers to rely on established procedures

8-6 Technology people Small Batch Technology: produces small quantities of one-of-a-kind products e Based on the skills of the workers who need a flexible structure Mass production Technology: automated machines make high volumes of standard products o Workers perform repetitive tasks so a formal structure works well Continuous Process Technology: totally mechanized ystems of automatic machines o Workers must watch for unexpected problems and react quickly. a flexible structure is needed here " win/MeGraw-HHill OThe McGraw-Hill Companies. Inc, 2000

8-6 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Technology & People Small Batch Technology: produces small quantities of one-of-a-kind products. ◆ Based on the skills of the workers who need a flexible structure. Mass Production Technology: automated machines make high volumes of standard products. ◆ Workers perform repetitive tasks so a formal structure works well. Continuous Process Technology:totally mechanized systems of automatic machines. ◆ Workers must watch for unexpected problems and react quickly. A flexible structure is needed here

8-7 Determinants of structure Human Resources. the final factor affecting organizational structure o Higher skilled workers who need to work in teams usually need a more flexible structure e higher skilled workers often have professional norms(CPAs, physicians) Managers must take into account all four factors(environment, strategy, technology and human resources) when designing the structure of the organization " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-7 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Determinants of Structure Human Resources:the final factor affecting organizational structure. ◆ Higher skilled workers who need to work in teams usually need a more flexible structure. ◆ Higher skilled workers often have professional norms (CPA’s, physicians). Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization

8-8 lob Desig oJob Design: group tasks into specific jobs. e Results in a division of labor between workers that is effective and efficient Job simplification: reduction of the tasks each worker performs e Too much and boredom results Job enlargement: increase tasks for a given job to reduce boredom Job enrichment: increases the degree of responsibility a worker has over a job e can lead to increased worker involvement " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-8 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Job Design ⚫Job Design: group tasks into specific jobs. ◆ Results in a division of labor between workers that is effective and efficient. ◼ Job simplification: reduction of the tasks each worker performs. ◆ Too much and boredom results. ◼ Job enlargement: increase tasks for a given job to reduce boredom. ◼ Job enrichment: increases the degree of responsibility a worker has over a job. ◆ can lead to increased worker involvement

8-9 Job Characteristics model Figure 8.2 Skill variet Meaningfulness Task Identity of work Task Significance Responsibility High Autonomy for work Motivation Outcomes Per fo rformance Satisfaction Knowled g f Feedback results of work " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-9 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Job Characteristics Model Skill Variety Task Identity Task Significance Autonomy Feedback Meaningfulness of work Responsibility for Work Outcomes Knowledge of results of work High: Motivation Performance Satisfaction Figure 8.2

8-10 Job Characteristics model Jobs have five characteristics describing extent of Skill variety employee uses a wide range of skills Task identity worker involved in all tasks of job from beginning to end of the production process Task significance: worker feels the task is meaningful to organization Autonomy: employee has freedom to schedule tasks and carry them out Feedback: worker gets direct information about how well the job is done These affect the motivation, satisfaction and performance of employees " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

8-10 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Job Characteristics Model Jobs have five characteristics describing extent of: – Skill variety: employee uses a wide range of skills – Task identity: worker involved in all tasks of job from beginning to end of the production process – Task significance: worker feels the task is meaningful to organization. – Autonomy: employee has freedom to schedule tasks and carry them out. – Feedback: worker gets direct information about how well the job is done. These affect the motivation, satisfaction and performance of employees