Download Rangkuman OB Chapter 15 by MSS FEUI PDF

TitleRangkuman OB Chapter 15 by MSS FEUI
TagsStrategic Management Employment Layoff Organizational Structure Division Of Labour
File Size677.8 KB
Total Pages7
Document Text Contents
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Chapter 15 - Foundations of Organization Structure

What is an Organizational Structure?

Organizational structure defines how job tasks are formally divided, grouped, and coordinated.

Six elements of an organization’s structure.:

1. Work Specialization

 Work specialization = the degree to which tasks in an organization are subdivided into

separate jobs.

 Division of labor:

- Makes efficient use of employee skills

- Increases employee skills through repetition

- Less between-job downtime increases productivity

- Specialized training is more efficient

- Allows use of specialized equipment

2. Departmentalization

 Departmentalization = the basis by which jobs in organization are grouped together.

 Grouping activities by:

- By functions performed. E.g: engineering, accounting, etc

- By the type of product or service the organization produces.

- On the basis of geography or territory, when an organization’s customers are

scattered over a large geographic area and have similar needs based on their


- By the process. Customer or products probably went through several

departments before receiving the service (for customer) or become the final

goods (for products).

- By the type of customers the organization seeks to reach. Customers in each

department have a common set of problems and needs best met by having

specialist for each.

3. Chain of Command

 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.

 Authority itself is the rights inherent in a managerial position to give orders and to

expect the orders to be obeyed.

 The unity of command says a person should have one and only one superior to whom

he or she is directly responsible.

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 Decision making typically becomes slower

 It’s risky because everything is depend on one person

II. The Bureaucracy

 A structure of highly operating routine tasks achieved through specialization, very

formalized rules and regulations, tasks that are grouped into functional departments,

centralized authority, narrow spans of control, and decision making that follows the

chain of command

 Bureaucracy relies on standardized work processes for coordination and control. It

usually implemented by Bank, Department Store and Government Offices.

 Advantages:

 Has ability to perform standardized activities in a highly efficient manner

 Standardized and high formalization allow decision making to be centralized

 Disadvantages:

 Obsessive concern with the following rules

 There is no room for modification

 It’s only efficient as long as employees confront familiar problems programmed

decision rules

III. The Matrix Structure

 A structure that creates dual lines of authority and combines functional and product


 Advantages:

 It has ability to facilitate coordination when the organization has a number of

complex and interdependent activities

 Direct and frequent contacts between different specialties in the matrix can let

information more quickly reach the people who need it

 Achieves economics of scale and facilitates the allocation of specialties by providing

both the best resources and an effective way of ensuring their efficient deployment

 Disadvantages:

 Without unity of command concept, ambiguity who reports to whom is significantly

increased and often leads to conflict

 Reporting to more than one boss introduces role conflict and unclear expectations

introduce role ambiguity.

New Design Options

1. The Virtual Organization

 A small, core organization that outsources its major business functions.

 Highly centralized with little or no departmentalization

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 Communication

Employees are less worried about outcomes and feel the company is taking their

perspective into account while they are involving in discussion.

 Participation

Employees worry less if they can participate in the process in some way.

 Assistance

Providing severance, extended health care benefits, and job search assistance

demonstrates a company does really care about its employees and honors their


Why do Stuctures Differ?

1. Mechanistic model

A structure characterized by extensive departmentalization, high formalization, a limited

information network, and centralization.

2. Organic model

A structure that is flat, uses cross-hierarchical and cross-functional teams, has low formalization,

possesses a comprehensive information network, and relies on participative decision making

The major causes of differentiation an organization’s structure:

i. Strategy

 Innovation strategy is a strategy that emphasizes the introduction of major new

products and services. Innovative firms will use competitive pay and benefits to attract

top candidates and motivate employees to take risks.

 Cost-minimization strategy is a strategy that emphasizes yight cost controls, avoidance

of unnecessary innovation or marketing expenses, and price cutting.

 Imitation strategy is a strategy that seeks to move into new products or new markets

only after their viability has already been proven.

ii. Organization Size

How the size of an organization affects its structure. As an organization grows larger, it becomes

more mechanistic.

Characteristics of large organizations:

• More specialization

• More vertical levels

• More rules and regulations

iii. Technology

Technology describes the way an organization transfers inputs into outputs. The common theme

that differentiates technologies is their degree of routines.

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Characteristics of routineness (standardized or customized) in activities:

 Routine technologies are associated with tall, departmentalized structures and

formalization in organizations.

 Routine technologies lead to centralization when formalization is low.

 Nonroutine technologies are associated with delegated decision authority.

iv. Environment

Environment includes outside institutions or forces outside an organization that potentially

affect the organization’s performance, such as suppliers, customer, government, etc. An

organization’s structure can be affected by environmental uncertainty.

Organization’s environment has three dimensions:

a. Capacity refers to the degree to which the environment can support growth.

b. Volatility describes the degree of instability in the environment.

c. Complexity is the degree of heterogeneity and concentration among environmental


Simple environments are homogeneus and concentrated, and heterogeneity one are

complex and diverse, with numerous competitors.

Some general conclusions: The more scarce, dynamic, and complex the environment, the more

organic a structure should be. The more abundant, stable, and simple the environment, the

more the mechanistic structure will be preferred.

Organizational Designs and Employee Behavior

Research Findings:

• Work specialization contributes to higher employee productivity, but it reduces job satisfaction.

• The benefits of specialization have decreased rapidly as employees seek more intrinsically

rewarding jobs.

• The effect of span of control on employee performance is contingent upon individual

differences and abilities, task structures, and other organizational factors.

• Participative decision making in decentralized organizations is positively related to job


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