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CHAPTER 6
Organizing

Learning Outcomes
ü Describe six key elements in organizational design.
ü Contrast mechanistic and organic structures.

ü Discuss the contingency factors that favor either the

mechanistic model or the organic model of organizational
design.
ü Describe traditional organizational designs.
ü Describe modern organizational designs.

6.1 Designing Organizational Structure

6.1.1 What Is Organizational Structure?
ü Organizing - arranging and structuring work to
accomplish an organization’s goals.
ü Organizational Structure - the formal arrangement of
jobs within an organization.
ü Organizational chart - the visual representation of
an organization’s structure.

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6.1 Designing Organizational Structure

6.1.2 Purposes of Organizing
ü Divides work to be done into specific jobs and departments.
ü Establishes formal lines of authority.
ü Establishes relationships among individuals, groups, and
departments.
ü Clusters jobs into units.
ü Coordinates diverse organizational tasks.
ü Assigns tasks and responsibilities associated with individual
jobs.
ü Allocates and deploys organizational resources.

6.1 Designing Organizational Structure

6.1.3 Organizational Design
ü Work specialization
ü Departmentalization
ü Chain of command
ü Span of control
ü Centralization and decentralization
ü Formalization

6.1.3 Organizational Design

a. Work specialization
Ø Dividing work activities into separate job tasks.
Ø Early proponents of work specialization believed it
could lead to great increases in productivity.
Ø Overspecialization can result in human
diseconomies such as boredom, fatigue, stress,
poor quality, increased absenteeism, and higher
turnover.

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Economies and Diseconomies of Work Specialization

6.1.3 Organizational Design

b. Departmentalization - the basis by which jobs are
grouped together

• Functional
– Grouping jobs by functions
• Product
– Grouping jobs by product
line
• Geographical
– Grouping jobs on the basis
of territory or geography
• Process
– Grouping jobs on the basis
of product or customer flow
• Customer
– Grouping jobs by type of
customer and needs

Common Forms of Departmentalization

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Common Forms of Departmentalization

Common Forms of Departmentalization

Departmentalization Trends
Ø Increasing use of customer departmentalization.

Ø Cross-functional team - a work team composed of

individuals from various functional specialties.

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6.1.3 Organizational Design

c. Chain of Command
The continuous line of authority that extends from upper
levels of an organization to the lowest levels of the
organization - clarifies who reports to whom.

6.1.3 Organizational Design

d. Authority
ü Authority - the rights inherent in a managerial position to tell
people what to do and to expect them to do it.
ü Acceptance theory of authority - the view that authority
comes from the willingness of subordinates to accept it.
ü Line authority - authority that entitles a manager to direct
the work of an employee.
ü Staff authority - positions with some authority that have
been created to support, assist, and advise those holding
line authority.

Chain of Command and Line Authority

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Line Versus Staff Authority

6.1.3 Organizational Design

e. Span of Control
The number of employees who can be effectively and
efficiently supervised by a manager.

6.1.3 Organizational Design

f. Centralization versus Decentralization
ü Centralization - the degree to which decision making is
concentrated at upper levels of the organization.
ü Decentralization - the degree to which lower-level
employees provide input or actually make decisions.
ü Employee empowerment - giving employees more
authority (power) to make decisions.

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Centralization or Decentralization

6.1.3 Organizational Design

g. Formalization
ü The degree to which jobs within the organization are
standardized and the extent to which employee behavior is
guided by rules and procedures.
ü Highly formalized jobs offer little discretion over what is to
be done.
ü Low formalization means fewer constraints on how
employees do their work.

6.2 Mechanistic and Organic Structures

ü Mechanistic organization - an organizational design
that’s rigid and tightly controlled.
ü Organic organization - an organizational design
that’s highly adaptive and flexible

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6.3 Factors Affecting Structural Choice

6.3.1 Strategy and Structure
Ø Changes in corporate strategy should lead to changes in an
organization’s structure that support the strategy.
Ø Certain structural designs work best with different
organizational strategies.
+The organic structure works well for organizations
pursuing meaningful and unique innovations.
+The mechanistic organization works best for companies
wanting to tightly control costs.

6.3 Factors Affecting Structural Choice

6.3.2 Size and Structure
As an organization grows larger, its structure tends
to change from organic to mechanistic with increased
specialization, departmentalization, centralization, and
rules/regulations.

6.3 Factors Affecting Structural Choice

6.3.3 Technology and Structure
Ø Organizations adapt their structures to their
technology.
Ø Woodward’s classification of firms based on the
complexity of the technology employed:
+Unit production of single units or small batches.
+Mass production of large batches of output.
+Process production in continuous process of outputs.

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Woodward’s Findings on Technology and Structure

6.3 Factors Affecting Structural Choice

6.3.4 Environmental Uncertainty and Structure
ü Mechanistic organizational structures tend to be
most effective in stable and simple environments.
ü The flexibility of organic organizational structures is
better suited for dynamic and complex
environments.

6.4 Traditional Organizational Designs

ü Simple structure - an organizational design with
low departmentalization, wide spans of control,
centralized authority, and little formalization.
ü Functional structure - an organizational design
that groups together similar or related occupational
specialties.
ü Divisional structure - an organizational structure
made up of separate, semiautonomous divisions.

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6.4 Traditional Organizational Designs

6.5 Contemporary Organizational Design

ü Team Structure - an organizational structure in which the
entire organization is made up of work teams.
ü Matrix Structure - an organizational structure that assigns
specialists from different functional departments to work on
one or more projects.
ü Project Structure - an organizational structure in which
employees continuously work on projects.
ü Boundaryless Structure - an organization whose design
is not defined by, or limited to, the horizontal, vertical, or
external boundaries imposed by a predefined structure

Example of a Matrix Organization

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6.5 Contemporary Organizational Design

6.5 Contemporary Organizational Design

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