Chapter 10 FOUNDATIONS OF ORGANIZATIONAL STRUCTURE Organizations are the means by which see achieve their eee tae are different from each othe; Thi it izations poals. This is so, even if organiza : : i Certain types of organizations aft just right for certain types. of environments, while some types of organizations are not fitted tp thrive on certain environment. An organization is one with a structure that is designed lo accomplish certain objectives. Understanding structure is important because it is part of organizational behavior. Structure and behavior influence each other, This relationship underscores the importance of studying the various concepts related to organizational structure, WHAT IS ORGANIZATIONAL STRUCTURE Organizational structure refers to the formal pattern of how people and jobs are grouped in an organization. It is often illustrated by an organizational chart, specifying who reports to wham. The organizational structure consists of mechanisms that serves fo coordinate and control activities of organizational members, Coordination is the process by which tasks and departments are inteerelated to achieve the goals of the organization. Control refers to the regulation of activities in ways that will enable members to predict and stabilize relationships with other members of the organization. re and control mechanisms must be both matched to © organization to make the organization effective. Basic Elements of Organizational Structure Organizational structure consists af the follawi ng basic elements?! 1, work specialization 2, departmentation3. _ pattern of authority a span of control D coordination of activities uk Specialization. This 5 nization are subdivided in, i ecialization is that ray work ee n, itis broken down into num one Pepicieed by a Separate perse ee in doing part of an a spec {0 the dean 1 Separay ef than an © to which tasks in jobs? The ‘Ss5ence of Te job being done Ol steps, with each st result is that individuals ty rather than the entire activity, The advantages of work specialization are: 1 total productivity tends to rule simplified tasks can be learned IN a relatively short time e and be completed quickly: and the availability of a Variety of jobs makes it possible for 3 eople to chonse, or be assigned to positions they enjoy od for which they are well suited, Y Beometrically; izati ; 15 Nicable to all jobs, and ialization, however, is not applicab et aan be undertaken in adapting it, ro Be erp! s, for instance, will not be efficient | itis subd a ee ie and assigning each step to different individuals. ie Pe ecduct may turn out to be an undesirable one. The e1 specialization ‘A—no wor STRUCTURE 21eGredit ned ‘Col Superviser Credit iewestigator STRUCTURE B - with work specialization Figure 36 STRUCTURE AND SPECIALI eae ZATION without specialization EMPLOYEE 8 Credit Investigator! EMPLOYEE & Credit Investigator’ Collector Collector Work output for one day: Work output for one day: {. investigated three 1. investigated three credit applications credit applications 2. collected thrae accounts 2, collected three accounts TOTAL OUTPUT: 6 investigations and 6 collections with specialization = Credit Investigator! Collector Work output for one day: Work output for one day: + investigated eight - investi i eka, investigated eight accounts TOTAL OUTPUT; 8 investigations and 8 collections Figure 37 AN EXAMPLE OF THE EFFECT OF SPECIALIZATION ———————ttl! sine ju 7 : a “6. Location — positions may also be 8 artmentation, This i: , that refers to the g = basic Flemeny ure NE SOUBING of inh; tf organizational manager according to some p, ee Ss Uneler the aaa abe ge of PANNING, Coordination, ua ratio aa Vand comin The phasis for grouping 08 ineluctys nal basis, for the I. Knowledge and ills — nes . to the specialized Ge te bring to the job. For example. penfos assigned to specialized de ; business, and vocati is that efficiencies are obtaine together. a Work process and fu according to the process or Under this type of grou set up to handle activ | science, sping, erouped departments are : ing, production, human resource Management, research and development, and finance. The purpose of this grouping is to achieve economics of scale by placing people with common skills and orientation into common units. Time — positions may also be grouped on the basis of when the work is to be done. For instance, when the organization performs the same work 24 hours a day, as may occur in a textile factory, members are grouped into the 6:00 AM to 2:00 PM shiit, the 2:00 PM to 10:00 PM shift, and the 10:00 PM to 6:00 AM shift. mgt 4, Product - positions in the organization may be grouped according to the good or service thats being produced. An appliance manufacturer my have sepals dene handling audio-visual equipment, air-conditioners, ana refrigerators, : ae 5, Customer — groups may also be formed on the basis need to deal with different types firm, for instance, may’ create @ customers who Pay cash, and another customers who avail of credit off i aluzon location, An organization: for a ey ee - division, a Visayas division: and a Si Anyolfers SMe advantages to the OFBARizatig, Departmentation These are the following: , made easier 1. Supervision | of resources sl imum use 0 uch as men, machines, a Feucl =e aay fsuch resources tH is established, materials results 10! c at performance 3. Commen measures ¢ 4, Communication |§ encouraged: [ENeINEERING| BUSINESS Figure 38 UPING OF JOBS ACCORDING TO WLEDGE AND SKILLS A SAMPLE GRO! KNO Figure 39 A SAMPLE GROUPING OF JOBS ACCORDING TO WORK PROCESS AND FUNCTION Third Shift 1000PM 6-00 AM Figure 40 _ A SAMPLE G ROUPING OF dons ACCORDING TO TIMEee (ee COMPANY Figure 47 Gi Ff SAMPLE ROUPING OF jogs, ACCORDING To PRO! DUCTS APPLIBNCE DEALER Government Figure 42 ‘A SAMPLE GROUPING OF JOBS ACCORDING TO CUSTOMER Figure 3 joss ACCORDING A SAMPLE GROUPING OF JO LOCATIONot quthority as an elemeny » pattem Pattern of Authority: pene fers of the extent by whic} in designi | organizational ® decisions without i a n designing On p allowed 10 make decisions \ ithout Betting embers at anarher momber. either : n making, | * ofganizatron me the approval of i be centralized oF decentralize, Y apis May : ed Authority patterns 1" + “One entrated in the hand ands Iris centralized when decisio ; Sas af higher-level managers. (U8 decentralized when decision making nd lower management positions. a fio middle a autheority i$ apprepriale for all organizations ons differ. Instead, the pattern of tion’s environment. Centralized ments, while decentralized authority is grantee No single pattern of ity © because environments of organizall authority must match the organiza! authority is better euited for stable environ authority is for complex and changing environments. authority offers the following advantages: pes and bottlenecks are reduced. | 2, Flexibility -managers.can cope with situations as they come. 3. Initiative — managers are highly motivated by the challenge. A Development — managers are provided with opportunity for training. tralized authority has also some dis Decentralized Efficiency — red tay Gael advantages. These are as follows: 1, Control = coordinating overall activities is more difficult, 2, Duplication - there is a great chance of efforts duplicated between departments. 3. Centralized expertise — home office experts may be overlooked or disregarded. 4. Competency - the organization r may not be able to roduce competent managers at all levels. ae . ee coed. Another consideration in designing the iS ey of u me is span of control. This element refers to the ae fiber di reporting to a single supervisor. ae As een pon or wide, It is narrow : #5 reporting ta a supervisor. The narrowcontrolling activities are More tight; and , ee is More time for rewarding behavior t : 4 f control is wide when THeTe are ce supervisor. The following chars ep aon with wide span of « organ? an 1; subordinates ate inherent to oN loyees work with lithe super, 3 eae is a high level of deleza th 5 , 2 ntrolling is lighter; and e 5h is less time for rewardina The! 4. hon ¢ i f control will depend « iale span oF F - ave Sow or the wide of span of cont ther the eee Figure 44 shows the neaie 5 : pes oN ontrol. There are also situations a f : wn in: Heute io ae Ao and these are shown in Figun col i no ide 5pTavis af saabarsinate requre letegratian Figure 45 SITUATIONS APPROPRIATE FOR WIDE SPAN OF CONTROL Coordination, Another basic element considered in designing the organizational structure is coordination. This term refers to the linking ‘of activities in the organization that serve to achieve a common goal or objective.” ; As the job is divided into several tasks and each is assigned to a corresponding unit, there is a risk that one task may be done too well or too early to the detriment of the other tasks. For instance, 3 Bees sales force aay maybe matched by the ability : e manufacturing unit to produce what can be sold. This kind of may be minimized if the activities of the various units are / coordinated. Such requirem I am Gtuerizatonal sucha must be incorporated in theMON ORGANIZATIONAL DF gic. qhere are common OFBANZational de. ine a the simple structure SIENS which Consist of the 4 the bureaucrac ¥ 5 ihe matrix structure simple Structure the simple structure is one that i § Characterized d artmentalization, wide e| Thy a bow degree Tt phan Of Control, auth eniralized ingle person, and little formalization, tt hs ne staff. It achieves coordination th iti 1as litthe technical and te eo igh direct supervision, by the chief executive in the upper On, The simple OEE EE "OSL appropriate for small businesses ye the retail store, service shop, and small manufacturing firm, li 5 angement, the manager is also this arrange! » ihe 6 under the owner, This structure ijlustrated in Figure 46, an organization chan for an automotive is ir shop. Wilfredo Dungo owns and manages the shop, Although. repal employs six full-time mechanics and a cashier, he directs the ities of the shop,jg its simplicity. With the ste struct! z anizatiol decisions can be mad a tee the owner can modify it anytin = a ze .- indicate geen ay the need arises fone an hss n erate : = ood! arises. Kanever nec i can be temporarily # igned as pareman se HN ded. The sho inexpens! to maintain: and acc untability is ¢ lear re is its inability to sery } rea structure 1 The weakn large organi ation. This centralization which ten! the organization grows If after an extended period, This is a prelude to failure. ess of the simple structt! : js because of its low formalization and hig} dito create information overload at the top : naking becomes See a decision 7 becomes dysfunctional 1 Size, nization the orga matic, and precise form of ‘zed activities ina hi iy t perform standardiz ' iba manner. This is the result of es nod er in functio! resulting, in ecor ‘of scale, minimumween employees WhO spea, ication and easier com ee at a commen fanguage : ean operate nice with less talented micele Ze Bureaucta’y an anage - The result Is tower Costs and lewerte¥ ane ; The disadvantages of bureau racy are a5 follows: 1, Specializatton which Is 4 feature of bureaucracy, creates Speck ‘ : erent eflicts. Functional unit goals override he cieel goals of the organization. A ; ise that do not precisely fit the rules, there ig he The Matrix Seructure The matrix off product or project It ig really an attempt fo weakne Matrix structures are Te 4. ‘When cases ar no roam for modification. anizational design ig one that superimposes 4 t-based design onan ‘existing function-based design, the strengths and minimize the maximize tation by function and by product.* es of bath deparime organizations that: found in Require response to rapid changes in two or more environments such as technology and markets; nties thatgenerate hi igh information processing Face uncertal requirements; and. Must deat with financial and and Want to take advantage of new opportunities and salve special problems. human resources: constraints; Figure 48 is an illustration of the matrix structure. Strengths of the Matrix Design. The matrix designed i has an array of strengths which are listed as iow ae 4s z 4. dv It allows derma ' Direc) nds ftom the environment to be met It provides flexibility. Itencourages resource efficiency, Itenhances skill development.creases Mmotivatic 5, tin an and Commitment arm i i PONE emiplanvees ‘ IL aids lop Management jn planning, esses Of the Matrix Gee yeakinesses Design. The matrixdesi nization has lis own weaknessés, They: are the ihoucg on 1, Wrcreates dual-authority confusion. i 2 Pspawns power struggle a it is time-consuming. 4, W requires interpersonal skills training, 5. it generates high implementation cost, Figure 48 fe a THE MATRIX-DESIGNED ORGANIZAthe basic organization?! esi ONE EEN zations art irom - ae a w designs. These are: are using ney 1. Outsourcing organizatl 2. Team structure fon Outsourcing Organization a The outsourcing ongantze tion, alsoknown as virtual Organization, Tee ement by which the organization ate Nee Performed for it by groups outside the organization. es as oe all work nee essary jor producing a product OT SELVICE, 2 Organization enters : wat with another organizatlon to perform some Specific ‘ampany which manufactures cars can ask manufactured car parts like tires, spark is an arning into an agreemi activities. For insiance, a ¢ other companies to provide plugs, audio equipment, among others. Outsourcing is very useful because it can reduce the company’s needforemployees, equipment, and materials, The resultis the reduction of the costs of maintaining those three requirements. Outsourcing can cover almost any work periormed by the organization. Examples are hiring and training employees, packaging and distribution, product research, security services, transportation and delivery, and many others, All is nat well, however, with outsourcing practices of Companies, This is because outsourcing effectively reduce the demand for labor within the organization and labor unions are not particularly elated. i that bid for outsourcing with an organization are sure to offer the lowest possible price. This pressure to violate wage iild labor laws. an illustration ( outsourcing organization primary functions ofIndependent ee * ‘tone = a agency Figure 49 AN OUTSOURCING ORGANIZATION ie Organization with a team structure makes use of teams as itral device to coordinate work activities. The team structure ontal rather than a vertical organization. Under this structure, ntal barriers are broken down and decision making is. it could be members of a higher level team, fer instance, team; the team leaders of the various districts could be i ofa regional team; and the like. e requirement of the team structure is that team members must alists as well a specialists.THE ORGANIZATIONAL gmmucTume’s RELEVANCE TO Huma, nizational structures place uni them. Not all people suis demands on people who Pp to a certain type of structure: some are better suited to a simpy structure, others are better suited to a bureaucracy, and still eae . are most productive in a matrix structure, This is important to kno. ly be effective if the People fe because organizational structures can on working within them are |-matched with the structure, Different types of ofe@! work withinSUMMApy societies achieve thejr Boals throu, Jish its objectives, OTBANIZations gccomP nizational structure CONSISt nf 4 The a e and contral activities of Fe pirtzniona Structures Son asic Clements including specialization, deparimentation, Pattern of authority Span of work |, and coordination of activities. - contro! MON organizational des} SS ieracy, and the matrix « the Ocime advantages and disa own ch of the design has its vantages, New organization design o PHONS consist of the outsourcing ization, and team structure. These are additional options which org ethe organization with the Opportunity to compete and survive. I cation structures are who work within them, Knowledge a d it cannot be ignored, “Banizations, To Make use gy Structures, "Mechanism that Serves to OrRANZational Member rs, NSISt of by Not independent of the people Of why this is so is very important