CHAPTER 5

ORGANIZING

Organizational Designs

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©2005 Pearson Education Canada, Inc.
 4 KEY ELEMENT
MANAGEMENT ACTIVITIES

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 • The structure of the organization : is the
framework or skeleton for dividing,
assigning & coordinating work.

• Whenever managers develop or change the

structure, it is called “organization design.”

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 Organization Organization
Structure Design

The framework Developments in

for dividing, or changes to
assigning, and the structure of
coordinating work an organization
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 Key Elements
of Organization Structure
Work Authority and
Specialization Responsibility

Chain Centralization vs.

of Command Decentralization

Span of Control Departmentalization

Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 • The first component is the division of labour, or work specialization. It describes
the degree to which tasks are subdivided into separate jobs. An entire job is not
done by one person. Individuals specialize in doing part of an activity rather than
the entire activity.
• Work specialization makes efficient use of the broad skills that workers have.
• Early advocates believed that work specialization could lead to indefinitely
increasing productivity. Since specialization was not widely practiced at the turn
of the twentieth century, their belief was reasonable. By the late 1940s, work
specialization enabled manufacturing firms to make the most effective use of
their employees’ skills. So, managers believed that this could go on indefinitely.
Managers today understand that while division of labour is appropriate for some
jobs, productivity in other jobs can be increased through enlarging, not
narrowing, the scope of job activities.

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 WORK SPECIALIZATION
High

Impact from
Human
Diseconomies
Productivity

Impact from
Economies of
Specialization
Low

Low Work Specialization High

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 Other Aspects of
Organization Structure

Chain of Command

Who reports to
whom?

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 THE CHAIN OF COMMAND
Chief Executive
Officer

Executive Executive
President
Vice President Vice President

Vice Vice Vice Vice Vice

President President President President President

Region Region Region Region Region

1 2 3 4 5

District District District District District District District

A B C D E F G

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 Other Aspects of
Organization Structure

Span of Control

How many direct

reports can a manager
manage?
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 SPAN OF CONTROL

• Number of employees that a manager can

manage effectively

• Increased over the last several years

• Contingency variables impact number

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 AUTHORITY VS.
RESPONSIBILITY
• Rights inherent in managerial • Obligation to perform
position to give orders and
expect them to be followed

• Related to one’s position--not

the characteristics of person • Goes hand-in-hand with
authority

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 THE CONCEPT OF
AUTHORITY
Chief Executive
Officer

Research and Human

Finance Accounting Marketing Production
Development Resources

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 LINE AUTHORITY

• Level of authority that entitles manager to

direct the work of an employee

• Contributes directly to the achievement of

organizational objectives

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 Making Decisions in Organizations

Managerial Employee
High High
Control Empowerment

Centralized Decentralized
Decision Decision
Making Making

Employee Managerial
Low Low
Empowerment Control

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 • The term centralization refers to how much decision-making
authority is pushed down to lower levels in the organization. It is
not an either-or concept, but is a matter of degree.
• Traditional organizations were structured in a pyramid, with power
and authority centralized at the top.Today’s organizations, on the
other hand, are more complex and need to be able to respond to the
dynamic changes in their environments.
• To do this, managers believe that decisions need to be made closed
to the problems. As a consequence, managers will make decisions
about the best amount of decentralization to achieve organizational
goals.
• Recall our discussion earlier about empowerment. For this to work,
decision-making must be decentralized.

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
THE DEGREE OF CENTRALIZATION
Lower Higher

Decentralization
Top Management Control

Employee Empowerment
Centralization
Higher Lower
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
THE DEGREE OF FORMALIZATION
Lower Higher

Low

Employee Freedom
Standardization

Formalization

High
Formalization

Higher Lower
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 Few Wide Spans
Departments of Control

The Simple Structure

Little Centralized
Formalization Authority
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 Strategy

Contingency Size
Factors and
Organization
Technology
Design

Environmental
Uncertainty
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 The Team-Based
Structure

Empower Hold Teams

Workers Accountable

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 The Virtual Organization
Independent R & D Advertising
Consulting Firm Agency

Executive
Group

Factories in Commissioned
South Korea Sales Representatives

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 Mechanistic Versus Organic Structures

•High horizontal differentiation •Low horizontal differentiation

•Rigid hierarchical relationships •Collaboration (vertical and horizontal)
•Fixed duties •Adaptable duties
•High formalization •Low formalization
•Formalized communication channels •Informal communication
•Centralized decision authority •Decentralized decision authority
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 ORGANIZATION STRUCTURE
DETERMINANTS AND OUTCOMES

Causes
• Strategy Performance
• Size and
• Technology Satisfaction
• Environment

Structures
Determines • Mechanistic
• Organic

Moderated by
individual differences
and cultural norms

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 The Concept
of Power

The Power
Core Authority
Level

Finance Human
Accounting Resources

Research and
Marketing Production Development

Function
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 5 TYPES OF
POWER
Coercive
(using force or threats)

Referent Reward
(well known track record of success)

Power
Expert Legitimate
(special knowledge, experience,
(conforming to the law or to rules)
skill relating to work)

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
Robbins et al., Fundamentals of Management, 4th Canadian Edition
©2005 Pearson Education Canada, Inc.
 Page 262- 309

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 END OF CHAPTER 5

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 QUIZ 1

• Date : 15 March 2019

• Day : Friday
• Time : 9.00 – 11.00 pm
• Duration : 30 min
• Questions : 20 MCQs

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 TEST 1
• Date : 20 March 2019
• Day : Wednesday
• Time : 12.25 – 1.25 pm
• Duration : 1 hour
• Questions : Subjective
• Venue : Lestari Hall

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.