Chapter 10
Organizational Structure and Design
Organizing is the process of creating structure.
Benefits of Organizing:
1. Clarifies work environment
-Everyone understands what to do (responsibilities, tasks)
2. Creates a coordinated environment
-Minimal confusion
3. Achieves the principle of unity of direction
-Establishment of one authority figure for each designated task
4. Chain of command
-Unbroken line of reporting relationships
OS- is the formal framework by which jobs are divided, grouped and coordinated
Organizational Design (OD) - is the process of creating or changing structure.
There are 6 decisions that must be made:
1. Work Specialization:
Specialization of labor
-The degree to which organizational tasks are
subdivided into jobs
Advantages-- Tasks can be done more efficiently,
decreasing training, etc.
Managers can supervise more employees.
Disadvantages-- Jobs become too simple, Employee
morale drops
2. Departmentalization
A. Functional- Specialized by business functions
(Marketing, Finance, etc.)
B. Geographical
C. Product- Each product carries its own marketing,
finance, etc. departments)
D. Customer- (Government, consumer, wholesaler)
E. Process
3. Chain of Command
AUTHORITY
-Formal, legitimate right of a manager to make decisions, allocate resources and give
orders.
-Line Authority- Manager who supervises operational employees
-Staff Authority-Manager who supervises the support staff
Responsibility
The obligation or expectation to perform.
UNITY OF COMMAND
Each employee should report to only one boss
This is sometimes difficult since there is an interdependence between
the line and staff.
4. Span Of Control
How many subordinates can a manager manage?
Wide Span-
Narrow Span-
5. Centralized vs. decentralized
Centralized - keeping most of the authority at
the level of higher management.
Decentralized- Delegating authority through out the organization.
6. Mechanistic vs. Organic
DELEGATION
-Downward transfer of formal authority.
Why do we delegate?
-Allows the manager to do more ‘managerial’ work
-Frees up time to do more planning (critical thinking)
Fears about delegation
-Lack of confidence in empl.
-Fears giving up authority
-”I can do it better and quicker!”
Steps to delegate
1. Assignment of tasks
2. Delegation of authority
3. Acceptance of responsibility -Managers do not delegate responsibility. They
delegate the acceptance of the assignment
4. Creation of accountability