Designing Organizational Structure – Basic and Adaptive designs

Chapter 10: Designing Organizational Structure – Basic Designs

The key elements in Basic organizational design are: Work Specialization, chain of command, span of control, departmentalization, centralization-decentralization, and formalization.

1.                  Work specialization viewed as a way to divide work activities into separate job tasks. Today’s view is that it’s an important organizing mechanism but it can lead to problems.

2.                  Departmentalization is the basis by which jobs are grouped/teamed together. One type of group/team that more organizations are using is a Cross-Functional team, it’s a work team composed of individuals from various functional specialties. Various forms of departmentalization are: Functional groups jobs by functions performed; product groups jobs by product lines; geographical group jobs by geographical region; process group jobs on product or customer flow; and customer group jobs on specific and unique customer groups.

3.                  Chain of Command is the line of authority extending from upper organizational level to lower levels, which clarifies who reports to whom. Its companion concepts: authority; responsibility; and unity of command, were viewed as important ways of maintaining control in organizations. The contemporary view is that they are less relevant in today’s organizations.

Authority refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it; Responsibility refers is the obligation or expectation to perform any assigned duties; Unity of command is the management principle that each person should report to only one manager.

4.                  Span of control’s traditional view tells that managers should directly supervise no more than five to six individuals. The contemporary view is that the span of control depends on the skills and abilities of the manager and the employees and on the characteristics of the situation.

5.      Centralization-decentralization is a structural decision about who makes decisions upper-level managers or lower-level employees. Today’s view is that employee were given more authority to make decisions.

6.      Formalization is about how standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures. Many organizations today rely less on strict rules and standardization to guide and regulate employee behavior.

Mechanistic and organic structures

Mechanistic Structures an organizational design that’s rigid and tightly controlled structure. Meanwhile, Organic structure tells about an organizational design that’s highly adaptive and flexible.

Contingency factors affecting Structural Choice

Strategy and structure, an organization’s structure should support the strategy. If the strategy changes, the structure also should change;

Size and Structure, An organization’s size can affect its structure up to a certain point. Once an organization reaches a certain size, it’s fairly mechanistic;

Technology and structure, an organization’s technology can affect its structure. An organic structure is most effective with unit production and process production technology. A mechanistic structure is most effective with mass production technology.

            Environmental Uncertainty and Structure, The more uncertain an organization’s environment, the more it needs the flexibility of an organic design.

Traditional Organizational Design.

Simple structure, a simple structure is one with little departmentalization, wide spans of control, authority centralized in a single person and a little formalization. Functional structure groups similar or related in a single person and little formalization. Divisional Structure is made up of separate business units or divisions.

Designing Organizational Structure – Adaptive Design

Contemporary Organizational Designs

Team Structures, is an organizational structure on which the entire organization is made up of work teams

            Matrix and Project Structure. Matrix Structure is an organizational structure that assigns specialists from different functional departments to work on one or more projects; Project structure is an organizational structure in which employees work on projects.

            Boundaryless Organization is an organization whose design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure. There are 2 types of boundaryless organization:

-          Virtual Organization is an organization that consists of a small core of full-time employees and outside specialists temporarily hired as needed to work on projects.

-          Network Organization is an organization that uses its own employees to do some work activities and networks of outside suppliers to provide other needed product components or work processes.

Learning Organization is an organization that has developed the capacity to continuously learn, adapt, and change.

Organizing for collaboration

            Organization’s collaboration efforts can be internal and external. Internal collaborative structural options include cross-functional teams, task forces, and communities of practice.

-         Cross-functional team is a work team composed of individuals from various functional specialties.

-         Task force is a temporary committee or team formed to tackle a specific short-term problem affecting several departments.

-         Communities of practice are groups of people who share a concern, a set of problems, or a passion about a topic and who deepen their knowledge and expertise in that area by interacting on an ongoing basis.

External collaborative options include open innovation and strategic partnerships.

-          Open innovation, expands the search for new ideas beyond the organization’s boundaries and allows innovations to easily transfer inward and outward.

-          Strategic partnership, are collaborative relationships between two or more organizations in which they combine resources and capabilities for some business purpose.

Flexible Work Arrangements

Flexible work arrangements give organizations the flexibility to deploy employees when and where they’re needed. Structural options include telecommuting, compressed workweeks, flextime, and job sharing.

-         Telecommuting is a work arrangement in which employees work at home and are linked to the workplace by computer.

-         Compressed workweek is one in which employees work longer hours per day but fewer days per week.

-         Flextime is a scheduling system in which employees are required to work a specific number of hours a week but are free to vary those hours within certain limits.

-         Job sharing is when two or more people split a full-time job.

Contingent workforce

          Contingent workers are temporary, freelance, or contract workers whose employment is contingent on demand for their services. Organizing issues include

-         Classifying who actually qualifies as an independent contractor;

-         Setting up a process for recruiting, screening, and placing contingent workers;

-         Having a method in place for establishing goals, schedules, and deadlines and for monitoring work performance.

Today’s Organizational design challenges

The two main organizational design challenges for today include:

-          Keeping employees connected, for instance by using mobile computing and communication technology to keep in touch with other workers

-          Managing global structural issues, other cultural design elements may be affected by cultural differences as well