Designing Organizational Structure


Six key elements in organizational design

The key elements in organizational design are work specialization, departmentalization, chain of command, span of control, centralization–decentralization, and formalization. Work specialization is dividing work activities into separate job tasks. Today’s view is that work specialization can help employees be more efficient. Departmentalization is how jobs are grouped together. Today most large organizations use combinations of diferent forms of departmentalization. The chain of command and 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. 

The traditional view of span of control was that managers should directly supervise no more than �ve 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. Centralization–decentralization is a structural decision about who makes decisions— upper-level managers or lower-level employees. Formalization concerns the organization’s use of standardization and strict rules to provide consistency and control. Today, organizations rely less on strict rules and standardization to guide and regulate employee behavior.

Mechanistic and organic structures. 

A mechanistic organization is a rigid and tightly controlled structure. An organic organization is highly adaptive and flexible.

The contingency factors that favor either the mechanistic model or the organic model of organizational design. 

An organization’s structure should support the strategy. If the strategy changes, the structure also should change. An organization’s size can aect its structure up to a certain point. Once an organization reaches a certain size (usually around 2,000 employees), it’s fairly mechanistic. An organization’s technology can aect its structure. An organic structure is most eective with unit production and process production technology. A mechanistic structure is most eective with mass production technology. The more uncertain an organization’s environment, the more it needs the ™exibility of an organic design.

Traditional organizational design options. 

A simple structure is one with little departmentalization, wide spans of control, authority centralized in a single person, and little formalization. A functional structure groups similar or related occupational specialties together. A divisional structure is made up of separate business units or divisions.

Organizing for flexibility in the twenty-first century. 

In a team structure, the entire organization is made up of work teams. The matrix structure assigns specialists from dierent functional departments to work on one or more projects being led by project managers. A project structure is one in which employees continuously work on projects. A boundaryless organization’s design is not de�ned by, or limited by, the horizontal, vertical, or external boundaries imposed by a prede�ned structure. A virtual organization consists of a small core of full-time employees and outside specialists temporarily hired as needed to work on projects. Another structural option is a task force, which is a temporary committee or team formed to tackle a specifc short-term problem afecting several departments.

Telecommuting is a work arrangement in which employees work at home and are linked to the workplace by computer. A 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 speci�c 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 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; and having a method in place for establishing goals, schedules, and deadlines and for monitoring work performance

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