Philippine Christian University

Taft Avenue, Manila

Graduate School

Master of Management, major in Educational management

Course: Master 612 – Management

Name : Rino P. Sangarios Date : July 25, 2022

Narrative Report: ORGANIZATIONAL STRUCTURE AND CHANGE

As much as individual and team-level factors affect employee attitudes and behaviors

at work, the organizational structure may have an even greater impact.

OBJECTIVES:

1. Explain how employee attitudes and actions are affected by formalization,

centralization, hierarchical levels, and departmentalization.

2. Describe the ways in which mechanistic and organic structures can be created by

combining the components of organizational structure.

3. Know the benefits and drawbacks of organic and mechanical organizational

structures.
Key Terms:

Organizational structure refers to how individual and teamwork within an organization

are coordinated. Individual work needs to be controlled and coordinated in order to

accomplish organizational goals and objectives.

Structure is a useful tool for improving coordination because it identifies reporting

relationships, indicates formal communication channels, and explains how individual

actions are connected.

Organizations can operate under a variety of different structures, each of which has

specific advantages and disadvantages. Some organizational models are better suited

for specific surroundings and jobs, even though any structure with poor management

would be troubled by problems.

Building Blocks of Structure

We shall discuss the centralization, formalization, hierarchical levels, and

departmentalization the four structural characteristics that have been widely

investigated in the literature. We see these four components as the foundation of a

company's structure. Then, we'll look at how these components combine to create two

distinct configurations of structures.

Centralization is the degree to which decision-making authority is concentrated

at higher levels in an organization. In centralized organizations, key choices are

frequently taken at the top of the hierarchy, whereas in decentralized organizations,

employees who are closest to the issue at hand make decisions and address issues

at lower levels.

(As an employee, where would you feel more comfortable and productive?)

Lower-level employees feel more empowered in decentralized organizations

because they have greater authority. Employees frequently assume that decentralized

businesses offer higher levels of procedural justice to employees since decisions can

be made more quickly. Decentralized companies are more likely to draw in job

candidates. That is why CEOs and other high-level managers are subject to greater

demands on their judgment because centralized companies delegate decision-making

authority to higher-level managers.

In the majority of small businesses, all decisions on the company's products,

services, strategic course, and the majority of other important areas are made by the

owner. However, a company can be centralized regardless of its size. An example of

an organization having a centralized management structure is Apple. Tim Cook,

Apple's Chief Executive Officer (CEO), who took over as company president after

Steve Jobs' death, is mostly responsible for making decisions within the company.

They are long regarded as an organization that retains a high level of centralized

control over the business's strategic activities, including the creation of new products,

the selection of target markets, and business acquisitions. In fast evolving technical

contexts, centralized management structures are common in business.

operations result in ineffective decision-making. Nevertheless, there are benefits to

centralization as well. Some workers feel better at ease in a workplace if their

management takes judgments and issues directions with assurance. Additionally,

centralization may result in more effective operations, especially if the business is

running in a stable environment. Extreme decentralization, however, can be

destructive to companies. Hitting the right balance between decentralization and

centralization is a challenge for many organizations.

Formalization

Formalization is the extent to which an organization’s policies, procedures, job

descriptions, and rules are written and explicitly articulated. There are formalized

systems when there are several written rules and regulations. These systems use

written rules to regulate employee conduct and leaving limited room for employees to

make individual decisions.

Formalization has the benefit of improving employee behavior predictability.

Employees respond to difficulties in a consistent manner across the organization

because they know to consult a handbook or a procedural guideline whenever a

problem at work arises, which promotes consistency in behavior. It clears up

uncertainty and gives workers guidance.

Because employees are accustomed to acting in a certain way, a high level of

formalization may result in less innovation. According to which, strategic decision-

making in these businesses frequently happens only during times of crisis. This
defined framework is linked that decreased motivation, worse job satisfaction, and

delayed decision-making process.

Hierarchical Levels

The amount of levels a company's hierarchy has is another crucial component

of its structure. When the size of the organization is held constant, tall structures

contain several levels of management between the top level and the frontline staff,

while flat structures have few layers.

Tall structures typically have fewer employees reporting to each manager,

giving managers more opportunities to oversee and keep an eye on

employee's behavior. In contrast, flat structures have more employees who report to

each management. Managers will be less able to give close oversight in such a

system, giving everyone more opportunity to take initiative.

According to E. E. Ghiselli & D. A. Johnson (1970), their study shows that flat

organizations provide greater levels of self-actualization and employee needs for

satisfaction. Simultaneously, flat structures could present certain difficulties. M

modeled on L. B. Chonko's study from 1982, managers who are responsible for a

larger workforce report higher degrees of role ambiguity, or the uncertainty that comes

from not knowing exactly what is expected of them in the workplace. This is especially

devastating for workers who require more direct management assistance.

Furthermore, because there are fewer management layers under a flat

structure, promotion chances will be more constrained. While workers in flat

organizational systems must be more adept at meeting their higher-order needs, such

as self-actualization. Tall structures are said to be superior at meeting the needs of

employees in terms of security. Lawler, E. E., and L. W. Porter (1964).

Organizational structures vary in terms of departmentalization, which is

generally divided into functional and divisional categories. Organizations that use

functional structures organize employment depending on how closely they perform

comparable tasks. Departments including marketing, production, finance, accounting,

human resources, and information technology may be present in such frameworks.

Each member of these structures performs a specific function and manages a large

number of transactions. For instance, in a functional organization, a marketing person

might also act as an event planner, organizing marketing campaigns for the entire

company's line of goods.

Departments in businesses with divisional structures stand in for the distinctive

goods, services, clients, or geographic location that the business caters to. Thus, each

distinctive good or service the business offers will have a separate department.

Marketing, manufacturing, and other roles are replicated inside each department.

Employees in these organizations behave more like generalists than specialists.

Employees will be responsible for carrying out a variety of duties in support of the

product rather than doing specific jobs. In a company with a divisional structure, for

instance, a marketing person can be in charge of organizing promotions, managing

interactions with advertising agencies, and organizing and carrying out marketing

research, all for the specific product line handled by his or her division.

In reality, a lot of these companies have a hybrid organizational structure that

combines functional and divisional structures. For instance, departmentalizing by

product may enhance innovation and speed up response time if the organization has

several product lines. Although each of these departments may have specialized
marketing, manufacturing, and customer service personnel serving the relevant

product, the business may also discover that centralizing some operations and

maintaining the functional structure makes sense and is more advantageous

financially for positions like human resources management and information

technology. If the same organization serves several nations or regions, it may also

establish geographic departments.

There are benefits to each departmentalization structure. When a business

does not have a huge number of products and services requiring specific attention,

functional structures frequently work well. It also performs better in a situation that are

more stable and slower to change. Each product in a company's diversified product

line will have different requirements, making divisional structures more practical for

quickly meeting consumer wants and foreseeing market developments. Product

divisions enable organizations to be more adaptable and operate more effectively in

challenging conditions.

Two Configurations: Mechanistic and Organic Structures

The many components of organizational systems, such as formalization,

centralization, hierarchy levels, and departmentalization, frequently coexist. As a

result, depending on how these components are arranged, we can discuss two

different configurations of organizational structures.

They resemble a bureaucracy. A bureaucratic organization is a government

agency or for-profit corporation with strictly adhered-to operating regulations and a

rigid line of command. These organizations are very centralized and formalized.

Employees are provided with detailed job descriptions outlining their specific tasks and

responsibilities, and communication typically occurs through formal channels.

Mechanistic organizations are not suited for innovation and swift action since they are

frequently rigid and resistant to change. The disadvantage of these forms would be

that they inhibit entrepreneurial activity and discourage employees from using their

own initiative. Mechanistic frameworks not only limit human liberty and self-

determination, which will probably result in lower levels of intrinsic motivation at work,

but they also have negative effects on innovation.

Despite these drawbacks, mechanistic systems provide benefits in more stable

environments. Efficiency is a mechanistic structure's key benefit. In a more general

sense, efficiency is the capacity to accomplish things properly, successfully, and

without waste. Mechanistic structures therefore provide benefits in businesses that

aim to maximize efficiency and reduce expenses. For instance, McDonald's has a well-

known bureaucratic organization with highly formalized staff jobs, distinct lines of

communication, and detailed job descriptions. They benefit from this structure since it

enables McDonald's to provide a consistent product at low cost all over the world.

There models can be helpful for young businesses. Uncertainty, ambiguity, and a lack

of structure are common problems for new companies. It has been demonstrated that

the presence of a mechanistic framework is connected to business performance in

new ventures.
Organic Structures

In contrast to mechanistic structures, organic structures have minimal levels of

formalization and are flexible and decentralized. Communication channels are more

open and flexible in organizations with an organic structure. Job descriptions for

employees are broader, and they are expected to carry out tasks in accordance with

the current demands of the company and their own levels of skill. Employee job

satisfaction is typically higher when organic structures are present. These institutional

settings encourage innovation and entrepreneurial behavior.

The diverse technological corporation 3M is an illustration of a business with an

organic structure. The business firmly supports decentralization. Nearly 100 profit

centers make up 3M, but each division seems like a little business. Each division

manager has complete autonomy and is responsible for all decisions made.

Operations inside each division are spun off to form a different business unit once they

grow too large and a division's product becomes profitable. This is carried out to

preserve the company's agility and the feel of a small business.

Illustration on their comparison:

Key components of a company's structure include the degree of centralization and

formalization, the number of levels in the hierarchy, and the type of

departmentalization the organization employs. These structural components have an

impact on employee attitudes and behaviors at work as well as how effective and

inventive the organization is. Together, these components give rise to both

mechanical and organic structures. Organic structures are decentralized, adaptable,

and support organizations in being inventive, whereas mechanistic structures are

rigid, bureaucratic and support businesses in being efficient.

Submitted by:

RINO P. SANGARIOS
Student