ORGANIZATIONAL STRUCTURES

Division of labor as well as the patterns of coordination, communication, workflow, and formal power
that direct organizational activities.

All Organizational Structures Require Two Fundamental Requirements

1. Division Of Labor Into Distinct Tasks

2. Coordination of that labor so employees are able to accomplish common goals.

Span of control (span of management)

The number of people directly reporting to the next level in the hierarchy

Influence: whether employees perform routine tasks

Degree of interdependence among employees within the department or team

Wide span of control

Manager has many direct reports.

Is possible when employees perform routine jobs, because there is less frequent need for direction of
advise from supervisors

Narrow span of control

Exists when very few people report directly to a manager

Is necessary when employees perform novel or complex tasks, because these employees tend to require
more supervisory decisions and coaching

Is necessary where employees perform highly interdependent work w/ others

Division Of Labor

Subdivision of work into separate jobs assigned to different people.

Subdivided work leads to job specialization.

Why divide work?

Job Incumbents Can Master Their Tasks More Quickly When Work Cycles Are Shorter.

Less Time Is Wasted Changing From One Task To Aother

Training Costs Are Reduced

Job Specialization Makes It Easier To Match People With Specific Aptitudes Or Skills To The Job They Are
Good At.

Coordination Is Closely Connected To Division Of Labor

That an organizations ability to divide work among people depends on how well those people can
coordinate with each other.
Otherwise individual effort is wasted due to misalignement, duplication, and mistiming of tasks.

As division of labor increases….coordination also tends to become more expensive and difficult.

Coordinating Mechanisms include

Informal communication- sharing information of mutual tasks (laison roles) *MOST FLEXIBLE

Formal hierarchy- assigning legitimate power to individuals who use the power to direct work (direct
supervisor)

Standardization- creating routine patterns of behavior or output (standardized skills)

Integrator roles is when (INFORMAL)

Coordination is required among several work units

They rely on persuasion and commitment

Formal Hierarchy

Assign’s legitimate power to individuals, who then use this power to direct work processes and allocate
resources -- CHAIN OF COMMAND

Not as agile in complex and novel situations.

Are only able to supervise a limited amount of employees

Tends to limit employee autonomy and involvement MICORMANAGED

Problems w/ building taller hierarchy (more layers of management)

Higher overhead costs

“Delayer”
Remove one or more levels in the organizational hierarchy
Divisional of labor and coordination

Division of labor

All organizations need to choose who does what (divide the labor) and coordinate that labor so that a
common goal is achieved.

The reasons companies divide their labor is to increase efficiency due to job specialization.

Mean dividing work into several jobs and assigning these jobs to different people. Division of labor is
divided into two parts:

1) Vertical Division: managers, directors, executives

2) Horizontal Division: Cash handling, selling, banking

All these jobs need to be well coordinated because otherwise some things will be done twice, or not
finished at the right time and so forth. There are three coordination mechanisms: informal
communication, formal hierarchy, and standardization.

Informal communication

This process includes employees just talking to each other, as well as having the same ideas about the
project so they know what to do. (sharing mental models)

a. This is obviously the easiest in small companies. Large companies create actual job roles with the
sole purpose of increasing communication On top of that, they divide their employees into
smaller teams.

Formal Hierarchy
Assigns legitimate power to some employees, who use this power to direct and coordinate work
activities. (this is a stereotypical duty of a manager)

a. People used to think that this is the best way to run a company; but we now know that this style
of coordination is not flexible and can therefore cause problems. Another problem is that
managers can only supervise a certain amount of employees; so there need to be a bunch of
managers. Lastly, today's workforce is entitled and therefore not well suited to deal with strict
managers.
Standardization
This involves creating routine patterns of behavior or output. There are three forms of
standardizations:
Standardized processes: you can increase quality and consistency by standardizing work
processes. An example of this are flow charts. This form works best when the task is routine and
simple.
Standardized outputs: this form involves ensuring that people have clearly defined goals and
output measures. An example are sales targets

Standardized skills: When activities are too complex you need to ensure that people have the necessary
skills. A form of standardizing skills is training.

Span Of Control
Refers to the numbers of people directly reporting to the next level above the hierarchy. A
narrow span of control exists when few people report to a single person and a wide span exists
when many people report to a single supervisor. Over the last decades the span of control has
widened a lot. This has changes as employees get more discretion and are able to make their
own choices. There are multiple situations that enable a wider span of control:

a. Staff members are self-managing and coordinate mainly through standardized skills
 b. Employees perform routine tasks

c. When employees are not very interdependent.

Tall versus Flat structures: As organizations grow they must either have a wider span of
control, or build a higher hierarchy, or do both. There are several issues with building a
higher structure.

d. Executives receive lower quality and less timely information (because the info has to
travel through many people in the hierarchy)
e. There is higher overhead costs

Centralization vs. Decentralization

Centralization and Decentralization: Centralization means that decisions are made by a small group at
the top of the organization. Most companies start like this because the founder makes all the decisions.
However, as the companies get more complex, they tend to decentralize, because the senior executives
can't make all the choices anymore.

Formalization

This is the degree to which companies standardize behavior, processes, and rules. Usually,
companies become more formalized when they grow as they tend to rely on repeated
processes and structures. Formalization may increase efficiency (due to skill in a certain are)
but it can also create problems:

a. Rules and procedures reduce organizational flexibility

b. They decrease organizational learning

c. It is also a source of job dissatisfaction as tasks are repetitive and can be boring.

Forms of Departmentalization

The organizational chart represents the fourth element in the structuring of organization, called
Departmentalization. It influences org. behavior in the following ways:

1) Establishes a chain of command

2) Focuses people around common mental models or ways of thinking

3) It encourages specific people and work units to coordinate through informal communication
- when people work near each other they have frequent interaction and therefore informal
interaction occurs to get the work done.

There are multiple different type of structures for organizations: simple structure, functional
structure, divisional structure, team-based structure, matrix structure and network structure.
 1. Simple structure
Most companies begin with a simple structure. This is minimal hierarchy. (just a few employees
reporting directly to the owners) Here employees perform broadly defined jobs. They do
whatever is asked of them that day as the companies are too small to hire employees for each
part of the company. This structure is very flexible, however it is difficult to keep as the company
grows.
2. Functional structure
As orgs grow, they typically shift to a functional structure. A functional structure groups
employees around specific knowledge or other resources. (i.e. you have a marketing unit, a
delivery unit and so on) Companies with strong functional structures are typically centralized
The functional structure creates efficiency and economies of scale.

Limits Of Functional Structure

b) Creates more conflict and poorer coordination

3. Divisional structure
This structure groups employees around geographic areas, outputs, or clients. This is divided into
three parts:a) Geographic division: you divide people by where they workb) Product/service
division: organize employees by distinct outputs
c) Client division: organizes employees around specific customer groups (you can group
employees into small business advisors, large business advisors, and medium business
advisors)

The divisional structure is good for growth, as you can just add departments.

Problems With Divisional Structure