CHAPTER 15: FOUNDATIONS OF ORGANIZATION STRUCTURE

The system of task, reporting, and authority relationships within which an

organization does its work

Purpose of structure is to order and coordinate

The Nature of Organization Organization Structure the actions of employees to achieve
Structure organizational goals

“Structure follows strategy”

To group together the tasks required to fufil the

objectives of the organization as a whole and to
allocate them to suitable individuals or groups

To allocate to individuals or groups the

authority they require to perform their functions
Objectives of Organizational
Structure To coordinate the objectives and activities of
separated units

To enable the flow of work, information and

other resources via lines of cooperation and
communication

Shows all people, positions, reporting

relationships, and lines of formal
communication

Depicts reporting relationships and work group

Describes the structure of an organization
memberships

Shows how positions and small work groups

are combined into departments which make up
the shape (configuration) of the organization

Units and relationships among them

Formal communication and reporting channels

Structure of authority, responsibility and delegation

Organization Chart Vertical chart

Horizontal chart

Different types of chart Concentric chart

Matrix chart

“Metaphors”: network spider web

Static not dynamic as organization

Formal structrure of authority and

Aid managerial thinking and communication but communication, not present informal
organiztion

Describe the structure of org, not the org itself

(mission, values, people, activities)

The way the organization’s work is divided into

different jobs to be done by different people

The process of dividing work into relatively

specialized jobs to achieve the advantages of
specialization

Dividing work into different personal specialties.

Division of labor can occur by:
Dividing work into different activities
necessitated (cần thiết) by the natural
sequence of the work the organization do

Work Specialization/Labor Division Work specialization: the division of labor into

(Chuyên môn hoá công việc/phân công LĐ) separate activities.
– Repetition of work.
– Training for specialization.
– Increasing efficiency through invention.
– Henry Ford

Specialization can reach a point of

diminishing returns
Work Specialization Economies and
Diseconomies
Then job enlargement gives greater
efficiencies than does specialization

the higher work specialization level is,

determine the work specialization level
the lower satisfaction of the
depending on size of the company
employees

The basis by which jobs are grouped together

Jobs are combined according to the

functions of the organization.

By having departments of specialists,

Function The principal advantage is efficiency.
management creates efficient units.

A major disadvantage is that

organizational goals may be
sacrificed in favor of departmental
goals.

All jobs associated with producing and

selling a product or product line are placed
under the direction of one manager.
Departmentalization (Bộ phận hoá) Product becomes the preferred basis as a
Product firm grows by increasing the number of
products it markets.

Concentrating authority, responsibility, and

accountability in a specific product
department allows top management to
coordinate actions.

Groups are established according to

geographic area.

The logic is that all activities in a given region

should be assigned to a manager.
Geography
Advantageous in large organizations because
Grouping Activities by: physical separation of activities makes
centralized coordination difficult.

Provides a training ground for managerial

personnel.

Process

Customers and clients can be a basis for

grouping jobs.

Customer Educational institutions

The loan department in a commercial bank

Examples of customer-oriented departments
include:
Telephone companies

Department stores

Typically seen as a balanced compromise

between functional and product
organization.
The matrix organization attempts to maximize
Characterized by the existence of a dual
the strengths and minimize the weaknesses of
authority system, which can cause conflicts.
both the functional and product bases.
Facilitates the utilization of highly
specialized staff and equipment.
Combined Bases for Departmentalization: The
Matrix Organization
The flexibility of this system allows speedy
response to challenges.

Ví dụ: NEU tổ chức theo phòng ban + theo Khoa

Viện

chỉ những mức độ quyền hạn ở một doanh

nghiệp, tức là cách mà công ty thiết kế việc
phân bổ quyền lực

Chuỗi lệnh không chỉ phản ánh trách nhiệm mà

còn hình thành quyền hạn và khả năng quyết
định trong doanh nghiệp.

Chain of command được thể hiện rõ ràng qua

sơ đồ tổ chức của doanh nghiệp.

Chain of command cho biết ai là cấp dưới của

ai.
System of reporting relationships in the
Trong một hệ thống phân công quyền hạn, vị trí
organization from the first level up through the
này kết nối với vị trí khác từ trên xuống.
president or CEO
Sự phân quyền trong chain of command thường
Chain of Command diễn ra theo một chiều thẳng đứng, từ vị trí này
đến vị trí khác, thể hiện sự phân quyền.

The unbroken line of authority that extends

from the top of the organization to the lowest
echelon and clarifies who reports to whom

A subordinate should have only one superior to

Unity of Command
whom he or she is directly responsible

Organizational downsizing results in lower Việc thu hẹp quy mô tổ chức dẫn đến chi phí
overhead costs, less bureaucracy, faster chung thấp hơn, ít quan liêu hơn, đưa ra quyết
Chain of Command (hệ thống chỉ huy)
decision making, smoother communications, định nhanh hơn, giao tiếp suôn sẻ hơn và tăng
and increases in productivity năng suất

An obligation to do something with the

Responsibility
expectation of achieving some act or output

The rights inherent in a managerial position to

give orders and to expect the orders to be
obeyed

Originates in the ownership of the organization

Authority
The relationship between responsibility and
authority must be one of parity
Power that has been legitimized within a
Can be delegated down to others
particular social context
Delegation (uỷ quyền) is the transfer to others
of authority to make decisions and use
organizational resources
Identify Seven Elements of an
Organization’s Structure line: vertical
staffing: horizontal

The authority of a manager depends on their

subordinates’ acceptance of the manager’s
right to give directives and to expect
compliance with them
An Alternative View of Authority Acceptance Theory of Authority
By either accepting or rejecting the directives of
a supervisor, workers can limit supervisory
authority

The number of subordinates a manager can

efficiently and effectively direct

Wider spans of management increase

organizational efficiency

Expense of additional layers of management

Narrow span drawbacks Increased complexity of vertical communication

Encouragement of overly tight supervision and

discouragement of employee autonomy

1. The coordination requirements within the

unit, including factors such as the degree of job
specialization

2. Degree of specialization

Span of Control (số lượng nhân viên cấp 3. Ability to communicate and manage
dưới mà một nhà quản trị phải quản lý)
Conditions Affecting Span of Control Optimal unit size (span of control) depends on 4. The similarity of the tasks in the unit

5. The type of information available or needed

by unit members

6. Differences in the members’ need for

autonomy

7. The extent to which members need direct

access to the supervisor

Contrasting Spans of Control

The degree to which decision making is

concentrated at a single point in the
organization.

Decision-making authority is concentrated at

the top of the organizational hierarchy

Managers must be trained to make the

Centralization (Tập trung hoá) decisions that go with delegated authority, and
training can be quite expensive.

Managers accustomed to making decisions

may resist delegating authority to their
subordinates, which can reduce effectiveness.
Reasons to Centralize Authority
Administrative costs are incurred because new
control systems must be developed to provide
top management with information about the
effects of subordinates decisions.

Decentralization means duplication of

functions.
Centralization and Decentralization
(Tập trung hoá và phân quyền) The degree to which decision making is spread
throughout the organization.
Decentralization (Phân quyền)
Decisions are made throughout the hierarchy.

Delegation of authority: the process of

Managers decide how much authority should
distributing authority downward in an
be delegated to each job and to each jobholder.
organization.

Relatively high delegation of authority

encourages the development of professional
managers.
The benefits of decentralizing authority include
Managers who have high authority can exercise
more autonomy, and thus satisfy their desires
Delegation of Authority to participate in problem solving.

Delegation of authority differs among

individuals, depending on each person’s ability
to make decisions.

If a local manager is incapable of making

decisions, decision making should be
centralized, regardless of how routine the
Delegation Decision Guidelines decisions.

Capable individuals aren’t always motivated

individuals.

Motivation must accompany competency to

create conducive conditions for
decentralization.

The degree to which rules and procedures

shape the jobs and activities of employees

Minimum worker discretion in how to get the

job done
High formalization
The degree to which jobs within the Many rules and procedures to follow
Formalization (Chính thức hoá)
organization are standardized.
Job behaviors are nonprogrammed
Low formalization
Employees have maximum discretion

Individuals are unique with meaningful

Good managers use appropriate judgment in differences
making exceptions to rules in recognizing that:
There are commonalities among employees

Positive results are especially strong in

Boundary spanning occurs when individuals organizations that encourage extensive internal
Boundary Spanning (Mở rộng ranh giới) form relationships with people outside their communication; in other words, external
formally assigned groups. boundary spanning is most effective when it is
followed up with internal boundary spanning.

A structure characterized by a low degree of

The Simple Structure departmentalization, wide spans of control,
authority centralized in a single person, and
little formalization

Simple, fast, and flexible.

Strengths: Inexpensive to maintain.

Simple structure: the manager and the owner Accountability is clear.

are one and the same.
Difficult to maintain in anything other than
small organizations.
Weaknesses:
Risky—everything depends on one person.

A structure of highly operating routine tasks

achieved through specialization, very
formalized rules and regulations, tasks that are
Common Organizational The Bureaucracy grouped into functional departments,
Frameworks and Structures centralized authority, narrow spans of control,
and decision making that follows the chain of
command

Combines two different designs to gain the

The Matrix Structure benefits of each.

A structure that creates dual lines of authority

and combines functional and product
departmentalization

Gains the advantages of functional and product

departmentalization while avoiding their
weaknesses

Facilitates coordination of complex and

Key Elements
interdependent activities

Breaks down unity-of-command concept

1. External pressure exists for a dual focus

Matrix structure is appropriate when: 2. Pressure exists for a high information-processing capacity

3. Pressure exists for shared focus

The Virtual Structure

A small, core organization that outsources its

major business functions

Provides maximum flexibility while

concentrating on what the organization does
Highly centralized with little or no best
departmentalization
Reduced control over key parts of the business

Also referred to as a modular or network

The essence of the virtual organization is that it organization.
The Virtual Organization is typically a small, core organization that
outsources major business functions. It is highly centralized, with little or no
departmentalization.

Removes vertical and horizontal boundaries.

The team structure: eliminates the chain of
command and replaces departments with Breaks down external barriers.
Alternate Design Options empowered teams.
Flattens the hierarchy and minimizes status
and rank.
The Team Structure
In the circular structure: in the center are the Has intuitive appeal for creative entrepreneur.
executives, and radiating outward in rings
grouped by function are the managers, then the However, employees may be unclear about
specialists, then the workers. whom they report to and who is running the
When fully operational, the team structure may
show.
break down geographic barriers.
We are still likely to see the popularity of the
circular structure spread.

The Circular Structure

The Leaner Organization:

Downsizing

The mechanistic model (cơ cấu tổ chức cơ học)

The organic model (cơ cấu tổ chức hữu cơ)

Technology

Contingency design theory: emphasizes the Environmental uncertainty

importance of fitting a design to the demands
of a situation, including: Strategy

Organization size

The essence of this approach is expressed by

Organizational Strategies Contingency Design Theories
this question:

Under what circumstances, and in what

situations, is either the mechanistic or organic
design relatively more effective?

“Structure follows strategy” (Alfred Chandler)

Management determines what the organization

is to do and what its goals are before designing
appropriate structure

An organization’s structure is a means to help

management achieve its objectives.
The Relationship Between Strategy and
Structure A strategy that emphasizes the introduction of
major new products and services
Innovation Strategy
Organic structure best

A strategy that emphasizes tight cost controls,

avoidance of unnecessary innovation or
Most current strategy frameworks focus on marketing expenses, and price cutting
Cost-minimization Strategy
three strategy dimensions
Mechanistic model best

A strategy that seeks to move into new

products or new markets only after their
viability has already been proven
Imitation Strategy
Mixture of the two types of structure

Large organizations have a more complex

structure

Large size -employing 2,000 or more people- is

As measured by employee total, organization
associated with greater specialization of labor,
asset value, sales total, total of clients served,
wider spans of control, more hierarchical levels,
physical capacity
greater formalization

Why Do Structures Differ? Organization Size Large organizations are more efficient and take
advantage of economies of scale

The impact of size becomes less important as

an organization expands.

Numerous studies have examined the

technology-structure relationship.
The way an organization transfers its inputs
into outputs.
Organizational structures adapt to their
technology.

Technology Tasks are fairly routine, where workers tend

machines designed and paced by engineering
standards.
The mechanistic design is effective for firms
Actual control of the work flow is separated
that mass produce products, such as clothing,
from supervision of the workforce.
foods, and automobiles.
In such organizations, the ideas of scientific
management and mechanistic design are
applicable.

Institutions or forces outside the organization

that potentially affect the organization’s
performance

People, other organizations, economic factors,

objects, events

All elements that lie outside the organization All of a broad set of dimensions and factors Political-legal, social, cultural, technological,
Environment General environment
boundary within which the organization operates economic, international

Specific organizations, groups, individuals who

Task environment
influence the organization

Three key dimensions: capacity, volatility, and

complexity

Institutions

Work specialization contributes to higher

employee productivity.

No evidence supports a relationship between

span of control and employee satisfaction or
performance.
Organizational Designs and Organizational Designs and Employee Behavior
Employee Behavior Fairly strong evidence links centralization and
job satisfaction, meaning that less
centralization is associated with higher
satisfaction.

National culture influences the preference for

structure.