Fundamentals of organizational behavior 2e by dubrin ch12

Chapter
12

Organization Structure
and Design

Fundamentals of
Organizational Behavior 2e
Andrew J. DuBrin

PowerPoint Presentation
by Charlie Cook


Learning Objectives
1. Identify and define the foundation concepts of
organization structure, including the informal
structure.
2. Specify the basic features of the bureaucratic form
of organization, including how it is divided into
departments.
3. Describe key modifications of a bureaucratic
structure: matrix, flat, and outsourcing.
4. Describe the two contemporary organizational
designs referred to as horizontal organizations and
network organizations.
5. Understand why a new type of organization chart
called an organigraph can contribute to
understanding organization structure.

A. J. DuBrin, Fundamentals of Organizational

12–2


Organizations
Organization
 Is a collection of people working together to achieve a

common purpose (or simply a big group).

Organization structure
 Is the arrangement of people and tasks to accomplish

organizational goals.

Organizational design
 Is the process of creating a structure that best fits a

purpose, strategy, and environment.

A. J. DuBrin, Fundamentals of Organizational

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Foundation Concepts of
Organizational Structure
Mechanistic versus Organic
 Mechanistic organizations are hierarchical bureaucracies

with an emphasis on specialization, control, and vertical
communications. They rely heavily on rules, policies, and
procedures.
 Organic structures are laid out as networks and emphasize
horizontal specialization, personal coordination, and
extensive informal communications. They have loose rules,
policies, and procedures that allow for rapid responses to
changes in the environment.
A. J. DuBrin, Fundamentals of Organizational

12–4


Foundation Concepts of
Organizational Structure
Formal versus Informal Structure
 Formal organizational structure


Is an official statement of the reporting relationships,
rules, and regulations that guide and govern the conduct
of business by the organization.

 Informal organizational structure




Is a set of unofficial working relationships providing the
flexibility that take care of events and transactions not

covered by the formal structure.
Is revealed using social network analysis to trace informal
social relationships and communication channels.

A. J. DuBrin, Fundamentals of Organizational

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Foundation Concepts of
Organizational Structure
Formalization
 Is the degree to which expectations regarding the methods

of work are specified, written down, and enforced.
 Produces an organization with highly specialized labor and
high delegation of authority.
 Is associated with mechanistic (bureaucratic) organizations.

A. J. DuBrin, Fundamentals of Organizational

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Foundation Concepts of
Organizational Structure
Centralization
 Is the extent to which executives delegate authority to lower

organizational units. Less delegation = more centralization.

 Strategic decisions are more likely to be centralized than
operational decisions.
 The use of functional units is a feature of centralization.

A. J. DuBrin, Fundamentals of Organizational

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Foundation Concepts of
Organizational Structure
Complexity
 Refers to the number of different job titles and

organizational units in an organization.
 Increases the difficulty of managing an organization.
 Typically increases with the size of the organization.

Differentiation
 A horizontally differentiated organization has many different

job titles.
 A vertically differentiated organization has many different
levels.
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Foundation Concepts of

Organizational Structure
Tight versus Loose Coupling
 Coupling is the extent to which organizational parts are

interdependent.
 Tight coupling between parts is indicated if a minor change
in one part produces a large change in an associated part.
 The degree of coupling in businesses has increased due to
the increasing interdependence of the parts or subsystems
of organizations today.
 Organizational design is influenced by coupling and the
increased necessity for flexibility to meet changing market
conditions.

A. J. DuBrin, Fundamentals of Organizational

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Weber’s Ideal Organization:
Bureaucracy
1. Rules and procedures controlling the organizational
structure.
2. A high degree of differentiation among organizational
functions.
3. A high degree of job specialization.
4. An organization of offices determined by hierarchy, with
each unit reporting to a higher unit.
5. A heavy emphasis on rules and norms to regulate behavior
6. Interpersonal relations characterized by impersonality in

place of favoritism.
7. Selection and promotion based on merit.
8. All administrative actions recorded in writing.

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The Bureaucratic Form of
Organization
Machine Bureaucracy

 Uses standardized work processes and is efficient.
 Best use is in large organizations.

Professional Bureaucracy
 Standardizes skills for

coordination and is
composed of a core
of highly trained
professionals.

A. J. DuBrin, Fundamentals of Organizational

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The Bureaucratic Form

of Organization
High

Few

TopLevel
Managers

Power and
Authority

Middle-Level

Number of
Employees

Managers
First-Level
Managers
Operative Employees

EXHIBIT
12-1

Low

A. J. DuBrin, Fundamentals of Organizational

Many

12–12


The Bureaucratic Form of
Organization

The Contribution of Bureaucracy
 Makes possible large-scale accomplishments and

accountability for results.
 Bureaucratic layers contain managers with precious skills
and expertise. If eliminated, the organization may suffer.
 Restructuring may destroy valuable organizational memory.

Potential Dysfunctions of a Bureaucracy
 Carrying bureaucratic characteristics to extremes

suppresses innovation and decision making, lowers
productivity, and creates inconvenience and inefficiency.
 Workers experience high frustration and low satisfaction.
A. J. DuBrin, Fundamentals of Organizational

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Sources of Individual and Subunit
Power
Departmentalization
 Is advantageous in that it gives major attention to enhancing

product growth or service to customers.
 Is the process of subdividing work into specialized
departments.
 Functional Departmentalization


Is grouping people according to their expertise.

 Territorial Departmentalization




Is grouping subunits according to the geographic
areas that they serve.
Internationalization of business has increased the need
for organizing subunits territorially.

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Sources of Individual and Subunit
Power
Departmentalization (cont’d)

 Product/Service Departmentalization


Is arranging units by the product or service they provide.

 Customer Departmentalization


Creates a structure based on customer needs.

Hybrid (or Mixed) Organization Structure
 Combines the advantages of different organizational types.

Line versus Staff
 Line groups are responsible for the primary purposes of the

firm whereas staff groups are responsible for secondary
purposes.
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Functional Departmentalization

President

Vice President
Marketing

Vice President
Operations

Vice President
Engineering

Vice President
Human
Resources

Vice President
Finance and
Chief Financial
Officer

EXHIBIT
12-2

A. J. DuBrin, Fundamentals of Organizational

12–16


Product-Service
Departmentalization

EXHIBIT
12-3

CEO

Vice President
Marketing

Vice President
Operations

Vice President
Engineering

Vice President
Human
Resources

Large
Appliance
Division

Small
Appliance
Division

Airplane
Engines
Division

Real Estate
Development
Division

Marketing

Operations

Engineering

A. J. DuBrin, Fundamentals of Organizational

Human Resources

12–17


Hybrid
Organization
Structure

International

CEO

Vice President
Desktop
Computers

Vice President
Printers

Vice President
Palm-Size
Computers

Marketing

and
Sales

Operations

Human
Resources

Domestic

Manufacturing

Logistics

Compensation

Training
and Development

EXHIBIT
12-4

A. J. DuBrin, Fundamentals of Organizational

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Mixed Organizing at Various Levels
CEO

Executive
Vice President
Sales and Marketing

Vice President
Sales

Sales
Manager
West

Executive
Vice President
Product Planning and Design

Vice President
Marketing

Manager
Advanced
Plannning

Sales
Manager
South

Sales
Manager
Midwest

EXHIBIT
12-4A

Vice President
Product Planning

Sales
Manager
East

Executive
Vice President
Operations

Vice President
Manufacturing

Vice President
Information
Systems

Manager
Special
Projects

Manager
Current
Product
Planning

Manager
Environmental
Regulations

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12–19


Key Modifications to the Bureaucratic
Structure
Matrix Organization
 Is a project structure superimposed on a functional

structure to take advantage of new opportunities and solve
special problems.
 Projects are temporary groups of specialists working under
one manager to accomplish a fixed objective such as
launching a new product.
 Matrix structure creates a dual reporting challenge—the
involved employees may have to report to two bosses.
 A key advantage is to implement projects quickly.
A. J. DuBrin, Fundamentals of Organizational

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Matrix Organization
in an Electrics
Company

President or

Electrical

Operations

Marketing

Electrical

Operations

Marketing

Engineer

Technician

Specialist

Electrical

Operations

Marketing

Engineer

Technician

Specialist

Digital

Electrical

Operations

Marketing

Assistant

Engineer

Technician

Specialist

Engineer

Laptop
Computer
Project

Cellular
Phone
Project

Personal

Project

EXHIBIT
12-5

Information
Systems

Information
Systems
Specialist

Information
Systems
Specialist

Information
Systems
Specialist

Quality

Quality
Analyst

Quality
Analyst

Quality

Analyst

Horizontal Flow of Project Authority and Responsibility

General Manager

Vertical Flow of Functional Authority and Responsibility

A. J. DuBrin, Fundamentals of Organizational

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Flat Organizational Structures and
Downsizing
Flat Organization
 Has relatively few levels.
 Is less bureaucratic because:



There are few managers available to review decisions.
Short chain-of-command creates less concern about
authority differences among people.

 Are more efficient than tall organizations.
 Requires that managers be conscious of the effects that

downsizing to a flatter structure has on surviving
employees.

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Outsourcing as an Organizational
Arrangement
Outsourcing
 Is having work done by other organizations.
 Is a method of dividing the work between groups on the

outside with groups on the inside.
 Reduces the need for employees and physical assets and
reduces payroll costs.
 Can create ethical dilemmas for companies who have no
control over the actions of their outsourcing suppliers.

A. J. DuBrin, Fundamentals of Organizational

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Leading-Edge Organizational
Structures
The Horizontal Structure

 Is the arrangement of work by teams that are responsible for

accomplishing a process.
 Is a structure in which employees take collective

responsibility for customers.

Reengineering
 Is the radical redesign of work to achieve substantial

improvements in performance.
 Searches for the most efficient way to perform a task.
 Organizes work horizontally rather than vertically.
A. J. DuBrin, Fundamentals of Organizational

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A Horizontal Structure

Customer
Request

EXHIBIT
12-6

Marketing
Specialist

Finance
Specialist

IT
Specialist

Operations
Specialist

A. J. DuBrin, Fundamentals of Organizational

Order
Fulfillment

12–25