Organizational Structure(elements, types, and common designs) and Culture

Organizational Structure

Organizational structure is the way in which job tasks are formally divided, grouped, and coordinated.

There are 6 key elements that managers have to address when they design organizational structure:

1. Work specialization

2. Departmentalization

3. Chain of command

4. Span of control

5. Centralisation and decentralisation

6. Formalization

Work specialization or division of labor: is the degree to which activities are subdivided into separate jobs. The essence of job specialization is that rather than one job being done entirely by one person, it is broken down into a number of steps with each step being completed by a separate individual, i.e. individuals specialize in doing one part of the activity rather than the entire activity.

Specialization means making the most efficient use of employee's skills. it is also easier and less costly to train a worker to do repeated, simple, and specific tasks.

By breaking jobs into smaller and standardized tasks that can be performed over and over again, Ford was able to produce cars at a very high rate. He demonstrated that work can be performed more efficiently if employees are allowed to specialize.

In the end, some companies like McDonald's and Ford have seen an increase in efficiency using work specialization while others like Saturn Corporation have had success by broadening the scope of jobs and reducing specialization.

Departmentalization: the basis by which jobs in an organization are grouped together.

One of the most popular ways to group jobs is by functions. For example, engineers, sales personnel, manufacturers, accountants, and supply specialists can be grouped separately. Various departments of a factor while research, patient care, accounts, etc would be the departments of a hospital. That means all organizations may have departments according to their needs.

Jobs can also be departmentalized on the basis of product (like Tide, pampers, and pringles), geography (like Asia, Africa, and Europe), process (validation, processing, payment collection), and type of customers(consumers, large corporations, software developer, and small businesses).

A large organization may even use all these types of departments together.

Chain of command: it is the unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.

Authority refers to the right inherent in a managerial position to give orders and expect the orders to be obeyed. To facilitate coordination, each manager is given a place in the chain of command and a certain degree of authority in order to meet their responsibilities.

The unity-of-command principle helps preserve the concept of an unbroken line of authority. It states that a person should have only one superior to whom he or she is directly responsible. It is necessary to avoid conflicting demands from several superiors.

These however have much less relevance today due to technology which allows even a low-level employee access to info that would only be available to a top manager 30-40 years ago.

The span of control: the number of subordinates a manager can efficiently and effectively direct.

The wider the span the more efficient the organization as it is very cost-efficient however it can reduce effectiveness. A wider span helps reduce cost, cut overhead, speed up decision-making, increase flexibility, get closer to ye customers, and empower employees. This is possible with good employee training.

Centralization and decentralization: centralization is the degree to which decision-making is concentrated at a single point in an organization. Here top managers make all the decisions. Typically it is said that if top management makes all decisions with little or no input from lower-level personnel, it is a centralized system.

In decentralisation on the other hand the lower-level personnel put their input and take part in the decision-making process. Here, actions can be taken more quickly to solve problems, more people put input so there are more opinions, and employees are less likely to feel alienated from those who make the decisions that affect their work lives.

Formalization: the degree to which jobs within an organization are standardized. With an explicit job description, lots of organizational rules, and clearly defined procedures covering work processes in organizations in which there is high formalization. Here, employees are expected to always handle the same input in the exact same way, resulting in a consistent and uniform output. hence, the greater the output the less input the employee has into how work is to be done.

DIFFERENT TYPES OF ORGANIZATIONS

Organizations can take various forms, and their structures can be classified into different types based on various factors. In the context of Organizational Behavior (OB), the following are common types of organizations:

1. Functional Organization:

• Characteristics: Departments are grouped based on functions (e.g., marketing, finance, operations).

• Advantages: Specialization, efficiency within functions.

• Challenges: Limited communication between functions, potential for silos.

1. Divisional Organization:

• Characteristics: Departments are organized based on products, services, or geographic regions.

• Advantages: Flexibility, focus on specific markets or products.

• Challenges: Duplication of functions across divisions, potential for competition.

1. Matrix Organization:

• Characteristics: Employees have dual reporting relationships (functional and divisional).

• Advantages: Improved communication, flexibility, expertise utilization.

• Challenges: Complex reporting structures, potential for power struggles.

1. Network Organization:

• Characteristics: Emphasis on collaboration and partnerships with external entities.

• Advantages: Flexibility, access to diverse resources and expertise.

• Challenges: Coordination challenges, reliance on external partners.

1. Team-Based Organization:

• Characteristics: Emphasis on self-managed teams with shared responsibilities.

• Advantages: Increased employee engagement, collaboration, adaptability.

• Challenges: Potential for conflicts, reliance on team dynamics.

1. Boundaryless Organization:

• Characteristics: Fluid and flexible structure, with fewer formal boundaries.

• Advantages: Enhanced communication, adaptability to change.

• Challenges: Potential for confusion, lack of clear structure.

1. Learning Organization:

• Characteristics: Focus on continuous learning, innovation, and knowledge sharing.

• Advantages: Adaptability, enhanced problem-solving, employee development.

• Challenges: Requires a cultural shift, time and resource investment.

1. Hierarchical Organization:

• Characteristics: Clear vertical structure with well-defined levels of authority.

• Advantages: Clear chain of command, structured communication.

• Challenges: Slow decision-making, limited employee empowerment.

1. Organic Organization:

• Characteristics: Flexible and adaptive structure, emphasis on employee empowerment.

• Advantages: Quick response to change, innovation.

• Challenges: Potential for lack of structure, unclear roles.

These are broad categories, and many organizations may exhibit a combination of these structures, depending on their size, industry, and specific needs. The choice of organizational structure can significantly impact how individuals within the organization behave, communicate, and collaborate.

COMMON ORGANIZATIONAL DESIGNS

• simple structure: a simple structure characterized by a low degree of departmentalization, a wide span of control, authority centralized in a single person, and little formalization. such a structure is most widely practiced in small businesses in which the manager and owner are the same person. large corporations may however use this structure in case of need and change requirements. such a structure that is fast, flexible, and inexpensive to maintain, with accountability being clear. it is however very difficult to maintain when the organization grows into a large business firm.

• bureaucracy: its key concept is standardization. bureaucracy is a structure with highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, a narrow span of control, and decision-making that follows the chain of command. the primary strength of bureaucracy lies in its ability to perform standardized activities in a highly efficient manner. it can however also lead to conflicts between different departments, fixed rules that cannot be bent according to needs, etc.

• the matrix structure: it is a structure that creates dual lines of authority and combines functional and product departmentalization. the main strength of functional departmentalization lies in putting specialists together while pooling and sharing specialized resources across products. product departmentalization on the other hand, facilitates coordination among specialties to achieve on-time completion and to meet budget targets. the matrix structure aims at combining the strengths of both these structures. it breaks the unity of command concept and employees have two managers- a product manager and a functional manager. the strength of a matrix lies in its ability to facilitate coordination when the organization has a multiplicity of complex and interdependent activities. it may however create confusion, power struggles, stress, role conflict, unclear expectations, ambiguity, insecurity, etc.

• team structure: Team structure refers to the way a group of individuals is organized within an organization to work together toward common goals or objectives. It defines the roles, responsibilities, and relationships among team members, influencing how they collaborate, make decisions, and achieve results.

• the empowered organization: An empowered organization, within the context of organizational structure, is one where employees are granted the authority and freedom to make decisions, take responsibility for their work, and actively contribute to the organization's goals. This structure encourages individuals to use their expertise, creativity, and judgment to drive performance and innovation while being held accountable for their actions and outcomes.

• the virtual/ network/ modular organization: it is a network of individuals and teams working together from various locations, often using technology to collaborate, communicate, and achieve common objectives. This structure enables remote work and flexible arrangements, allowing members to connect virtually rather than being physically located in a central office. they usually outsource their services to major business firms

• the boundaryless organization: An organization that seeks to eliminate the chain of command, have a limitless span of control, and replace departments with empowered teams.

the kind of structure an organization would successfully apply depends on several factors such as strategy, organizational size, technology, preference of employees, culture, and environment.

Organizational Culture

organisational culture refers to a system of shared beliefs, held by members that distinguishes the organization from other organizations. it is a set of key characteristics that the organization values:

1. innovation and risk taking

2. attention to details

3. outcome orientation

4. team orientation

5. people orientation

6. aggressiveness

7. stability(painting status quo)

a dominant culture is one that expresses the core values that are shared by a majority if the organization's members.

subcultures are minicultures within an organization typically defined by department designations and geographical separation.

core values are primary or dominant values that are accepted throughout the organization.

a strong culture in one in which the core values are held intensely and shared widely.

institutionalization: a condition that occurs when an organization takes on a life of its own, apart from any of its members and gains immortality.

socialization: a process that adapts employees to the organization's culture. it is a three-stage process-

1. prearrival stage: period of learning that occurs before new employee joins the organization.

2. encounter stage: new employee sees what the organization is really like and confronts the possibility that expectations and reality may differ.

3. metamorphosis stage: new employee adjusts to the job, work group and organization.

rituals: repetitive sequence of activities that express and reinforce the key values of the organisation, which goals and people are most important and which are expendable.

positive organizational culture: a culture that emphasises building on employees strengths,rewards more than punishes and emphasises individual vitality and growth.

workspace spirituality: the recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of community.

To create an ethical organizational culture, management can do the following:

1. be a visible role model

2. communicate ethical expectations

3. provide ethical training

4. visibly reward ethical acts and punish unethical ones

5. provide protective mechanisms so that employees can report unethical behavior without fear of reprimand.

CHANGES IN ORGANIZATIONS: The following factors can cause huge changes in organizations- Nature of the workforce, technology, economic shocks, competition, social trends, world politics, etc.

change means making things different. Organizational changes can be either planned, intentional, and goal-oriented, or unplanned and accidental. Changing agents are those persons who act as catalysts and assume the responsibility for managing change activities. Changes can be very hard to accept, for both an individual and an organization.