Essential Concepts in Organizational Structure and Team Dynamics

Organizational Design Concepts

A potential drawback in organizational design is the less effective use of central information.

Management Span and Organizational Layers

• Span of Management: The number of subordinates who report to a particular manager.
  • Relates to: Wide span versus narrow organizations.
• Organizational Layers: The levels of management in an organization.
  • Relates to: Flat versus tall organizations.

3. Specialization and Departmentalization

Specialization (The Division of Labor)

Specialization (e.g., the Ford model) is the division of labor into small, specific tasks and the assignment of employees to perform a single task.

Advantages and Disadvantages of Specialization

• Pros:
  • Efficiency
  • Ease of training
  • Ease of performing tasks
• Cons:
  • Low levels of satisfaction and motivation
  • High turnover rates
  • Potential for injuries
  • Low quality work

Departmentalization

Departmentalization is the grouping of jobs into working units, usually called departments, units, groups, or divisions. These groupings often follow criteria such as functional area, product, geographical location, or customer type.

4. Forms of Organizational Structure

• Line Structure: Direct lines of authority descend from top managers to the lowest levels of the organization.
• Line and Staff Structure: Combines the traditional line relationship with specialized managers (staff managers) who assist line managers.
• Multidivisional Structure: A structure that organizes departments into larger groups called divisions.
  • Divisions can be formed based on the same criteria as departments (customer, product, and/or geography).

5. Groups and Teams

Definitions

• Group: Two or more individuals who communicate with one another, share a common identity, and have a common goal.
• Team: A small group whose members have complementary skills; have a common purpose, goals, and approach; and hold themselves mutually accountable.

Examples of Formal Groups

• Committee: A permanent, formal group that performs a specific task.
• Task Force: A temporary group of employees responsible for bringing about a particular change.

Team Decision Making

Benefits:

• Improved use of dispersed specific knowledge.
• Increased employee buy-in.

Costs:

• Collective action problems.
• Free-riding (social loafing).

When Team Decisions Are Most Beneficial

Team decisions are generally more beneficial when:

• Specific knowledge required for the decision is dispersed among members.
• It is easy to control the costs of collective decision making and mitigate the free-rider problem.

Optimal Team Size

Optimal team size involves a tradeoff between the benefits of an increased knowledge base and the costs associated with team decision making.