Organizational Design: Elements and Factors Influencing Structure

CHAPTER 6:ORGANIZATIONDESIGN:When the managers of an enterprise decide to change the organisations structure they have to make an organization design. The organization designinvolves how specialized jobs should be, the rules that the emplyees should follow and what decisions should be taken. This organisation design is important for everyone because the employees should know what will be the structure for tomorrow. Nowadays, managers try to find the most efficient organization design that facilitate the employees work. They are 6 basic elements of organizational structure: work specialization, departmentalization, authority and responsibility, span of control, centralization versus decentralization, and formalization.WHAT IS WORK SPECIALIZATION?:Work specialization is dividing the work in separate job tasks so that each employee specialize only in that job task to increase the work output. Work specialization helps companies to efficiently use their skill that the employees have. It is an inefficinet use of resources because skilled workers are paid more, this means all employees would be paid more because of the easy tasks. Managers see work specialization as really important because it helps employees to be more efficient.WHAT IS DEPARTMENTALIZATION?This step is when all the work activities made by the employees are grouped together so it is all integrated again. There are five forms of departmentalization but the methods used should contribute to the goals of the organisation. The work activities are grouped together by functions performed or functional departmentalization. You The big advantage to functional departmentaluzation is the economics of scale, by putting peopke with common skills  into common units. Product departmentalization focuses on big products areas in the corporation. Each product is under the authority of a senior manager who is totally specialised in.The customer departmentalization is that customers in each department have the same prblems and needs.The big organizations use most  of the departmental groups.WHAT ARE AUTHORITY AND RESPONSIBILITY?To know whar is authority and responsibility you also have to know about the chain of command, meaning the line of authority that goes up to upper organizational to lower levels. This helps a lot employeees with questions like: What do i do when i have a problem? So authority refers to the rights inherent in a position to give orders and expect from the employees that this orders are obeyed. In conclusion, authority is the position in the organization and has nothing to do with personal characteristics.WHAT ARE THE DIFFERENT TYPES OF AUTHORITY RELATIONSHIPS?They are two types of authority the line authority and the staff authority. Line authority is a manager that directs the work of the employee, this means it is the employee authority relationship that extends from top of the organization to the lowest level. Staff authorities exist to support and advise the line of authority because they do not have the time or expertise to have their job done effectively.WHAT IS UNITY OF COMMAND:Unity of command is when the employee just have to report to only one manager because reporting to two or more managers can bring confusion . Unity of command is logical when yhe organization is simple.HOW DO AUTHORITY AND POWER DIFFER?Authority is a right, it is based on someones position in the organization and authortiy goes with the job. On the other hand, Power is an employee individual capacity to influence decisions. Authority comes in part of the concept of power.WHAT IS A SPAN OF CONTROL?Early management theorists debated the optimal number of employees a manager can effectively have, wit mostfavoring small spans, typically around six workers, for closer control. However, some recognized that a manager's level in the organization affects this, with higher-level managers needing smaller spans due to dealing with more complex issues. Recently, there's been a shift towards larger spans of control in organizations like General Electric and Kaiser Aluminum, driven by efforts to streamline decision-making. This shift considers various factors such as employee training, experience, task similarity, and complexity in determining the appropriate span of control.

HOW DO CENTRALIZATION AND DECENTRALIZATION DIFFER?When organizing, a crucial question arises: "Where are decisions made?" Centralization refers to the extent decisions are made at higher levels of the organization, while decentralization involves lower-level managers providing input or making decisions themselves. It's not a binary choice but rather a spectrum. No organization is entirely centralized or decentralized. Historically, traditional organizations had a pyramid structure with power concentrated at the top, resulting in predominantly centralized decision-making. However, as organizations become more complex and responsive to dynamic environments, there's a shift towards decentralization. Early management writers suggested that centralization depended on the situation and aimed for optimal employee utilization. Over the past decades, especially in US and Canadian organizations, there's been a trend towards more decentralized decision-making to better adapt to changing and complex environments.WHAT IS FORMALIZATION?Formalization is about how much a company's jobs follow strict rules and procedures. In places where formalization is high, there are clear job descriptions, lots of rules, and set ways to do tasks. Employees don't have much choice in how they work. But in places with low formalization, employees have more freedom to do things their way. Early management experts thought companies would usually have a lot of formalization, especially those with a bureaucratic style.HOW IS MECHANISTIC ORGANIZATION DIFFERENT FROM AN ORGANIC ORGANIZATION?The mechanistic organization, like a bureaucracy, came from combining six structure elements. It had a clear chain of command, where each person had a boss. It had many rules and a tall structure with lots of levels. As the organization grew, more rules were made. Jobs were very specialized and routine. The organic organization is the opposite. It's flexible and changes quickly. Jobs aren't strict, and employees are often professionals who can handle different tasks without much supervision. Decisions are made by those who know best, not just top managers. Designing the right structure depends on four things: what the organization wants to do, how big it is, what technology it uses, and how uncertain its environment is.HOW DOES STRATEGY AFFECT STRUCTURE?The way an organization is set up should help it reach its goals. Since goals are a big part of how an organization plans, it makes sense that its plan and structure are closely connected. Alfred Chandler looked into this first. He studied big American companies and saw that when they changed their goals, they also changed how they were set up to support those goals. At first, companies might start with just one product or service, so they kept things simple. One manager could make decisions, and things weren't too complicated. But as companies grew and had bigger plans, they needed more complex structures.HOW SIZE AFFECTSSTRUCTURESize and Mechanization: Specialization, departmentalization, centralization, and an abundance of rules and regulations characterize larger, more mechanistic organizations (those employing over 2,000 people). After these organizations reach a certain size, the influence of size on structure becomes less significant because they have already developed mechanistic framework.Impact of Growth: A small organization's structure becomes more mechanistic as it grows in size because of the increased coordination and control that comes with a larger workforce.HOW TECHNOLOGY AFFECTS STRUCTUREStudy:Joan Woodward's seminal research showed that an organization's technology has a big impact on how it is structured. She divided technology into three categories: process, mass, and unit production, each requiring a distinct organizational structure.Routine vs. Nonroutine Technology:  For efficiency, organizations using routine technology typically adopt a mechanistic structure. On the other hand, nonroutine technology users are more likely to embrace an organic structure in order to promote adaptability and creativity.