Organizational Structure and Bureaucratic Design Principles

Bureaucracy: Main Features

• Division of Work
• Rules and Regulations
• Hierarchy of Authority
• Technical Competence
• Record Keeping
• Impersonal Relations

Advantages

• Specialization
• Structure
• Rationality
• Predictability
• Democracy

Disadvantages

• Rigidity
• Goal Displacement
• Impersonality
• Compartmentalization of Activities
• Paperwork
• Empire Building
• Red Tape

Organizational Models

Traditional Organizations

• Weber’s Bureaucracy
• Simple Structure
• Functional Structure
• Divisional Structure

Contemporary Organizational Design

• Team Structure
• Matrix Structure
• Project Structure
• Boundaryless Structure

Mixed Types of Design

• Virtual Organizations
• Network Organizations

Core Organizational Concepts

Organization: A system of consciously coordinated activities or efforts of two or more persons.

Permeable Boundary: A conceptual boundary (apart from physical fencing) that defines who or what is part of an organization.

Span of Control: The number of subordinates a superior can effectively manage; the number of persons directly responsible to an executive.

Centralization vs. Decentralization

Centralization: Decision-making is concentrated at a single point. This is common when decisions are minor, the company is large, or the environment is stable.

Decentralization: Decision-making power is spread out. This is common when decisions are significant, the company is geographically dispersed, or the environment is complex and uncertain.

Specialization

The degree to which activities or tasks in an organization are broken down and divided into individual jobs.

• High Specialization: Beneficial as it allows employees to become “masters” in specific areas, increasing productivity.
• Low Specialization: Allows for more flexibility, as employees can more easily tackle a broader array of tasks.

Formalization

Deals with how jobs are structured within an organization.

• Informal Organization: Places more value on the individual. It allows for the evolution of a role or position based on an individual’s preferences and skill set.
• Formal Organization: Structure seeks to separate the individual from the role or position.

Departmentalization

The process of grouping jobs together to coordinate common activities and tasks.

• Rigid Departmentalization: Each department or team is highly autonomous.
• Loose Departmentalization: Teams have freedom to interact and collaborate.

Departmentalization by Type

• Functional
• Product
• Geographical
• Process
• Customer

Structural Frameworks

Mechanistic Structures

Characterized by a narrow span of control, high centralization, high specialization, high formalization, and rigid departmentalization. The chain of command is always clear.

Organic Structures

Characterized by a wide span of control, low centralization, low specialization, low formalization, and loose departmentalization. The chain of command can sometimes be difficult to decipher.