CHAPTER 15: Foundation of Organizational Structure
CHAPTER 15:
FOUNDATION OF ORGANIZATION STRUCTURE What Is Organizational Structure?
Organizational Structure
Defines how job tasks are formally divided, grouped, and coordinated.
There are six key elements that managers need to address when they design their org.’s structure.
Key Elements:
1.Work specialization
2.Departmentalization
3.Chain of command
4.Span of control
5.Centralization and decentralization
6.Formalization
Work Specialization
The degree to which tasks in the organization are subdivided into separate jobs.
Division of labor:
Makes efficient use of employee skills
Increases employee skills through repetition
Less between-job downtime increases productivity
Specialized training is more efficient.
Allows use of specialized equipment.
Benefits include:
Increasing levels of skill
Less time is wasted moving from job to job
Training is less costly
Increased focus
Adam Smith’s pin factory
“Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things.” During the 1st half of the 20th century, managers viewed work specialization as an unending source of increased productivity, and , for a time, it was.
However, by 1960, it became evident that a good thing could be carried too far.
The point reached in some jobs where “human diseconomies” from work overspecialization resulted - boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover – more than offset the economic advantages.
Departmentalization
The basis by which jobs are grouped together
Grouping Activities By:
•Function •Product •Geography •Process •Customer
Chain of Command
The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to whom.
Concepts:
Authority
FOUNDATION OF ORGANIZATION STRUCTURE What Is Organizational Structure?
Organizational Structure
Defines how job tasks are formally divided, grouped, and coordinated.
There are six key elements that managers need to address when they design their org.’s structure.
Key Elements:
1.Work specialization
2.Departmentalization
3.Chain of command
4.Span of control
5.Centralization and decentralization
6.Formalization
Work Specialization
The degree to which tasks in the organization are subdivided into separate jobs.
Division of labor:
Makes efficient use of employee skills
Increases employee skills through repetition
Less between-job downtime increases productivity
Specialized training is more efficient.
Allows use of specialized equipment.
Benefits include:
Increasing levels of skill
Less time is wasted moving from job to job
Training is less costly
Increased focus
Adam Smith’s pin factory
“Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things.” During the 1st half of the 20th century, managers viewed work specialization as an unending source of increased productivity, and , for a time, it was.
However, by 1960, it became evident that a good thing could be carried too far.
The point reached in some jobs where “human diseconomies” from work overspecialization resulted - boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover – more than offset the economic advantages.
Departmentalization
The basis by which jobs are grouped together
Grouping Activities By:
•Function •Product •Geography •Process •Customer
Chain of Command
The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to whom.
Concepts:
Authority