ninth edition

STEPHEN P. ROBBINS

MARY COULTER

Organizational
Structure and Design

2007 Prentice Hall, Inc.

All rights reserved.

PowerPoint Presentation by Charlie Cook

The University of West Alabama

Defining Organizational Structure

Organizational Structure
The formal arrangement of jobs within an organization.

Organizational Design
A process involving decisions about six key elements:

Work specialization

Departmentalization

Chain of command

Span of control

Centralization and decentralization

Formalization

2007 Prentice Hall, Inc. All rights reserved.

102

Purposes of Organizing
Divides work to be done into specific jobs and
departments.
Assigns tasks and responsibilities associated with
individual jobs.
Coordinates diverse organizational tasks.
Clusters jobs into units.
Establishes relationships among individuals,
groups, and departments.
Establishes formal lines of authority.
Allocates and deploys organizational resources.
2007 Prentice Hall, Inc. All rights reserved.

103

Organizational Structure
Work Specialization
The degree to which tasks in the organization are
divided into separate jobs with each step completed
by a different person.
Overspecialization can result in human diseconomies
from boredom, fatigue, stress, poor quality, increased
absenteeism, and higher turnover.

2007 Prentice Hall, Inc. All rights reserved.

104

Economies and Diseconomies of

Work Specialization

2007 Prentice Hall, Inc. All rights reserved.

105

Departmentalization by Type
Functional
Grouping jobs by
functions performed

Product
Grouping jobs by product
line

Geographical

Process
Grouping jobs on the
basis of product or
customer flow

Customer
Grouping jobs by type of
customer and needs

Grouping jobs on the

basis of territory or
geography

2007 Prentice Hall, Inc. All rights reserved.

106

Functional Departmentalization

Advantages
Efficiencies from putting together similar specialties and
people with common skills, knowledge, and orientations
Coordination within functional area
In-depth specialization
Disadvantages
Poor communication across functional areas
Limited view of organizational goals
2007 Prentice Hall, Inc. All rights reserved.

107

Geographical Departmentalization

Advantages
More effective and efficient handling of specific
regional issues that arise
Serve needs of unique geographic markets better
Disadvantages
Duplication of functions
Can feel isolated from other organizational areas

2007 Prentice Hall, Inc. All rights reserved.

108

Product Departmentalization

+
+
+

Allows specialization in particular products and services

Managers can become experts in their industry
Closer to customers
Duplication of functions
Limited view of organizational goals

2007 Prentice Hall, Inc. All rights reserved.

109

Process Departmentalization

+ More efficient flow of work activities

Can only be used with certain types of products

2007 Prentice Hall, Inc. All rights reserved.

1010

Customer Departmentalization

+ Customers needs and problems can be met by specialists

- Duplication of functions
- Limited view of organizational goals

2007 Prentice Hall, Inc. All rights reserved.

1011

Organization Structure (contd)

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 who.

2007 Prentice Hall, Inc. All rights reserved.

1012

Common Organizational Designs

Traditional Designs
Simple structure

Low departmentalization, wide spans of control, centralized

authority, little formalization

Functional structure

Departmentalization by function
Operations, finance, human resources, and product
research and development

Divisional structure

Composed of separate business units or divisions with limited

autonomy under the coordination and control the parent
corporation.

2007 Prentice Hall, Inc. All rights reserved.

1013

Organizational Designs (contd)

Contemporary Organizational Designs
Microsofts Windows 7 was the outcome of a three-year project marked
by close collaboration among the thousands of people working on
various aspects of the product. This approach contrasted sharply with
the development of Windows Vista, where the development team had
evolved into a rigid set of siloseach responsible for specific technical
featuresthat didnt share their plans widely. With Vista, programming
code created by each group might have worked fine on its own, but it
caused technical problems when integrated with code created by other
groups. Those design issues, as well as internal communications
breakdowns, contributed to numerous product delays and
defects. CEO Steve Ballmer was adamant about not repeating that
mistake. Thus, to rebuild Windows, Microsoft razed wallsthat is,
organizational structure walls that acted as barriers and impediments to
efficient
and
effective
work.

2007 Prentice Hall, Inc. All rights reserved.

1014

Organizational Designs (contd)

Contemporary Organizational Designs
Team structures
The

entire organization is made up of work groups or selfmanaged teams of empowered employees.

In

this structure, employee empowerment is crucial because no

line of managerial authority flows from top to bottom

employee

teams design and do work in the way they think is

best, but the teams are also held responsible for all work
performance results in their respective areas

2007 Prentice Hall, Inc. All rights reserved.

1015

Organizational Designs (contd)

Contemporary Organizational Designs
Team structure:
Pros:
Employees
Reduced

are more involved and empowered.

barriers among functional areas.

Cons:
No

clear chain of command.

Pressure on teams to perform.

2007 Prentice Hall, Inc. All rights reserved.

1016

An Example of a Matrix Organization

Matrix and project structures:

Specialists from different functional departments are
assigned to work on projects led by project managers.
Matrix and project participants have two managers.
In project structures, employees work continuously on
projects; moving on to another project as each project is
completed.

2007 Prentice Hall, Inc. All rights reserved.

1017

Organizational Designs (contd)

Contemporary Organizational Designs
Matrix structure:
Pros:
Fluid

and flexible design that can respond to environmental

changes.

Faster

decision making.

Cons:
Complexity
Task

of assigning people to projects.

and personality conflicts.

2007 Prentice Hall, Inc. All rights reserved.

1018

Organizational Designs (contd)

Contemporary Organizational Designs (contd)
Boundaryless Organization

The Large Hadron Collider is a $6 billion particle accelerator.

The atom smasher is so large that a brief status report lists
2,900 authors, so complex that scientists in 34 countries
have readied 100,000 computers to process its data, and so
fragile that a bird dropping a bread crust can short-circuit its
power supply.

But exploiting the colliders potential to expand the frontiers of

knowledge has required that scientists around the world cut
across boundaries of place, organization, and technical
specialty to conduct ever more ambitious experiments

2007 Prentice Hall, Inc. All rights reserved.

1019

Organizational Designs (contd)

Contemporary Organizational Designs (contd)
Boundaryless Organization

A flexible and unstructured organizational design that is intended

to break down external barriers between the organization and its
customers and suppliers.

Removes internal boundaries:

the horizontal ones imposed by work specialization and
departmentalization
vertical ones that separate employees into organizational levels
and hierarchies

Eliminates external boundaries:

the boundaries that separate the organization from its
customers, suppliers, and other stakeholders

2007 Prentice Hall, Inc. All rights reserved.

1020

Organizational Designs (contd)

Contemporary Organizational Designs (contd)
Boundaryless Organization

Virtual Organization
An organization that consists of a small core of fulltime employees and that temporarily hires specialists
to work on opportunities that arise.

Network Organization
which uses its own employees to do some work
activities and networks of outside suppliers to provide
other needed product components or work processes

2007 Prentice Hall, Inc. All rights reserved.

1021

Organizational Designs (contd)

Contemporary Organizational Designs
Boundaryless Organization structure:
Pros:
Highly

flexible and responsive.

Utilizes

talent wherever its found.

Cons:
Lack

of control.

Communication

2007 Prentice Hall, Inc. All rights reserved.

difficulties.

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Organizational Designs (contd)

The Learning Organization
A structure in which employees continually acquire and
share new knowledge and apply that knowledge.
Pros:
Sharing

of knowledge throughout organization.

Sustainable

source of competitive advantage.

Cons:

Reluctance on part of employees to share knowledge for fear of

losing their power.

Large numbers of experienced employees on the verge of

retiring

2007 Prentice Hall, Inc. All rights reserved.

1023