Session 4: Organization Structure

Organization structure Definition and Advantage and Disadvantage

application

Organization is a system for What we need:

accomplishing and connecting - Main aim: link people together in an OS establish network of relationship
activity work in OS - Group task together
People in an OS will know what - Allocate people and group authority they required to perform their
should they work and where function
their work support for - We also need OS to coordinate the objective and activities of different
units, different departments and enable the flow of work information and
other resources via lies up cooperation and communication
Work specialization or Labor Advantage:
division means that OS can - Will have a view of labor, increase productivity, effectiveness of operation
divide to different jobs, - Save training cost because individual and employees just doing the same
different tasks to be done by work, same task and they doing routine and repetitive task. That’s easy for
different people employee to be skillful
Depend on the size of company, - Less time is spent for changing task, putting away tool and equipment from
we can decide the level of work a prior step, getting ready for another.
specialization. - Can increase the formality and standardize for the output.
If the company is a big - Increase expertise and skill for individual
company: the workload is very Disadvantage:
high so in order to better to - Negative effect from employee behavior because they do repetitive tasks 
manage work – Organization feel boring and not satisfy with the job
can be designed specialization - Lead to reduce productivity and effective
work. With 3 level: high, - Employee can absence job because of boring
medium and low level Note: work specialization can increase productivity but if too high specialization
can lead to reduce productivity
 Advantages:
An OS can choose 1 or 2 type of - Functional departmentalization advantage is efficiencies gained form putting
departmentalization or may be like specialist together.
combine, it depends on the size - Product or service departmentalization advantages is increase accountability
of company for performance because all activities related to a specific product or service are
under the direction of a single manager.

Beside setting of the reporting

system for company, we have to
identify the authority and
responsibility associate with
different job position in an
organization
Authority: staffing authority
and line authority
- Staffing authority: is the
right to give an advice
to other people.
Normally exist in the
same level of
management
- Line authority: right to
ask other people to do
something. Normally
exist from people who
at the higher position to
lower
Unity of command: identify the
subordinate should have only
one supervisor to whom she/he
 is directly responsibility. 1
employee to set 1 immediately
boss or manager. Unity of
command may be broken
because we have no bond with
OS  less important
- With span of control, we Narrow span of control Wide span of control
identify the size of OS and Advantage - Close with the subordinate to - Small number of
work group. support managers.
Determine the number of level - Can contact daily, easier to - More efficient in terms of
management in an manage work of subordinate cost
organization - Employee can be easier to -
- Span of control: narrow span of promoted, opportunity to
control and wide span of higher position
control. Disadvantage - Large number of managers - Supervisor no longer have
- To optimal span of control, OS - Complicated flow, and time to provide
have to take into account the communication. subordinates with
nature of task, the similarities - Change environment of necessary leadership and
of the task in the unit organization will be slower support, effective decline
- High administrative cost and employee
because of large number performance suffers.
manager - High training requirement
Application - Complicated task - Simple task
- Normal or not good quality - Good quality and ability
and ability of leader and of leader and employee
employee - Low communication and
- High communication and coordination between
coordination between manager and employee
manager and employee
 Different Dept can apply different span of control
- Centralization means that all Advantage of Centralization:
decision made by the top - Easier to implement the organization policy
manager - Provide a consistent strategy across organization
- Decentralization: middle - Easier to manager organization
manager can even operative; - Easier to coordinate and management control
the employee can have the - Can greater use work specialization.
right to make decision - Improve decision making
- The balance between centralize - Can keep balance among different department
and decentralize is one of Advantage of decentralization:
major debate in OS - Enable to meet and closer to operate level of work, more flexible
- Most organization necessary - Increase responsibility of subordinate and responsiveness to the local situation
involves degree of - Can improve level of the personal customer service
centralization. - Can provide opportunity for training and developing in management
-  allow al middle managers and even employee to make decision and they can
learn from that
- Motivate the middle managers and also employee -> they will think they
valuable and increase motivation
- High formalization and low Advantage of high formalization
formalization - Easier to brief behavior of employee
- Easier to manage
- Easier to employee to perform their job
- Easier to establish procedure and process
Disadvantage of high formalization:
- Formalization not only eliminate the possibility of employees engaging in
alternative behaviors, it removes the need for them to consider alternatives
and creative as well.
- Employee may have difficulties when dealing with contingencies situation
happening during performing their job
-
Simple structure exists in a Strength of simple structure:
small organization: shop, - Flexible, fast
startup company - Inexpensive to maintain
Characteristic of simple - Accountability is very clear
organization by low level of Weakness of simple structure:
work specialization, low level of - Difficult to maintain anything other than small organization when the
departmentalization, wide span size of organization increase. The simple structure is no longer
of control, authority centralize appropriate
and little formalization - Risky because all decision made by the top manager and if top manager
make wrong decision, the company will be suffered.

The function of structure is we Advantage:

have a high level of work - Take advantage of departmentalization -> primarily ability to perform
specialization, standardized activities, increase efficiency and effectiveness of the
departmentalization normally operation
by business function: marketing, - Functional department means that different individual who have
HR, sale, logistic… expertise get together in one department so enable to in deep
Bureaucracy has very clear knowledge and skill development
chain of command, very narrow - Putting specialist together, knowledge sharing and learning among
span of control  have a lot of people in the same dept, minimum duplication ò people and
management level, very high equipment.
level centralization and also - Less talented -> less costly
formalization – a lot of rule and - Middle or lower level of managers because rules and regulations
regulation substitute for managerial discretion,
 Functional structure is
 very cumbersome Disadvantage:
organization - Slow response time to environmental changes
- Poor coordination among dept because have high level of work
specialization so that each dept just focus con their objective  ignore
and don’t care about other depts.
- May cause decisions to pill on top, hierarchy overload
- Less innovation, autonomy and creativity because of high level of
formalization
- Involves restricted view of organization goals
Call martrix structure because it Advantage:
combines 2 line of authorities - Flexibility, greater security and control information and ultimately force
and combine 2 types of dept in staff environment, better coordinate between different resources
this structure. inside organization
Combine department by - The matrix reduces “bureau pathologies” – it dual lines of authority
business function and by limit people ‘s tendency to protect their territories at expense of
products/customers/project or organization goals.
geography. - Best in medium size of structure
Employees in the structure will Disadvantage:
have 2 bosses. Ex: university, - Can result in a more complex structure and it can create pressure for
college, or big company can use employee because they have to report to 2 bosses in the same time
this model - Confuse for employees when 2 bosses are conflicts with each other, the
Key element: … employees can be suffered
Appropriate apply: ….
Matrix structure might be
adopted in following
circumstances:
a.more than one critical
orientation to the operation
b.need to process
simultaneously large amount of
information
c.need for sharing of resources
This is a small, core organization Strength:
that outsources its major - Enable the organization to obtain the talent and resources worldwide
business functions because of their flexible, innovative idea
… - Save a lot of administration cost to remain cumbersome hierarchy
Normally with the organization Weakness:
network we have a small - Virtual organization are in a stage of perpetual flux and reorganization,
number ò employes, very key which mean role, goal, and responsibility are unclear, setting the stage
employee for political behavior.
Ex: project; film marker, - Culture alignment and shared goals can be lost because of the low
consulting company degree of interaction.
- Difficult to share knowledge and information.
- Risk to loss of control over resources that we have move to rely from
other organization
- We have problem if may be the people who mobilized from other
organization don’t commit -> we can not control over the expertise and
their commitment
Common products, big Mechanistic model:
company, routine technique is - High specialization
suitable with mechanistic model - Rigid departmentalization
Special product and differential - Clear chain of command
products, small company, high - Narrow span of control
technology is suitable for - Centralization
organic model - High formalization
Organic model
- Cross-functional teams,
- Cross-hierarchical teams
- Free flow of information
- Wide spans of control
- Decentralization
- Low formalizati
Strategy Structural option
Innovation Organic: a loose structure; low specialization, low
formalization, decentralize
Cost Mechanistic: tight control, extensive work specialization,
minimization high formalization, high centralization
Imitation Mechanistic and organic: mix of loose with tight properties,
tight controls over current activities and looser controls for
new undertakings.
High capacity, high volatility and
high complexity -> organic
model