Chapter 10: Organisational Structure and Design

Question 1

What is organisational structure design?

Answer 1

• Organising - arranging and structuring work to accomplish an organisation’s goals.
• Organisational Structure - the formal arrangement of jobs within an organisation.
• Organisational Design - developing and changing an organisation’s structure.

Question 2

What are the six key elements in organisational design?

Answer 2

• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization

Question 3

Describe Work Specialization.

Answer 3

•Work Specialization (dividing work activities into separate job tasks)
–The degree to which tasks in the organisation are divided into separate jobs with each step completed by a different person.
–Overspecialization can result in human diseconomies such as boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.

Question 4

Describe Departmentalization

Answer 4

The basis by which jobs are grouped together
• Functional
– Grouping jobs by functions performed
• Product
– Grouping jobs by product line
• Geographical
– Grouping jobs on the basis of territory or geography
• Process
– Grouping jobs on the basis of product or customer flow
• Customer
– Grouping jobs by type of customer and needs

Question 5

Describe Chain of Command

Answer 5

The continuous line of authority that extends from upper levels of an organisation to the lowest levels of the organisation—clarifies who reports to whom.

Question 6

Describe Span of Control

Answer 6

• Span of Control - the number of employees who can be effectively and efficiently supervised by a manager.
• Determines the number of levels and managers an organisation has.
• Wider or larger the span of control, the more efficient an organisation is.
• The width of span should be restricted to an extent managers can have time to lead effectively

Question 7

Describe Centralization & Decentralization

Answer 7

• Centralization - the degree to which decision making is concentrated at upper levels in the organisation.
– This is common in organisations in which top managers make all the decisions and lower-level employees simply carry out those orders.
– Top managers make organisation’s key decisions with little or no input from lower-level employees

• Decentralization - when an organisation relegates decision making to managers who are closest to the action.
• Lower-level employees provide input or actually make decisions.
• Employee Empowerment
– Increasing the decision-making authority (power) of employees

Question 8

Describe Formalization

Answer 8

• Formalization - the degree to which jobs within the organisation are standardized and the extent to which employee behavior is guided by rules and procedures.
– Highly formalized jobs offer little discretion over what is to be done.
– Low formalization means fewer constraints on how employees do their work.

Question 9

What are the Contemporary Organisational Designs?

Answer 9

• Boundaryless Organisation
– A flexible and unstructured organisational design that is intended to break down external barriers between the organisation and its customers and suppliers.

• Virtual Organisation
– An organisation that consists of a small core of full-time employees and that temporarily hires specialists to work on opportunities that arise.

• Network Organisation
– A small core organisation that outsources its major business functions (e.g., manufacturing) in order to concentrate what it does best.

• Learning Organisation
– An organisation that has developed the capacity to continuously learn, adapt, and change through the practice of knowledge management by employees.

Question 10

Explain Boundaryless Organisation.

Answer 10

•An flexible and unstructured organisational design that is intended to break down external barriers between the organisation and its customers and suppliers.

•Removes internal (horizontal & vertical) boundaries:
–Horizontal Boundaries: imposed by work specialization & departmentalization.
–Vertical Boundaries: separates employees into organisational level & hierarchies
–Eliminates the chain of command
–Has limitless spans of control
–Uses empowered teams rather than departments

•Eliminates external boundaries:
–External boundaries separate the organisation from its customers, suppliers & other stakeholders.
–Uses virtual or network organisational structures to get closer to stakeholders (customers & suppliers).

Question 11

Explain the Learning Organisation.

Answer 11

–An organisation that has developed the capacity to continuously learn, adapt, and change through the practice of knowledge management by employees.
–Characteristics of a learning organisation:
•An open team-based organisation design that empowers employees
•Extensive and open information sharing
•Leadership that provides a shared vision of the organisation’s future, support and encouragement
•A strong culture of shared values, trust, openness, and a sense of community.