Topic 6 - Designing Organizational Structures

Question 1

State

Key functions that managers perform {4}

Answer 1

• Planning
• Organizing
• Leading
• Controlling.

Question 2

Define

Organizing

Answer 2

Organizing involves coordinating and allocating a firm’s resources so that the firm can carry out its plans and achieve its goals

Question 3

This organizing, or structuring, process is accomplished by?

Answer 3

• division of labour
• labourdepartmentalization
• delegation

Question 4

Define

Organizational Structure

Answer 4

An organizational structure defines how activities such as task allocation, coordination, and supervision are directed toward the achievement of organizational aims.

Question 6

Define

Organizational Design

Answer 6

Organizational design is a step-by-step methodology which identifies dysfunctional aspects of workflow, procedures, structures, and systems, and realigns them to fit current goals, then develops a plan to implement the new changes.

Question 7

Organizational design has six key elements. What are they?

Answer 7

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

Question 8

Define

Work Specialization

Organizational design elements

Answer 8

Work specialization or division of labor is the degree to which activities in the organization are subdivided into separate jobs.

Work specialization creates efficiency and productivity, but can also result in boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover.

Question 9

Departmentalization

Organizational design elements

Answer 9

Departmentalization is an aspect of organizational design that includes the subdivision of a business into units based on its function or other criteria.

Most companies, including restaurants, are likely to use two or more types of departmentalization simultaneously.

Question 10

List

Five basic types of departmentalization

Departmentalization

Answer 10

• Functional
• Geographical
• Product
• Process
• Customer

Question 11

Functional Departmentalization

basic types of departmentalization

Answer 11

In functional departmentalization, an organization is organized into departments based on the respective primary functions each performs for the organization.

Question 12

Define

Geographical Departmentalization

Basic types of departmentalization

Answer 12

Grouping jobs on the basis of territory or geography.

Question 13

Define

Product Departmentalization

Basic types of departmentalization

Answer 13

Product departmentalization typically groups tasks related to a particular product or product line under one senior manager who specializes in that aspect of the company’s business.

Question 14

Define

Process Departmentalization

Basic types of departmentalization

Answer 14

• Grouping activities on the basis of products, services, or customers.
• Process departmentalization allows homogeneous activities to be categorized in which each process requires different skills.

Question 15

Define

Customer Departmentalization

Basic types of departmentalization

Answer 15

Grouping activities on the basis of common customers or types of customers. Different departments are made to serve the common type of customers. The assumption is that the customers of each department have common problems or need which are fulfilled by the departments. These departments are under the supervision of the specialist who meets the problems and needs of the customers.

Question 16

Chain of Command

Organizational design elements

Answer 16

The chain of command is the authority, communication, and responsibility along which orders are passed in the organization. We can say that the order from top management to the lowest rank is the chain of command.

Question 17

List

Elements of a Chain of Command

Chain of command

Answer 17

• Authority
• Responsibility
• Unity of command

• Authority is legitimate power, granted by the organization and acknowledged by employees, that allows an individual to request action and expect compliance.
• Responsibility – delegation of authority that makes employees accountable to their supervisor.
• Unity of command – the principle that guarantees that everyone will have a direct supervisor and will not be taking orders from a number of different supervisors.

Question 18

Define

Span of Control

Organizational design elements

Answer 18

• A manager’s span of control (or span of management) is the number of employees the manager directly supervises.

The larger the span of control, the more efficient the organization.

Question 19

The optimal span of control is determined by the following five factors

Span of Control

Answer 19

1. Nature of the task. The more complex the task, the narrower the span of control.
2. Location of the workers. The more locations, the narrower the span of control.
3. Ability of the manager to delegate responsibility. The greater the ability to delegate, the wider the span of control.
4. Amount of interaction and feedback between the workers and the manager. The more feedback and interaction required, the narrower the span of control.
5. Level of skill and motivation of the workers.The higher the skill level and motivation, the wider the span of control.

Question 20

Define

Centralization

Organizational design elements

Answer 20

Centralization refers that decision-making in the organization can be done by only top management. It is the formal authority that top management will give decisions which will be followed by everyone without any changes.

Question 21

Define

Decentralization

Organizational design elements

Answer 21

Decentralization refers that decision-making is not only restricted to top management. Decisions are also made by lower-level employees because they are more toward the action of performance.

Decentralization makes employees feel that the organization is trusting them and giving them the right to make decisions.

Question 22

Define

Formalization

Organizational design elements

Answer 22

Standardization of jobs within the organization is called formalization. The rules and regulations within the organization are strictly followed. It is very clear what is to be done, when it is to be done, and how it is to be done.

Example: Everyone should be at their desk/office at 8:00 am sharp and salary will be deducted $ 20 for every absent whoever has more than three absences in a month.

Question 23

Define

Contemporary Structures : Matrix

(also called the project management approach)

Answer 23

• Combines two different forms of departmentalization, functional and product, that have complementary strengths and weaknesses.
• Each employee has two direct supervisors: their functional line manager and the project manager.

Question 24

State

Advantages of the Matrix Structure

Contemporary Structures : Matrix

Answer 24

Advantages of the matrix structure include:
* Teamwork
* Efficient use of resources
* Flexibility
* Ability to balance conflicting objectives
* Higher performance
* Opportunities for personal and professional development

Question 25

# State **Disadvantages of the Matrix Structure** | Contemporary Structures : Matrix

Answer 25

Disadvantages of the matrix structure include: * Power struggles * Confusion among team members * Lack of cohesiveness

Question 26

Contemporary Structures : Committee

Answer 26

* Authority and responsibility are held by a group rather than an individual. * Committee’s role is often advisory, but in some situations the committee has the power to make and implement decisions.

Question 27

**The Informal Organization**

Answer 27

The network of connections and channels of communication based on the informal relationships of individuals inside the organization.

Question 28

# State Functions of the informal organization | The Informal Organization

Answer 28

1. a source of friendship and social contact 2. the interpersonal relationships help employees feel better informed about and connected with what is going on in the firm 3. informal organizations can provide status and recognition that the formal organization cannot or will not provide employees. 4. the network of relationships can aid the socialization of new employees by informally passing along rules , responsibilities, basic objectives and job expectations. 5. helps employees be more aware of what is happening in the workplace by transmitting information quickly.