Organizational Behaviour, emerging knowledge and practice for the real world, by S. McShane, M. Von Glinow (fifth edition) – Book summary
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Organizational structure refers to the division of labour as well as the patterns of coordination, communication, workflow and formal power that direct organizational activities.
Organizational structures include two requirements, the division of labour into distinct tasks (1) and the coordination of labour (2). Division of labour refers to the subdivision of work into separate jobs assigned to different people. Job specialization increases work efficiency. An organization’s ability to divide work among people depends on how well those people can coordinate with each other. There are three coordination mechanisms:
People with liaison roles are expected to communicate and share information with co-workers in other work units. People with integrator roles are responsible for coordinating a work process by encouraging employees in each work unit to share information and informally coordinate work activities.
Organizational structure has four elements: span of control, centralization, formalization and departmentalization.
The span of control refers to the number of people directly reporting to the next level above in the hierarchy. The best span of control is decided by the degree of autonomy for staff members (1), whether employees perform routine tasks (2) and the degree of interdependence among employees within the department or team (3). A highly interdependent job requires a narrow span of control because there is more conflict. The span of control is interconnected with organizational size and the number of layers in the organizational hierarchy. A wide span of control is only achievable by removing layers of management.
Centralization means that formal decision-making authority is held by a small group of people, typically those at the top of the organizational hierarchy. Larger organizations often decentralize, they disperse decision making authority and power throughout the organization.
Formalization is the degree to which organizations standardize behaviour through rules, procedures, formal training and related mechanisms. Formalization can increase efficiency and compliance, but it can reduce organizational flexibility, organizational learning and creativity. Formalization is also a source of job dissatisfaction and work stress.
A mechanistic structure is an organizational structure with a narrow span of control and a high degree of formalization and centralization. An organic structure is an organizational structure with a wide span of control, little formalization and decentralized decision making. Mechanistic structures operate better in stable environments because they rely on efficiency and routine behaviours and organic structures work better in dynamic environments because they are more flexible and responsive to changes.
Departmentalization specifies how employees and their activities are grouped together. It establishes the chain of command, focusses people around common mental models and it encourages specific people and work units to coordinate through informal communication. There are different types of departmentalization:
Direct supervision is easier in a functional structure. Grouping employees around skills focusses their attention on those skills and not necessarily on the company’s products, services or client needs. Compared to other structures, the functional structure usually produces more dysfunctional conflict and poorer coordination in serving clients or developing products. The geographic divisional structure organizes employees around distinct regions. The product/service divisional structure organizes employees around distinct outputs and the client divisional structure organizes employees around specific customer groups. The right divisional structure depends on the primary source of environmental diversity or uncertainty. The team-based structure is more flexible in turbulent environments and it tends to reduce costs because there is less hierarchy. The ambiguity of teams and increased conflict can lead to increased stress. In a pure matrix structure, two bosses have equal power. There is a product-geographic matrix structure and a functional structure overlays with a project structure. The matrix structure increases conflict among managers with equal power. Another problem of the matrix structure is ambiguous accountability. The network structure typically consists of several satellite organizations bee-hived around a hub or core firm.
There are four contingencies of organizational design:
The more complex the environment, the more decentralized the organization should become. An integrated environment only has one client, product and geographic area. The more diversified the environment, the more need for a divisional structure.
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This bundle contains everything you need to know for the second interim exam of Work & Organizational Psychology for the University of Amsterdam. It uses the book "Organizational Behaviour, emerging knowledge and practice for the real world, by S. McShane, M. Von
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