What are some major differences between organic and mechanistic organizational structures and systems quizlet?

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Managing Growth

Terms in this set [42]

Organizational Structure

Framework that defines the boundaries of the formal organization and within which the organization operates.

What does the Organizational Structure reflect?

how groups compete for resources, where responsibilities for profits and other performance measures lie, how information is transmitted, and how decisions are made. Some employees can work in any system; others need the rigid discipline of a structured system to function properly. The larger the organization, usually more structure is needed.

What are the 3 Three growth stages of an organization

1] Craft or family-start up stage, very few policies in place. Usually one person handles one area.
2] Entrepreneurial-growth stage, increasing a lot at first then leveling off. The beginning of a formal structure usually occurs during this stage. If an effective organizational structure is not developed, control of the organization may be lost.
3] Professional management-as-entrepreneurial stage is leveling off; the company is then taken over by a professional manager who performs the functions of planning, staffing, organizing, leading, and controlling.

Organizational chart

series of boxes connected with one or more lines to graphically represent the organization's structure. The box represents the position within the organization while the line represents the nature of the relationships among different positions.

Why do many entrepreneurs fail during the professional management stage?

lack of organizational skills necessary to perform in a highly organized structure.

Line Structure

organization structure with direct vertical lines between the different levels of the organization. Most important aspect of the line structure is that the work of all organizational units is directly involved in producing and marketing the organization's goods and services. There are clear lines of authority which allows for rapid decision making and prevents passing the buck. Disadvantages are it may force managers to perform too broad a range of duties and may cause the organization to become too dependent on one or two key employees. Because of the simplicity, it is often found in many small companies.

Line and Staff Structure

Staff specialists are added to a line organization

Staff functions

advisory and supportive in nature

Line functions

directly involved in the production and marketing of the organization's goods. Line functions contribute directly while staff functions contribute indirectly.

What is the difference between line and staff functions?

Conflict often occurs between line and staff. Some staff personnel may resent the fact that they have no formal authority and some line managers, knowing that the final responsibility rests upon themselves, are reluctant to listen to staff personnel.

Matrix Structure

Hybrid organization structure in which individuals from different functional areas are assigned to work on a specific project or task.

Project

combination of human and non-human resources pulled together in a temporary organization to achieve a specified purpose. [usually is something new and has a temporary life]. A manager from one area will be assigned to head the project. Advantages include expertise from many different functional areas and flexibility to make changes as necessary. Problems include violation of the unity of command. There must be clear instructions and communication between the project and line manager. A second problem occurs when project personnel are still evaluated by their functional manager. They are also very costly to implement.

Flat structures

relatively few levels and relatively large spans of management at each level

Tall structure

many levels and relatively small spans of management

Flat vs. tall structures

Study by James Worthy noted that flat structure offered the potential for greater job satisfaction. This forced the manager to delegate authority and develop more direct links of communication.
Study by Carzo and Yanouzas found that groups operating in a tall structure had better performance
There have been studies that produced different results so no concrete conclusions can be reached.

Factors affecting structure

1] Strategy
2] Size
3] Environment
a] Mechanistic system
b] Organic systems

Strategy

organizations must decide which structure will best facilitate their objectives It can be made up of equal departments or more vertical depending on the strategy. Does structure follow strategy or does strategy follow structure? Research indicates that structure should follow strategy.

Size

number of employees or sales volume can dictate structure The smaller the organization, the less specialized they usually tend to be. As an organization grows it is usually necessary to make structural changes.

Environment

Broken down into two distinct organizational systems

Mechanism System

characterized by a rigid delineation of functional duties, precise job descriptions, fixed authority and responsibility, and a well developed organizational hierarchy through which information filters up and instructions flow down.

Organic Systems

less formal job descriptions, greater emphasis on adaptability, more participation, and less fixed authority.

Stable vs Dynamic Industries

Research found that successful firms in stable industries tended to be mechanistic in structure while successful firms in dynamic industries tended to be organic in structure.

Firms grouped by mode of production which related to technical complexity.

a] Small batch production [represents the lower end of the technological advancement]
b] Large batch or mass production
c] Continuous flow or process production [represents the more advanced end of technological advancement]

Organization and technology

1] The number of levels in an organization increased as technical complexity increased

2] Ratio of managers and supervisors to total personnel increased as technical complexity increased

3] Organic and mechanistic management systems tended to predominate in frims at both ends of the scale of technical complexity, while mechanistic systems predominated in firms falling in the middle ranges.

4] No significant relationship existed between technical complexity and organizational size.

Simple form, lean staff

Peters and Waterman, in their studies of efficient companies noted that the successful companies fought the urge to increase staff positions as an organization grew. The efficient companies were simply structured with a small staff.

Why is a small staff effective

1] allows quick adjustment in a dynamic environment
2] conductive to innovation

Four characteristics outlined by Peters and Waterman that enable an organization to maintain a simple form and lean staff.

1] extraordinary divisional integrity, each division has its own functional areas,
including product development, finance, and personnel
2] continual formation of new divisions and rewards for this practice
3] guidelines that determine when a new product or product line will become an
independent division
4] moving people and even products among divisions on a regular basis without causing
disruption.

Contingency approach

states that the most appropriate structure depends on the technology used, the rate of environmental change, and other dynamic forces.

Departmentation

Grouping jobs into related work units. These units may be related on the basis or work functions, products, customer, geography, technique, or time.

Function departmentation

defines organizational units in terms of the nature of work.

4 basic groups of Function departmentation

production, marketing, finance, and human resources. These basic groups may be further split. Production may include maintenance, quality control, engineering, manufacturing, etc.

Advantages and disadvantages of functional divisions

Advantages: ability to specialize, efficient use of resources, economies of scale.
Disadvantages: if the separate functional departments are not working together to meet the overall company goal there can be problems. [eg sales and marketing selling more than the production team can produce].

Product departmentation

grouping all activities necessary to produce and market a product or service, usually under a single manager.

Advantages and disadvantages of Product departmentation

Advantages: Allows company to manage each product as a separate profit center. It is a good cross training tool as managers get some experience in all of the functional areas.
Disadvantages: if departments get overly competitive it can be detrimental to the entire operation. Another major issue is the duplication of facilities, equipment, and manpower. [sales rep can sale separate products in the same call]. Best in large multi-product organizations.

Geographic

Defining organizational units by territory. Used by companies with physically dispersed and autonomous operations or offices. Takes advantage of local employees and salespeople and leads to a high level of service. The negative side of this is the cost of maintaining many facilities.

Customer

Defines organizational units in terms of customers served. Advantage is your sales people can specialize and maintain a close relationship with a group of customers and have the best possible chance to meet the customers needs.

Outsourcing [subcontracting]

Any of the major functional areas can be outsourced [accounting, human resources, information technology, and contract manufacturing]

Example where outsourcing might be feasible?

[Small amounts of I/T, new product to sell that is not like anything else you produce]

Benefits of outsourcing

1] Allows the organization to emphasize its core competencies by eliminating some
areas
2] Reduces operating costs by utilizing others who can do the job more effectively and
more efficiently
3] Accessing top talent in a field without having to own it
4] Fewer personnel problems
5] Improved resource allocation by allowing growth to take place more quickly

Disadvantages of outsourcing

1] Loss of control and being at the mercy of the vendor
2] Loss of in-house skills
3] Threat to the morale of the workforce if too many areas are dominated by outside
vendors
4] Loss of loyalty by having employee do job

Committees

organization structure in which a group of people are formally appointed, organized, and superimposed on the line or line and staff structure to consider or decide certain matters.

Board of Directors

Committee selected by an organization to oversee the major policies and strategies of a company. Figurehead, lawsuits, liability insurance

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