Formal Organizational Structure

9 Key excerpts on "Formal Organizational Structure"

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  Management, 7th Asia-Pacific Edition

  • John R. Schermerhorn, Jr., Paul Davidson, Peter Woods, Aharon Factor, Fatima Junaid, Ellen McBarron(Authors)
  • 2019(Publication Date)
  • Wiley

    (Publisher)

  What is organisational structure? The way in which various parts of an organisation are formally arranged is usually referred to as the organisational structure. The organisational structure is the system of tasks, workflows, reporting relationships and communication channels that link the work of diverse individuals and groups. Any structure should both allocate task assignments, through a division of labour, and provide for the coordination of performance results. A good structure that does both of these things well can be an important asset to an organisation. 15 Unfortunately, it is easier to talk about good structures than it is to create good structures. This is why you sometimes read and hear about organisations restructuring, or changing their structures in an attempt to improve performance. However, there is no structure that meets the needs of all circumstances. Structure must be handled in a contingency fashion; as environments and situations change, structures must often be changed too. To make good choices, a manager must know the alternatives and be familiar with current trends and developments. They must also be prepared to create ‘chaos’ to help produce innovative solutions to complex problems, when necessary. Nothing new and innovative can emerge from organising systems that are highly ordered and stable. Chaotic systems, such as revolutions and resistance, create new configurations of decision making and power. Formal structure You may know the concept of structure best in the form of an organisation chart, which is a diagram that shows reporting relationships and the formal arrangement of work positions within an organisation. 16 A typical organisation chart identifies various positions and job titles, as well as the lines of authority and communication between them. This is the formal structure, or the structure of the organisation in its official state. It represents the way the organisation is intended to function.

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  Exploring Management

  • John R. Schermerhorn, Jr., Daniel G. Bachrach(Authors)
  • 2017(Publication Date)
  • Wiley

    (Publisher)

  Organization Charts Describe Formal Structures of Organizations. When managers organize things, they arrange people and jobs into effective work relation- ships. They spell out who does what, who is in charge of whom, and how people and work units should cooperate. This creates what we call the organization structure, a formal arrangement of people, tasks, positions, and reporting relationships. You probably know the concept of structure best in terms of an organization chart. This is a diagram of positions, or job titles, and reporting relationships, or the hierarchy of authority within a team or organization. 5 This chart describes a division of labor designed to support organizational performance by assigning important tasks to individuals and groups. You can learn from an organization chart, but only in respect to formal struc- ture, as shown in the margin. This is the “official” structure or the way things are supposed to operate. 6 Think of it as a “best guess” for how to align positions, people, and responsibilities. But as with most work, things don’t always go as intended. Cir- cumstances, tasks, and people change. And every time they do, the formal structure moves a bit further away from the situation it is supposed to fit. This is why managers often find themselves tinkering with the formal structure to get the alignment right. Organizations Also Have Informal Structures. SITUATION: A worker in his office cubicle overhears a conversation in the next cubicle. Words such as “project being terminated” and “job cuts will be necessary” are used. At lunch, he shares this with friends. Word quickly spreads around the building that the employer is going to announce layoffs. Organization structure is a formal arrangement of tasks, reporting relationships, and communication linkages. An organization chart describes the arrangement of work positions within a team or organization. The division of labor assigns important tasks to individuals and groups.

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  System Engineering Management

  • Benjamin S. Blanchard, John E. Blyler(Authors)
  • 2016(Publication Date)
  • Wiley

    (Publisher)

  matrix, and so on. These organizational patterns are discussed in the sections to follow, as they relate to the objectives of system engineering.

  7.4.1 Functional Organization Structure

  The primary building block for most organizational patterns is the functional structure reflected in Figure 7.2 . This approach, sometimes referred to as the “classical” or “traditional” approach, involves the grouping of specialties or disciplines into separately identifiable entities. The intent is to perform similar activities within one organizational component. For example, all engineering work would be the responsibility of one executive, all production or manufacturing work would be the responsibility of another executive, and so on. Figure 7.3 shows a further breakout of engineering activities for illustrative purposes.

  Figure 7.2

  Producer organization (traditional functionally oriented structure).

  Figure 7.3

  Breakout of engineering organizational activities.

  As shown in the figures, the depth of the individual elements of the organization will vary with the type of project and level of emphasis required. For projects involving the conceptual and/or preliminary design of new systems, there will be a great deal of emphasis on marketing and engineering. Within engineering, the system engineering organization should be highly influential in the design decision-making process, as compared with some of the individual design disciplines. Later, as the development process phases into detail design, the individual design disciplines will assume a greater degree of importance, and the interest in production and manufacturing increases.

  As with any organizational structure, there are advantages and disadvantages. Table 7.1 identifies some of the pros and cons associated with the pure functional approach illustrated in Figure 7.2

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  Business Policy and Strategy

  The Art of Competition

  • Chris Chatfield, Cheryl Van Deusen, Steven Williamson, Harold C. Babson(Authors)
  • 2007(Publication Date)
  • Auerbach Publications

    (Publisher)

  In other words, the managerial decision-making process necessary to formulate and develop a structure is called organizational design . Upon completing the organization design, an organizational chart depicting the formal organization structure is derived. An organization chart illustrates how people, processes, and tasks are structurally grouped and shows the formal reporting relationships that exist in an organization (Figure 7.1). Each place on the organizational chart is typically occupied by an individual, and each horizontal level represents a level of authority. As companies grow larger in size, many charts are needed to fully understand how employees are grouped and how each position is integrated into a cohesive whole. It is very important to note that the organization chart presents only the formal structure designed by company officials. The informal structure, albeit nebulous and undefined, does have an impact in many organizations. Although we may briefly mention the informal organization structure when its influence is important, for the most part, this chapter will focus only on the Formal Organizational Structure, as well as the decisions and evaluations that are necessary to design an effective one. Organization Design and Structure 89 ORGANIZATION DESIGN DECISIONS As previously stated, when designing an organizational structure, certain decisions must be made. These decisions will determine the actual size and shape of the structure, while developing the communication channels for the organization. The factors that must be considered when creating an organizational structure include: span of control, division of authority, division of labor, and integration. The consequences of these decisions all contribute to shaping each organization’s structure to suit its unique environment.

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  Industrial Engineering Foundations

  Bridging the Gap between Engineering and Management

  • Farrokh Sassani(Author)
  • 2017(Publication Date)
  • Mercury Learning and Information

    (Publisher)

  8 INDUSTRIAL ENGINEERING FOUNDATIONS organizational structure for its personnel and departments, the form of which depends on the goals of the enterprise. A consulting firm, a hospital, or a chemical plant, for example, all have different organizational needs and structures. In a manufacturing or production company, the term production implies transformational processes in which raw materials are converted into consumable goods and products. In doing so, the combination of manpower, machinery, tools, energy, and capital is required. This is a simplified definition. As depicted in Figure 2.1, there are many tasks, such as financial planning, demand forecasting, operations scheduling, quality control, and distribution, that are associated with manufacturing any product. This association is such that, if satisfactory performance is required, which is undoubtedly always the case, then there is a need for well-designed structure to control and coordinate all these highly interrelated activities. In fact, no human undertaking is ever successful unless it is organized. Therefore, to achieve the goals of an organization, it is necessary to develop teams or units that function as a single efficient and effective entity. Figure 2.1. Entities and functions in a manufacturing company. 2.2 BASIC PRINCIPLES OF ORGANIZATION We discuss various forms of organizational structure later; however, regardless of these forms, there are basic operational principles that are common to all. At the personnel level, all members of an organization perform better in their roles when they know the following clearly: ORGANIZATIONAL STRUCTURE 9 - What their job is - Who their direct supervisor is - Where their position in the organizational structure is - What their authority is - To whom they must report relevant information These factors are essential to a good organization and apply to everyone in the organization.

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  Organizations

  Structures, Processes and Outcomes

  • Pamela S. Tolbert, Richard H. Hall(Authors)
  • 2015(Publication Date)
  • Routledge

    (Publisher)

  It is this kind of context in which matrix forms of organization are expected to be best suited, although the dual-authority structure can require extremely intensive interactions and demands, especially on those employees who have two bosses. Partly because of this, it has been suggested that it’s most suited to relatively smaller organizations with a limited number (three or four product lines) (Galbraith, 1971). Information Technology Before moving on to consider other forces that shape formal structure, there are a few additional points to note about studies of technology and organizations. Research on the effects of technology on organizations dropped off considerably after the 1970s—perhaps because of the shift in researchers’ interests from understanding internal influences on organizational operations to understanding more external, environmental influences. This shift seems particularly surprising, however, because it was after this time point that information technologies developed in ways that allowed significant transformations in the way people worked and, hence, in organizational routines and operations (Zammuto et al., 2007). These technologies allow information to be exchanged simultaneously among a large number of individuals working at geographically and temporally dispersed locations; they also provide decision-making tools (simulations, visualization of work processes, etc.) that were largely unknown thirty years ago (Kellogg, Orlikowski, and Yates, 2006 ; Polzer et al., 2006). Such technological change has potentially enormous implications for the way organizations are structured. Yet we have little systematic knowledge of whether or how this technology has significantly altered structural patterns or the conditions under which it does or does not lead to structural changes

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  Organizational Behaviour

  • Paul Smith, Marilyn Farmer, Wendy Yellowley(Authors)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  Of course, strategy and structure are inextricably intertwined. Chandler's point was that new challenges give rise to new structures. The challenges of size and complexity, coupled with advances in communications and techniques of management control, produced divisionalization and decentralization. These same forces, several generations on, are now driving us towards new structural solutions – the federated organization, the multi-company coalition, and the virtual company. Few historians are prescient. Chandler was.

  (Adapted from Crainer and Dearlove 2003; quotation from p. 32)

  Q  To what extent does structure follow strategy?

  Technology

  Technology can be defined as how the organization transfers its inputs into its outputs (Robbins, Judge and Campbell 2010: 443). A car manufacturer, such as Ford, uses production lines to manufacture its vehicles. On the other hand, a university may use a variety of teaching technologies – some traditional, such as the lecture or seminar, and others more modern, such as the case study and a virtual learning environment.

  It is suggested that the type of technology has an important influence on the organizational structure. Studies point to the degree of routineness as being a key aspect in this. Technologies lie on a continuum from the standardized, routine and automated through to the non-routine and customized. Much of large-scale production-line manufacturing would be an example of the former, while furniture restoring, custom shoemaking and medical research would be examples of the latter. Although the link between routines and structure is a complex one, studies have found a clear association between routineness and formalization: organizations with routine technologies tend to have greater formalization, in terms of rules, regulations, job descriptions and documentation. Routine technologies also tend to be associated with taller and more departmentalized structures.

  Environment

  Various studies have shown a link between the structure and management of an organization and the external environment within which the firm operates, specifically in relation to the degree of uncertainty and change in the environment.

  Burns and Stalker (1961) studied a number of UK firms in different industries and their settings. They characterized these settings or environments into five types, ranging from stable to unpredictable. Two main types of structure and management practice were also identified: the mechanistic and the organic. The mechanistic structure was one with a high degree of task specialization and formalization, tight specification of individual responsibility and authority, centralized decision-making and formal rules and procedures. It can be likened to Weber's bureaucratic structure. The organic structure possessed little task specialization, a low degree of formalization, delegated decision-making and a high degree of individual responsibility.

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  Introduction to Theory of Control in Organizations

  • Vladimir N. Burkov, Mikhail Goubko, Nikolay Korgin, Dmitry Novikov(Authors)
  • 2015(Publication Date)
  • CRC Press

    (Publisher)

  Mechanisms of Organizational Structure Design ◾ 239 8. Solve problems 9. Exhort, persuade, set goals and values The following section illustrates the basic terms and notions related to organizational structures. The model of a manage-ment hierarchy controlling a technological network would serve as an example. The Problem of Management Hierarchy over a Technological Network [110] Let N = { w 1 , …, w n } be a set of workers able to interact. Denote by w env the external environment interacting with the workers. Typical workers are denoted by w , w ′ , w ′′∈ N . Any function of the form ∪ ⋅ ∪ → ℜ + f N w N w env env p : ( { }) ( { }) (6.1) is called a flow function . In other words, for each pair of workers w ′ , w ′′∈ N the vector f ( w ′ , w ′′ ) defines the intensity of flows between w ′ and w ′′ . This vector includes p nonnegative components. Every component determines the intensity of a specific interaction between the workers; one would iden-tify different types of interaction (e.g., a material flow and an information flow). Therefore, the technology of interac-tion between the workers specifies the flow function f or the weighted technological network ( N , f ). The technological net-work is undirected , that is, ∀ w ′ , w ′′∈ N : f ( w ′ , w ′′ ) = f ( w ′′ , w ′ ). We say the relation exists between two workers if and only if the flow between them makes zero. Suppose that the network has no loops; that is, for each worker w the equality holds: f ( w , w ) = 0. Consider the following example. Set N = { w 1 , w 2 , w 3 } and p = 1; this means we have three workers and one-dimensional flows. Assume that the technological network consists of four relations: ( , ) 1 f w w env = λ , ( , ) 1 2 f w w = λ , ( , ) 2 3 f w w = λ , 240 ◾ Introduction to Theory of Control in Organizations = λ f w w env ( , ) 3 . Here λ stands for the flow intensity. This tech-nological network is illustrated in Figure 6.1 and corresponds to a production line (a “business process”).

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  A Primer on Organizational Behavior

  • James L. Bowditch, Anthony F. Buono, Marcus M. Stewart(Authors)
  • 2015(Publication Date)
  • Wiley

    (Publisher)

  42 Organizational Context of Technological Innovation While advanced manufactur- ing and information technologies hold significant promise for enhanced organizational performance, they have become so complex that they often stretch the ability of man- agerial and organizational systems to absorb them. 43 In fact, a basic problem is that while such technologies are becoming increasingly commonplace, many firms have been slow to fully adopt them and those that have often view them as little more than turnkey systems requiring almost no modification of present organizational structures and practices. Organizations, however, are far more likely to effectively use such ad- vanced technologies when appropriate modifications are made in strategies that stress technological progress and structures that facilitate their introduction, acceptance, and diffusion. In fact, research suggests that competitive advantage is likely to result only when managers understand the need to redesign their organizational processes and structures to exploit the full benefits of technological innovation efforts. 44 Strategy Historically, strategy has been defined as the “determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals.” 45 As this definition implies, strategy requires sound diagnostic skills and astute judgment. Based on an analysis of the external environment and organizational resources, managers identify organizational goals and objectives and then generate systematic plans and structures to accomplish those goals and objectives. 46 As illustrated in Figure 9-3, this view, which is influenced by the early work of Alfred Chandler, suggests that strategy determines structure. In his research, Chandler found that companies usually begin operations with a single product or service (concentration strategy).

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