Organizational Structure

Review of Day 3
• Drivers of globalization and reasons for market entry
• Market selection
• Methods of entry
• Strategy dilemma – how local, how global?

2

Day 4 Objectives
• Historical origins of structure
• Major dimensions of organizational structure
• Strengths/drawbacks of various structures

3

Organizations: How are they structured?
• Case study

Organizations: How are they structured?
• Work specialization
– Ford (Henry)
• Efficient, train replacement,
• Inflexible, dissatisfied

• Chain of command
– (Boss)

• Span of control
• Centralization
• Formalization

Frederick Taylor:
The Four Principles of Scientific Management
• Evaluate a task by scientifically studying each part of the task
• Carefully select workers with the right abilities for the task
• Give workers the training and incentives to do the task with the proper work methods • Use scientific principles to plan the work methods and ease the way for workers to do their jobs

Elton Mayo & the Hawthorne Effect
• Started out trying to see if different lighting affects worker productivity
• In later experiments, variables such as wage levels, rest periods and length of the work day were varied
• Worker performance seemed to increase over time leading Mayo and his colleagues to hypothesize the Hawthorne Effect
• Employees worked harder if they received added attention, if they thought managers cared about their welfare and that supervisors paid attention to them

Hugo Munsterberg:
Founder of “Industrial Psychology”

He set out to “sketch the outlines of a new science which is to intermediate between the modern laboratory psychology and the problems of economics: the psychological experiment is systematically to be placed at the service of commerce and industry." Hugo Munsterberg:
Founder of “Industrial Psychology”

• Study jobs and determine which people are best suited to specific jobs
• Identify the psychological conditions under which employees do their best work • Devise management strategies to influence employees to follow the management’s interests

Mary Parker Follett:
Democratic Organizations
• Organizations should be operated as
“communities” with managers and subordinates working together in harmony
• “Authority of Expertise”: The work process should be under the control of workers with relevant knowledge, rather than of managers who should act as facilitators
• Conflicts should be resolved by having the managers and workers talk over differences and find solutions that would satisfy both parties: integration

Organizations: How are they structured?
• Work specialization
– Ford (Henry)
• Efficient, train replacement,
• Inflexible, dissatisfied

• Chain of command
– (Boss)

• Span of control

Factors Influencing Span of Control Decisions
Job
Complexity
Job
Similarity

Technology

Ability of
Management

Span of Control

Degree of
Employee
Empowerment

Geographic
Proximity of
Supervised
Employees

Amount of Coordination
Abilities
of
Employees

Organizations: How are they structured?
• Work specialization
– Ford (Henry)
• Efficient, train replacement,
• Inflexible, dissatisfied

• Chain of command
– (Boss)

• Span of control
• Centralization
• Formalization

Organizations: How are they structured?
•
•
•
•
•

Work specialization
Chain of command
Span of control
Centralization
Formalization
– McDonald’s French Fries
– Alcoa Casters

General Organization Types
Mechanistic
Organization

Organic
Organization

Centralized hierarchy of authority

Decentralized hierarchy of authority

Many rules and procedures

Few rules and procedures

Specialized tasks

Shared tasks

Formalized communication

Informal communication

Few teams or task forces

Many teams or task forces

Narrow span of