Thread: Foundations of organization structure

LEARNING OBJECTIVES

After studying this chapter, students should be able to:

1. Identify the six key elements that define an organization’s structure.
2. Explain the characteristics of a bureaucracy.
3. Describe a matrix organization.
4. Explain the characteristics of a virtual organization.
5. Summarize why managers want to create boundaryless organizations.
6. Contrast mechanistic and organic structural models.
7. List the factors that favor different organizational structures.
8. Explain the behavioral implications of different organizational designs..


CHAPTER OVERVIEW

The theme of this chapter is that an organization’s internal structure contributes to explaining and predicting behavior. That is, in addition to individual and group factors, the structural relationships in which people work have a bearing on employee attitudes and behavior.
What is the basis for the argument that structure has an impact on both attitudes and behavior? To the degree that an organization’s structure reduces ambiguity for employees and clarifies such concerns as “What am I supposed to do?,” “How am I supposed to do it?,” “To whom do I report?,” and “To whom do I go if I have a problem?” it shapes their attitudes and facilitates and motivates them to higher levels of performance.
Of course, structure also constrains employees to the extent that it limits and controls what they do. For example, organizations structured around high levels of formalization and specialization, strict adherence to the chain of command, limited delegation of authority, and narrow spans of control give employees little autonomy. Controls in such organizations are tight, and behavior will tend to vary within a narrow range. In contrast, organizations that are structured around limited specialization, low formalization, and wide spans of control provide employees greater freedom and, thus, will be characterized by greater behavioral diversity.
Exhibit 15-11 visually summarizes what we will discuss in this chapter. Strategy, size, technology, and environment determine the type of structure an organization will have. For simplicity’s sake, we can classify structural designs around one of two models: mechanistic or organic. The specific effect of structural designs on performance and satisfaction is moderated by employees’ individual preferences and cultural norms.
One last point: Managers need to be reminded that structural variables such as work specialization, span of control, formalization, and centralization are objective characteristics that can be measured by organizational researchers. The findings and conclusions we will offer in this chapter, in fact, are directly a result of the work of these researchers, but employees do not objectively measure these structural characteristics! They observe things around them in an unscientific fashion and then form their own implicit models of what the organization’s structure is like. How many people did they have to interview with before they were offered their jobs? How many people work in their departments and buildings? Is there an organization policy manual? If so, is it readily available, and do people follow it closely? How is the organization and its top management described in newspapers and periodicals? Answers to questions such as these, when combined with an employee’s past experiences and comments made by peers, lead members to form an overall subjective image of what their organization’s structure is like. This image, though, may in no way resemble the organization’s actual objective structural characteristics.
The importance of these implicit models of organizational structure should not be overlooked. As we noted in Chapter 5, people respond to their perceptions rather than objective reality. The research, for instance, on the relationship between many structural variables and subsequent levels of performance or job satisfaction is far from consistent. We explained some of this as being attributable to individual differences. However, an additional contributing cause to these inconsistent findings might be diverse perceptions of the objective characteristics. Researchers typically focus on actual levels of the various structural components, but these may be irrelevant if people interpret similar components differently. The bottom line, therefore, is to understand how employees interpret their organization’s structure. That should prove a more meaningful predictor of their behavior than the objective characteristics themselves.