Page 199 - Fundamentals of Management Myths Debunked (2017)_Flat

198 Part 3 • Organizing
Considering there are numerous situations where rules may be too restrictive, many
organizations have allowed employees some latitude, giving them sufficient autonomy to
make those decisions that they feel are best under the circumstances. It doesn’t mean throw-
ing out all organizational rules because there always will be rules that are important for
employees to follow—and these rules should be explained so employees understand why it’s
important to adhere to them. But for other rules, employees may be given some leeway. 26

What Are Some Common Organizational Designs?

In making structural decisions, managers have some common designs from which to choose:
6-3 Compare and traditional and more contemporary. Let’s look at some.
contrast
traditional and What Traditional Organizational Designs Can Managers Use?
contemporary When designing a structure, managers may choose one of the traditional organizational
organizational designs. These structures—simple, functional, and divisional—tend to be more mechanistic
designs. in nature. (See Exhibit 6–9 for a summary of the strengths and weaknesses of each.)

whaT is The simPle sTruCTure? Most companies start as entrepreneurial ventures us-
ing a simple structure, which is an organizational design with low departmentalization, wide
27
simple structure spans of control, authority centralized in a single person, and little formalization. The simple
An organizational design with low departmentaliza- structure is most widely used in smaller businesses and its strengths should be obvious. It’s fast,
tion, wide spans of control, authority centralized in flexible, and inexpensive to maintain, and accountability is clear. However, it becomes increas-
a single person, and little formalization
ingly inadequate as an organization grows, because its few policies or rules to guide operations

Exhibit 6–9 Traditional Organization Designs

STRENGTHS WEAKNESSES

Simple
Fast; Structure Not appropriate as
exible; organization grows;
inexpensive to maintain; reliance on one person
clear accountability. is risky.

Functional
Cost-saving advantages Structure Pursuit of functional goals can
from specialization cause managers to lose sight
(economies of scale, minimal of what’s best for the overall
duplication of people and organization; functional
equipment); employees are specialists become insulated
grouped with others who and have little understanding
have similar tasks of what other units are doing.

Divisional
Focuses on results—division Structure Duplication of activities and
managers are responsible resources increases costs and
for what happens to their reduces ef ciency.
products and services.

Source: Robbins, Stephen P., Coulter, Mary, Management, 13th Ed., © 2016, p. 304. Reprinted
and electronically reproduced by permission of Pearson Education, Inc., New York, NY.