Organizational Behavior- II | Chapter 5 : Designing Organizational structure : Authority and Control | Chapter Summary – By Group 12 |

| GROUP 12 | B13146 | Francis Kurian Thomas | B13144 | Dhruv Wali | B13149 | Harish Goel | B13179 | Varun Anand | B13181 | Vipul Singla |
2/8/2014
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Designing Organizational Structure: Authority and Control

To protect shareholders goals, managers must constantly analyze organizational structure. This chapter examines the vertical dimension of structure—the hierarchy of authority created to control an organization’s members.
How and why does vertical differentiation occur?

The Emergence of the Hierarchy
The hierarchy emerges when an organization faces coordination and motivation problems due to increased level of differentiation. At this point, the hierarchy emerges to coordinate and motivate members by increasing the number of managers and organizational levels. This gives the organization direct face to face control over its members. Managers choose between a flat hierarchy with few levels relative to company size and a tall hierarchy with many levels relative to size.

Problems with Tall Hierarchies
A hierarchy is tall if it has many levels relative to organizational size and flat if it has few levels relative to size. Most large companies do not exceed 9 or 10 levels and do not increase the number of managers, because tall hierarchies have problems with
A) Communication Problems. As the chain of command extends, communication takes longer, which slows decision making. Information is distorted, accidentally or deliberately, as it goes up and down the hierarchy.
B) Motivation Problems. The taller the organization, the less managerial authority and responsibility there are. Tall hierarchies decrease motivation because managers, with less authority and responsibility, are less motivated.