Organizing defined

Arranging and grouping jobs,

allocating resources, and
assigning work so that
activities can be
accomplished as planned

Organization concepts

Work specialization
Span of control
Chain of command
Authority

Staf
Functional

Responsibility
Centralization

Contrasting spans of control.

What Is Organizational
Structure?
Organizational Structure
How job tasks are
formally divided,
grouped, and
coordinated.

Key
KeyElements:
Elements:
Work
Workspecialization
specialization
Departmentalization
Departmentalization
Chain
Chainof
ofcommand
command
Span
Spanof
ofcontrol
control
Centralization
Centralizationand
and
decentralization
decentralization
Formalization
Formalization

Key Design Questions and

Answers for Designing the
Proper Organization Structure
The Key Question
Provided By

The Answer Is

1. To what degree are articles

subdivided into separate jobs?

Work specialization

2. On what basis will jobs be grouped

together?

Departmentalization

3. To whom do individuals and groups Chain of command

report?
4. How many individuals can a manager
efficiently and effectively direct?
5. Where does decision-making
authority lie?

Span of control

Centralization
and decentralization

6. To what degree will there be rules

Formalization
and regulations to direct employees

What Is Organizational
Structure? (contd)
Work Specialization
The degree to which tasks in the organization
are subdivided into separate jobs.
Division
Divisionof
oflabor:
labor:
Makes
Makesefficient
efficientuse
useof
ofemployee
employeeskills
skills
Increases
Increasesemployee
employeeskills
skillsthrough
throughrepetition
repetition
Increases
Increasesproductivity
productivity
Specialized
Specializedtraining
trainingisismore
moreefficient.
efficient.
Allows
Allowsuse
useof
ofspecialized
specializedequipment.
equipment.

What Is Organizational
Structure? (contd)
Departmentalization
The basis by which jobs are grouped together.
Grouping
GroupingActivities
ActivitiesBy:
By:
Function
Function
Product
Product
Geography
Geography
Process
Process
Customer
Customer

What Is Organizational
Structure? (contd)
Authority
The rights inherent in a managerial position to
give orders and to expect the orders to be
obeyed.
Chain of Command
The unbroken line of authority that extends
from the top of the organization to the lowest
echelon and clarifies who reports to whom.
Unity of Command
A subordinate should have only one superior to
whom he or she is directly responsible.

What Is Organizational
Structure? (contd)
Span of Control
The number of subordinates a manager can
efficiently and efectively direct.
Concept:
Concept:
Wider
Widerspans
spansof
ofmanagement
managementincrease
increaseorganizational
organizational
efficiency.
efficiency.
Narrow
NarrowSpan
SpanDrawbacks:
Drawbacks:
Expense
Expenseof
ofadditional
additionallayers
layersof
ofmanagement.
management.

Increased
Increasedcomplexity
complexityof
ofvertical
verticalcommunication.
communication.
Encouragement
Encouragementof
ofoverly
overlytight
tightsupervision
supervisionand
and
discouragement
discouragementof
ofemployee
employeeautonomy.
autonomy.

Contrasting Spans of
Control

What Is Organizational
Structure?
(contd)
Centralization
The degree to which decision making is
concentrated at a single point in the
organization.
Decentralization
The degree to which decision making
is spread throughout the organization.
Formalization
The degree to which jobs
within the organization are
standardized.

Departmentalization

Defined
By function
By product
By geography
By customer
By process

Functional departmentalization.

Product departmentalization.

Customer departmentalization.

Geographic departmentalization.

Process departmentalization.

Organizational designs

Simple structure
Functional structure
Divisional structure
Matrix organization
Boundaryless organization
Learning Organization

A matrix structure in an aerospace firm.

Job description

A formal statement of job duties,

working conditions, and operating
responsibilities
Acts as a standard by which to
measure performance
Clarifies the duties and
responsibilities

A job description for a production editor in a publishing company.

AUTHORITY

The formal and legitimate right of

a manager to make decisions,
issue orders, and allocate
resources to achieve
organizationally desired outcomes

Characteristics of
Authority

Authority is vested in
organizational positions, not
people
Authority is accepted by
subordinates
Authority flows down the vertical
hierarchy

RESPONSIBILITY

The duty to perform task or

activity an employee has been
assigned

ACCOUNTABILITY

The fact that the people with

authority and responsibility are
subject to reporting and justifying
task outcomes to those above
them in the chain of command

DELEGATION

The process managers use to transfer

authority and responsibility to
positions below them in the hierarchy
Starts when the organization is being
established and tasks are added
during day-to day operations

Delegation process

Allocation of duties
Delegation of authority
Assignment of responsibility
Creation of accountability

Efective Delegation

Establish goals and standards

Ensure clarity
Involvement
Expect completed work
Provide training
Timely feedback

Barriers to Delegation

Failure to define authority and responsibility

clearly.
Failure to provide employees with sufficient
training to carry out the task.
Poor planning by some managers.
Some managers feel that only they can do a
job properly.
Fear that employees will make mistakes.
Fear that employees will do well and be
promoted ahead of the manager .

Centralization Vs
Decentralization
Centralization
It is the concentration of authority
a the top of an organization or
department
Decentralization
It is a dispersal of a high degree of
authority to lower levels of an
organization

Decentralization
Potential benefits
It frees top managers to develop
organizational plans and strategies

It develops lower level managers

self-management, planning and
administration competencies

Contd.,

Subordinates have a better grasp of

all the facts
Valuable time is lost when a
subordinate or am must check
everything with manager
It fosters a healthy, achievementoriented atmosphere among
employees

Common Organization
Designs
Simple Structure
A structure characterized by a low degree of
departmentalization, wide spans of control,
authority centralized in a single person, and
little formalization.

Common Organization
Designs (contd)
Bureaucracy
A structure of highly
operating routine tasks
achieved through
specialization, very
formalized rules and
regulations, tasks that are
grouped into functional
departments, centralized
authority, narrow spans of
control, and decision
making that follows the
chain of command.

The Bureaucracy

Strengths

Functional
economies of scale
Minimum duplication
of personnel and
equipment
Enhanced
communication
Centralized decision
making

Weaknesses

Subunit conflicts
with organizational
goals
Obsessive concern
with rules and
regulations
Lack of employee
discretion to deal
with problems

LINE AUTHORITY

Line authority belongs to mangers who

have the right to direct and control the
activities of employees who perform the
tasks essential to achieving
organizational goals
Flows down the organization through
primary chain of command

STAFF AUTHORITY

It belongs to those who support

line functions through advice,
recommendations, research,
technical expertise
For some issues staf units are
given command

Common Organization
Designs (contd)
Matrix Structure
A structure that creates dual lines of authority
and combines functional and product
departmentalization.
Key
KeyElements:
Elements:
++Gains
Gainsthe
theadvantages
advantagesof
offunctional
functionaland
andproduct
product

departmentalization
departmentalizationwhile
whileavoiding
avoidingtheir
theirweaknesses.
weaknesses.
++Facilitates
Facilitatescoordination
coordinationof
ofcomplex
complexand
and
interdependent
interdependentactivities.
activities.

Breaks
Breaksdown
downunity-of-command
unity-of-commandconcept.
concept.

New Design Options

Team Structure
The use of teams as the central device to
coordinate work activities.

Characteristics:
Characteristics:

Breaks
Breaksdown
downdepartmental
departmentalbarriers.
barriers.
Decentralizes
Decentralizesdecision
decisionmaking
makingto
tothe
theteam
teamlevel.
level.
Requires
Requiresemployees
employeesto
tobe
begeneralists
generalistsas
aswell
wellas
as
specialists.
specialists.
Creates
Createsaaflexible
flexiblebureaucracy.
bureaucracy.

New Design Options

(contd)
Virtual Organization
A small, core organization that outsources its
major business functions.
Highly centralized with little or no
departmentalization.
Concepts:
Concepts:
Advantage:
Advantage:Provides
Providesmaximum
maximumflexibility
flexibilitywhile
while
concentrating
concentratingon
onwhat
whatthe
theorganization
organizationdoes
doesbest.
best.
Disadvantage:
Disadvantage:Reduced
Reducedcontrol
controlover
overkey
keyparts
partsof
of
the
thebusiness.
business.

A Virtual Organization

New Design Options

(contd)
Boundaryless Organization
An organization that seeks to eliminate the
chain of command, have limitless spans of
control, and replace departments with
empowered teams.
T-form
T-formConcepts:
Concepts:
Eliminate
Eliminatevertical
vertical(hierarchical)
(hierarchical)and
andhorizontal
horizontal
(departmental)
(departmental)internal
internalboundaries.
boundaries.
Breakdown
Breakdownexternal
externalbarriers
barriersto
tocustomers
customersand
and
suppliers.
suppliers.

Why Do Structures Difer?

Mechanistic Model
A structure characterized by
extensive departmentalization,
high formalization, a limited
information network, and
centralization.

Why Do Structures Difer?

Organic Model
A structure that is flat, uses cross-hierarchical
and cross-functional teams, has low
formalization, possesses a comprehensive
information network, and relies on participative
decision making.

Mechanistic Versus Organic Models

Why Do Structures Difer?

Strategy
Innovation Strategy
A strategy that emphasizes the introduction of
major new products and services.
Cost-minimization Strategy
A strategy that emphasizes tight cost
controls, avoidance of unnecessary innovation
or marketing expenses, and price cutting.
Imitation Strategy
A strategy that seeks to move into new
products or new markets only after their
viability has already been proven.

The Strategy-Structure
Relationship
Strategy

Structural Option

Innovation

Organic: A loose structure; low

specialization, low formalization,
decentralized

Cost minimization

Mechanistic: Tight control; extensive

work specialization, high formalization,
high centralization

Imitation

Mechanistic and organic: Mix of

loose with tight properties; tight
controls over current activities and
looser controls for new undertakings

Why Do Structures Difer?

Size
Size
How the size of an organization afects its
structure. As an organization grows larger, it
becomes more mechanistic.
Characteristics
Characteristicsof
oflarge
largeorganizations:
organizations:
More
Morespecialization
specialization
More
Morevertical
verticallevels
levels
More
Morerules
rulesand
andregulations
regulations

Why Do Structures Difer?

Technology
Technology
How an organization transfers its inputs into
outputs.
Characteristics
Characteristicsof
ofroutineness
routineness(standardized
(standardizedor
or
customized)
customized)ininactivities:
activities:

Routine
Routinetechnologies
technologiesare
areassociated
associatedwith
withtall,
tall,
departmentalized
departmentalizedstructures
structuresand
andformalization
formalizationinin
organizations.
organizations.
Routine
Routinetechnologies
technologieslead
leadto
tocentralization
centralizationwhen
when
formalization
formalizationisislow.
low.
Nonroutine
Nonroutinetechnologies
technologiesare
areassociated
associatedwith
withdelegated
delegated
decision
decisionauthority.
authority.

Why Do Structures Difer?

Environment
Environment
Institutions or forces outside the organization
that potentially afect the organizations
performance.
Key
KeyDimensionsDimensions Capacity:
Capacity:the
thedegree
degreeto
towhich
whichan
anenvironment
environmentcan
can
support
supportgrowth.
growth.
Volatility:
Volatility:the
thedegree
degreeof
ofinstability
instabilityininthe
theenvironment.
environment.
Complexity:
Complexity:the
thedegree
degreeof
ofheterogeneity
heterogeneityand
and
concentration
concentrationamong
amongenvironmental
environmentalelements.
elements.

Bureaucracy Is Dead

Characteristics of
Bureaucracies

Specialization
Formalization
Departmentalization
Centralization
Narrow spans of
control
Adherence to a chain
of command.

Why Bureaucracy
Survives

Large size prevails.

Environmental
turbulence can be
largely managed.
Standardization
achieved through hiring
people who have
undergone extensive
educational training.
Technology maintains
control.

Organizational Designs
and Employee Behavior
Research
ResearchFindings:
Findings:
Work
Workspecialization
specializationcontributes
contributesto
tohigher
higheremployee
employee
productivity,
productivity,but
butititreduces
reducesjob
jobsatisfaction.
satisfaction.
The
Thebenefits
benefitsof
ofspecialization
specializationhave
havedecreased
decreasedrapidly
rapidlyas
as
employees
employeesseek
seekmore
moreintrinsically
intrinsicallyrewarding
rewardingjobs.
jobs.
The
Theeffect
effectof
ofspan
spanof
ofcontrol
controlon
onemployee
employeeperformance
performanceisis
contingent
contingentupon
uponindividual
individualdifferences
differencesand
andabilities,
abilities,task
task
structures,
structures,and
andother
otherorganizational
organizationalfactors.
factors.
Participative
Participativedecision
decisionmaking
makinginindecentralized
decentralized
organizations
organizationsisispositively
positivelyrelated
relatedto
tojob
jobsatisfaction.
satisfaction.

Organization Structure: Its

Determinants and
Outcomes