ORGANIZATION

STRUCTURE
 WHAT IS ORGANIZATIONAL
STRUCTURE?
 According to STEPHEN P ROBBINS “An organizational
structure defines how job tasks are formally divided,
grouped and coordinated.”

 According to FRED LUTHANS “Organization structure

represents the skeleton framework for organizational
behavior.”

 Organisational structure is defined as “the framework of

tasks, reporting and authority relationships within which
an organisation functions.”
 NEED FOR FORMAL
ORGANIZATION STRUCTURE
 Facilitating Management
 Encouraging Growth
 Optimum Use of Technological Improvement
 Encouraging Human Use of Human Beings
 Stimulating Creativity
 Work Specialization
Work Specialization or Division Of Labour
refers to the degree to which activities in an
organization are subdivided into separate jobs.

In essence, individuals specialise in doing part

of an activity rather than the entire activity.
 Departmentalization
The basis by which jobs are grouped together is called
Depatmentalization.
The various ways by which Departmentalization can be
done are:-
 Functional

 Product

 Customer

 Geographic
Chain of Command
Who reports to whom?
 Span of Control
How many people can a manager manage?
 Formalisation
It refers to the degree to which the jobs within
the organisation are standardized.

The degree of formalization can vary widely

between organizations and within
organizations.
 The Degree of Formalization
Lower Higher

Employee Freedom
Standardization

Low
Formalization

High
Formalization

Higher Lower
 Centralization and
Decentralization
Centralization
Formal decision making authority is held
by a few people, usually at the top

Decision making authority is

dispersed throughout the organization
Decentralization
 Making Decisions in
Organizations
Managerial Employee
High High
Control Empowerment

Centralized Decentralized
Decision Decision
Making Making

Employee Managerial
Low Low
Empowerment Control
 FORMS OF ORGANIZATIONAL
STUCTURES

 The Line and Staff Organization Structure

 The Functional Organization Structure
 The Divisional Organization Structure
 The Matrix Structure
 The Project Organization Structure
 Free form Organization Structure
 Network Organization Structure
 Line and Staff Organization
Structure
 Line Departments – Substantive (direct) in its contribution to
organization’s overall objective

 Staff Departments – Objective (indirect) in its contribution to

organization’s overall objective

Line and Staff conflict

Reasons of conflict are:
• Difference in view points
• Lack of Demarcation between Line and Staff
• Lack of proper understanding of authority
• Different background
 Functional Organization Structure
 Traditional concept of organising.
 The basis of departmentation is the various
functions to be performed by the organisation.
 Widely used in medium and large organisations.
 Divisional Organization Structure
 Also known as Profit Decentralization.
 Organization is divided into fairly autonomous units.
 Each unit is self contained and directly accountable to the
organization.

Basis of Divisionalisation
 Product Divisionalisation

 Territorial Divisionalisation

 Strategic Business Divisionalisation

 Product Divisionalisation
CEO

Vice President Vice President Vice President Vice President

Sales and Research and Materials Finance
Marketing Development Management

PDM PDM PDM PDM

Canned Frozen Frozen Baked

Soups Vegetable Entrees Goods
Division Division Division Division
Centralized support functions
Divisions
Geographic Divisionalisation

Regional
Operations

Regional CEO Regional

Operations Central Support Operations
Functions

Individual
stores
Regional
Operations

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Matrix Organization Structure
It is the realisation of two dimensional
structure which emanates directly from two
dimensions of authority.
It is in voilation of unity of command.
Matrix = Matrix + Matrix + Matrix + Matrix
Organization Structure Systems Culture Behaviour
 CEO
Matrix Structure

Vice President Vice President Vice President Vice President Vice President
Engineering Sales and Finance Research and Purchasing
Marketing Development

Product A
Manager

Product B Product Team

Manager

Product C
Manager

Product D
Manager

Two-boss employee
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Project Organization Structure
 Free Form Organization
 Also known as naturalistic, organic or adhocratic
form of organiztion structure.
 Free form structures reduce the emphasis on
positions, departments and other formal units, and
on the organizational hierarchy.
 Free form organizations are suitable for those
industries which have to work in highly dynamic
environments.
 Network organization structure
A recent innovation in organizational
architecture is the use of network structures.

A network structure is a cluster of different

organizations whose actions are
coordinated by contracts and agreements
rather than through a formal hierarchy.

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