Defining Organizational Structure

Discuss the traditional and contemporary view of work

specialization.
Describe each of the five forms of departmentalization.
Explain cross-functional teams.
Define chain of command, authority, responsibility, and
unity of command.
Discuss the traditional and contemporary views of chain of
command.
Discuss the traditional and contemporary views of span of
control.

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 Explain what factors influence the amount of
centralization and decentralization in an organization.
Explain how formalization is used in organizational
design.
Organizational Design Decisions
Contrast mechanistic and organic organizations.
Explain the relationship between an organizations
strategy and structure.
Explain how an organizations size affects its structure.

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 Discuss Woodwards findings on the relationship of
technology and structure.
Explain how environmental uncertainty affects an
organizations structure.
Common Organizational Designs
Contrast the three traditional organizational designs.
Explain team-based, matrix, and project structures.
Discuss the design of virtual, network, and modular
organizations.
Describe the characteristics of a learning organization

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 refers to the establishment of a structure
within which the organisations activities
will be carried out.
Organising is the function in which the
synchronization and combination of
human , physical and financial resources
takes place
It determines relationships among
individuals in an org.

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 Organising results in the systematization of
tasks, resources, methods and procedures.
It establishes accountability, lines of
authority are indicated. This gives direction
to the group. Organising therefore clarifies
employees responsibilities allows individuals
to concentrate on their field of expertise
Channels of communication are pinpointed.
This ensures that communication is effective
and all information required by employees to
perform their jobs effectively reaches them
through the correct channels.
It helps managers deploy resources
meaningfully. Organising results in the
productive application and utilisation of
resources.
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 It results in synergy which helps promote
the effectiveness and quality of the work
performed.
Organising results in the coordination of
activities within the organisation.
Organising creates an organizational
structure which is responsible for creating
a mechanism for coordinating the entire
organization.
Organising allows the total workload to be
spread evenly and according to ability
among the various employees.
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 Specialization
As the enterprise expands the entrepreneur becomes the
manager who allocates various tasks to her helpers.
Specialization has an impact on the extent to which the total
task of the org. is to be subdivided into smaller components.
It is in fact the degree to which special tasks are identified
and allocated to individuals or groups of employees with
special training.
Work Specialization
The degree to which tasks in the organization are divided into
separate jobs with each step completed by a different person
Overspecialization can result in human diseconomies from
boredom, fatigue, stress, poor quality, increased absenteeism,
and higher turnover

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 Specialization
As the enterprise expands the entrepreneur becomes the
manager who allocates various tasks to her helpers.
Specialization has an impact on the extent to which the total
task of the org. is to be subdivided into smaller components.
It is in fact the degree to which special tasks are identified
and allocated to individuals or groups of employees with
special training.
Work Specialization
The degree to which tasks in the organization are divided into
separate jobs with each step completed by a different person
Overspecialization can result in human diseconomies from
boredom, fatigue, stress, poor quality, increased absenteeism,
and higher turnover

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 Responsibility- obligation to carry out a
task
Authority right to give instructions and
deploy resources
Responsibility must always =
Authority, otherwise this can lead to a
great deal of frustration on the part of
the subordinate who has been tasked
with carrying out certain activities.

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 The process whereby the obj and activities of separate
depts. are integrated so that the org . obj can be achieved
optimally. Coordination is the glue that keeps the various
departments within ann. organisation together as it deals
with the inter- relatedness of tasks and activities.
3 principles of coordination-

Chain of command: Chain of Command

The continuous line of authority that extends from upper levels
of an organization to the lowest levels of the organization and
clarifies who reports to whom
one subo : one boss
The scalar: line of authority and responsibility fro top to
bottom
Span of control: number of employees reporting to one boss

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 The number of employees who can be effectively
and efficiently supervised by a manager
Width of span is affected by:
Skills and abilities of the manager and the employees
Characteristics of the work being done
Similarity of tasks
Complexity of tasks
Physical proximity of subordinates
Standardization of tasks
Sophistication of the organizations information system
Strength of the organizations culture
Preferred style of the manager

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1. Management considers the plans and objectives
of the enterprise.
2. Analyses of the primary activities to be
performed
3. Divide tasks into sub tasks
4 . Combine tasks rationally and effectively i.e
form departments and clarify authority
5. Coordinate the activities of employees in a
harmonious whole, as well as coordination
between authority and responsibility
6. Evaluate the results and effectiveness of the
enterprise and make necessary adjustments

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 The system of tasks, workflows, reporting relationships,
and communication channels that link together diverse
individuals and groups (Schermehorn, 2007)
a relatively stable group of tasks, relationships and
processes within an org. the aim of the organizational
structure is to control, eliminate or reduce uncertainty
in the behavior of individuals (Robbins and Coulter,
2010)
the basic infrastructure within which executive s
decision making behaviour occur
The formal arrangement of jobs within an organization

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 Formal structures
The structure of the organization in its official state.
An organization chart is a diagram describing
reporting relationships and the formal arrangement
of work positions within an organization.
An organization chart identifies the following
aspects of formal structure:
The division of work.
Supervisory relationships.
Communication channels.
Major subunits.
Levels of management.

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 Informal structures
A shadow organization made up of the unofficial,
but often critical, working relationships between
organization members.
Potential advantages of informal structures:
Helping people accomplish their work.
Overcoming limits of formal structure.
Gaining access to interpersonal networks.
Informal learning.

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 Informal structures (cont.)
Potential disadvantages of informal structures:
May work against best interests of entire organization.
Susceptibility to rumor.
May carry inaccurate information.
May breed resistance to change.
Diversion of work efforts from important objectives.
Feeling of alienation by outsiders.

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 -it addresses how the work is to be
distributed.
it is the process in which tasks are
grouped into controllable units.
The key to effective departmentalization
lies in the successful organizing of
people and activities so that information
flows throughout the enterprise.

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 Functional structures
People with similar skills and performing
similar tasks are grouped together into
formal work units.
Members work in their functional areas of
expertise.
Are not limited to businesses.
Work well for small organizations
producing few products or services.

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 + Efficiencies from putting together
similar specialties and people with
common skills, knowledge, and
orientations
+ Coordination within functional area
+ In-depth specialization
Poor communication across
functional areas
Limited view of organizational goals

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 Potential advantages of functional
structures:
Economies of scale.
Task assignments consistent with expertise
and training.
High-quality technical problem solving,
In-depth training and skill development.
Clear career paths within functions.

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 Potential disadvantages of functional
structures:
Difficulties in pinpointing responsibilities.
Functional chimneys problem.
Sense of cooperation and common purpose
break down.
Narrow view of performance objectives.
Excessive upward referral of decisions.

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 Divisional structures
Group together people who work on the
same product or process, serve similar
customers, and/or are located in the same
area or geographical region.
Common in complex organizations.
Avoid problems associated with functional
structures.

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 Potential advantages of divisional
structures:
More flexibility in responding to
environmental changes.
Improved coordination.
Clear points of responsibility.
Expertise focused on specific customers,
products, and regions.
Greater ease in restructuring.

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 Types of divisional structures and how they
group job and activities:
Product structures focus on a single product or
service.
Geographical structures focus on the same
location or geographical region.
Customer structures focus on the same customers
or clients.
Process structures focus on the same processes.

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 Matrix structure
Combines functional and divisional structures to
gain advantages and minimize disadvantages of
each.
Used in:
Manufacturing
Service industries
Professional fields
Non-profit sector
Multi-national corporations

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 Efficient information exchange-
Departments work closely together and
communicate with each other
frequently to solve issues.
Increased Motivation-structure
encourages a democratic leadership
style. This style incorporates the input
of team members before managers
make decisions
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 Potential disadvantages of matrix structures:
Two-boss system is susceptible to power
struggles.
Two-boss system can create task confusion and
conflict in work priorities.
Team meetings are time consuming.
Team may develop groupitis.
Increased costs due to adding team layers to
structure.

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 The stability of the business environment
The strategy of the business- structure follows strategy
THE SIZE OF THE BUSINESS. Small businesses are not
organized in the same way as large , complex
organizations. Large organization are usually
characterized by many levels of management , a high
degree of specialization and extensive
departmentalization , however there has been a shift
towards flatter and leaner organisational structures.
The competence of employees as well as the attitudes
and beliefs of top management.
The organisational culture. The beliefs and values
shared by the people in a business influence how the
organisation is structured

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 Members at Each Level
(Highest) Assuming Span of 4 Assuming Span of 8

1 1 1
2 4 8
3 16 64
4 64 512
5 256 4096
6 1024
7 4096

(Lowest)
Span of 4: Span of 8:
Employees: = 4096 Employees: = 4096
Managers (level 16) = 1365 Managers (level 14) = 585

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 the skill and experience of both manager and subo
the degree of interaction necessary between the different units
The extent to which a manager must execute non- mgt tasks.
The relative similarity of the tasks to be supervised.
The extent to which procedures are standardized.
the degree of physical distribution
the regularity with which new problems arise.
the preferences of both mangers and subordinates
cost of the decision
controls available
availability of capable managers.
the need for uniformity of policy

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 the skill and experience of both manager and subo
the degree of interaction necessary between the different units
The extent to which a manager must execute non- mgt tasks.
The relative similarity of the tasks to be supervised.
The extent to which procedures are standardized.
the degree of physical distribution
the regularity with which new problems arise.
the preferences of both mangers and subordinates
cost of the decision
controls available
availability of capable managers.
the need for uniformity of policy

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 Certain org .relationships must be
created to clarify to employees ,who is
going to assign tasks to them and to
whom they must report back. This
entails allocating responsibility and
authority.

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 -The assignment of authority to another
person to carry out specific duties
Why delegate?
to enable managers to do more work
it is the subordinate( not the manager ) who
has specialized knowledge for the task
it is a training aid for personnel
It improves subordinates managerial skills.

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 Responsibility is passed to a subordinate
- In assigning the task the manager gives
the subordinate authority to do the job i.e
she has authority to deploy resources
-the employee is expected to be
accountable for her job

NB DELEGATION does not negate

responsibility

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 Psychological obstacles
fear of being overtaken by subordinates
Manager may feel that he can do the job
better.
Lack of confidence in subordinates.
manager may feel it wastes time explaining
to subo
Fear of being accountable for a poorly done
piece of work.
unwillingness by subo to take responsibility
Most of these obstacles can be overcome
by continuous training and motivation of
employees 38
 1. Authority and responsibility not
clearly defined
2. When accountability is not fostered

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 Guidelines for effective delegation:
Carefully choose the person to whom you delegate.
Define the responsibility; make the assignment clear.
Agree on performance objectives and standards.
Agree on a performance timetable.
Give authority; allow the other person to act independently.
Show trust in the other person.
Provide performance support.
Give performance feedback
Recognize and reinforce progress.
Help when things go wrong.
Dont forget your accountability for performance results.

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 Improve communication betwn subo
and managers. It highlights the
strengths and weaknesses of subo and
gives managers the self confidence to
delegate the right tasks and to know
that they will be properly done.
better communication enables subo to
better understand responsibilities ,
authority and accountability.
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 Centralization
The degree to which decision making
is concentrated at a single point in
the organization
Organizations in which top managers
make all the decisions and lower-level
employees simply carry out those orders

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 Decentralization
The degree to which lower-level
employees provide input or actually
make decisions
Employee Empowerment
Increasing the decision-making discretion
of employees

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 More Centralization
Environment is stable
Lower-level managers are not as capable or
experienced at making decisions as upper-
level managers
Lower-level managers do not want to have a
say in decisions
Decisions are significant
Organization is facing a crisis or the risk of
company failure
Company is large

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 More Decentralization
Environment is complex, uncertain

Lower-level managers are capable and experienced

at making decisions
Lower-level managers want a voice in decisions

Decisions are relatively minor

Corporate culture is open to allowing managers to

have a say in what happens

Company is geographically dispersed

Effective implementation of company strategies

depends on managers having involvement and flexibility
to make decisions

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 it reduces managers workload , enabling the
manger to devote more time to strategic mgt
issues
improves decision making as decision are made
close to the action place
Improved training, morale and initiative in the
lower levels of management.
Flexible and faster decision making in a rapidly
changing env.
it foster a competitive climate in the org

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 It defeats the primary goal of organizing i.e
integrating of subunits, as there is need for some
form of centralization.
it can lead to loss of control
there is danger of duplicating tasks
It requires more intensive mgt training to enable
managers to complete delegated tasks.
it demands complicated planning and reporting
methods

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 Formalization
The degree to which jobs within the
organization are standardized and the
extent to which employee behaviour
is guided by rules and procedures
Highly formalized jobs offer little
discretion over what is to be done
Low formalization means fewer
constraints on how employees do their
work

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 Mechanistic Organization
A rigid and tightly controlled structure
High specialization
Rigid departmentalization
Narrow spans of control
High formalization
Limited information network (mostly
downward communication)
Low decision participation by lower-
level employees

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 Highly flexible and adaptable
structure
Nonstandardized jobs
Fluid team-based structure
Little direct supervision
Minimal formal rules
Open communication network
Empowered employees

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 Mechanistic
High Specialization
Rigid Departmentalization
Clear Chain of Command
Narrow Spans of Control
Centralization
High Formalization
Organic
Cross-Functional Teams
Cross-Hierarchical Teams
Free Flow of Information
Wide Spans of Control
Decentralization
Low Formalization
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 Structural decisions are influenced by:
Overall strategy of the organization
Organizational structure follows strategy
Size of the organization
Firms change from organic to mechanistic organizations
as they grow in size
Technology use by the organization
Firms adapt their structure to the technology they use
Degree of environmental uncertainty
Dynamic environments require organic structures;
mechanistic structures need stable environments

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 Strategy Frameworks:
Innovation
Pursuing competitive advantage through meaningful
and unique innovations favours an organic structuring
Cost minimization
Focusing on tightly controlling costs requires a
mechanistic structure for the organization
Imitation
Minimizing risks and maximizing profitability by
copying market leaders requires both organic and
mechanistic elements in the organizations structure

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 Strategy and Structure
Achievement of strategic goals is facilitated by
changes in organizational structure that
accommodate and support change
Size and Structure
As an organization grows larger, its structure
tends to change from organic to mechanistic
with increased specialization,
departmentalization, centralization, and rules
and regulations

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 Technology and Structure
Organizations adapt their structures to their
technology
Woodwards classification of firms based on the
complexity of the technology employed:
Unit production of single units or small batches
Mass production of large batches of output
Process production in continuous process of outputs
Routine technology = mechanistic organizations
Nonroutine technology = organic organizations

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 Environmental Uncertainty and
Structure
Mechanistic organizational structures tend
to be most effective in stable and simple
environments
The flexibility of organic organizational
structures is better suited for dynamic and
complex environments

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 Team Structures
The entire organization is made up of work groups
or self-managed teams of empowered employees
Matrix Structures
Specialists for different functional departments are
assigned to work on projects led by project
managers
Matrix participants have two managers
Project Structures
Employees work continuously on projects, moving
on to another project as each project is completed

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 Boundaryless Organization
A flexible and an unstructured organizational
design that is intended to break down external
barriers between the organization and its
customers and suppliers
Removes internal (horizontal) boundaries:
Eliminates the chain of command
Has limitless spans of control
Uses empowered teams rather than departments
Eliminates external boundaries:
Uses virtual, network, and modular organizational
structures to get closer to stakeholders

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 Virtual Organization
An organization that consists of a small core of full-
time employees and that temporarily hires
specialists to work on opportunities that arise
Network Organization
A small core organization that outsources its major
business functions (e.g., manufacturing) in order to
concentrate on what it does best
Modular Organization
A manufacturing organization that uses outside
suppliers to provide product components for its final
assembly operations

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 Problems in Outsourcing
Choosing the wrong activities to outsource
Choosing the wrong vendor
Writing a poor contract
Failing to consider personnel issues
Losing control over the activity
Ignoring the hidden costs
Failing to develop an exit strategy (for either moving
to another vendor, or deciding to bring the activity
back in-house)

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 An organization that has developed the capacity to
continuously learn, adapt, and change through the
practice of knowledge management by employees
Characteristics of a learning organization:
An open team-based organization design that empowers
employees
Extensive and open information sharing
Leadership that provides a shared vision of the
organizations future; support; and encouragement
A strong culture of shared values, trust, openness, and a
sense of community

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 Organizational Design
Boundaryless
Teams
Empowerment

Organizational Culture
Information Sharing
Strong Mutual Relationships
THE LEARNING Open
Sense of Community
ORGANIZATION Timely
Caring
Accurate
Trust

Leadership
Shared Vision
Collaboration

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 Contemporary organizing trends
include:
Shorter chains of command.
Less unity of command.
Wider spans of control.
More delegation and empowerment.
Decentralization with centralization.
Reduced use of staff.

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 Define what is meant by span of control. How has it
been affected by organizational changes in recent
years?
Describe the five bases for functional
departmentalization organization structure.
Explain matrix and project structures. What are
they and what is their value to managers?
What are the purposes for organizing? Explain.
What roles do work specialization and
departmentalization play in organizational
structure and design?
Using relevant practical examples, discuss in detail the
major characteristics of a learning organization.

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