Organizational Structur

e
Organizational Structure
How job tasks are formally
divided, grouped, and
coordinated.
Stephen P Robbins
Organizational Structure can
be defined as the framework of
tasks reporting and authority
relationships within which an
organization functions.
Key Elements:
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and
decentralization
• Formalization
15
–2
The Key Question The Answer Is Provided
By
1. To what degree are articles Work specialization
subdivided into separate jobs?
2. On what basis will jobs be grouped Departmentalization
together?
3. To whom do individuals and groups Chain of command
report?
4. How many individuals can a manager Span of control
efficiently and effectively direct?
5. Where does decision-making Centralization
authority lie? and decentralization
6. To what degree will there be rules Formalization
and regulations to direct employees
and managers?

15
–3
Work Specialization
The degree to which tasks in the organization are
subdivided into separate jobs.

Division of labor:
• Makes efficient use of employee skills
• Increases employee skills through repetition
• Less between-job downtime increases productivity
• Specialized training is more efficient.
• Allows use of specialized equipment.

15
–4
15
–5
Departmentalization
The basis by which jobs are grouped together.

Grouping Activities By:

• Function
• Product
• Geography
• Process
• Customer

15
–6
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.
15
–7
Span of Control
The number of subordinates a manager can efficiently
and effectively direct.

Concept:
Wider spans of management increase organizational
efficiency.

Narrow Span Drawbacks:

• Expense of additional layers of management.
• Increased complexity of vertical communication.
• Encouragement of overly tight supervision and
discouragement of employee autonomy.

15
–8
E X H I B I T 15–3

15
–9
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.

15
–
Source: S. Adams, Dogbert’s Big Book of Business, DILBERT E X H I B I T 15–4
reprinted by permission of United Features Syndicate, Inc.
15
© 2005 Prentice Hall Inc. All rights reserved.
–
Types of Organizational Designs

Simple Structure

The Bureaucracy

The Matrix Organization

15
–
Simple Structure
A structure characterized by a low degree of
departmentalization, wide spans of control, authority
centralized in a single person, and little
formalization.
A Simple Structure:
Jack Gold’s Men’s Store

E X H I B I T 15–5
15
–
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.

15
–
 Strengths  Weaknesses
• Functional • Subunit conflicts
economies of scale with organizational
• Minimum duplication goals
of personnel and • Obsessive concern
equipment with rules and
• Enhanced regulations
communication • Lack of employee
• Centralized decision discretion to deal
making with problems

15
–
Matrix Structure
A structure that creates dual lines of authority and
combines functional and product departmentalization.

Key Elements:
+ Gains the advantages of functional and product
departmentalization while avoiding their weaknesses.
+ Facilitates coordination of complex and interdependent
activities.
– Breaks down unity-of-command concept.

15
–
 The matrix organization is an attempt to combine
the advantages of the pure functional structure
and the product organizational structure. This
form is identically suited for companies, such as
construction, that are “project-driven”. The figure
below shows a typical Matrix organization.

 In a matrix organization, each project manager

reports directly to the vice president and the
general manager. Since each project represents a
potential profit centre, the power and authority
used by the project manager come directly from
the general manager.
(Dean)

E X H I B I T 15–6
15
–
 The basis for the matrix organization is an endeavor to
create synergism through shared responsibility between
project and functional management. Other advantages of a
pure matrix organizational form, to project management,
include:
 Because key people can be shared, the project cost is
minimized
 Conflicts are minimal, and those requiring hierarchical
referrals are more easily resolved
 There is a better balance between time, cost and
performance
 Authority and responsibility are shared
 Stress is distributed among the team