Organization

An Organizational Perspective on
Work

Organization
A consciously coordinated social unit,
composed of two or more people, that
functions on a relatively continuous basis to
achieve a common goal or set of goals.
Groups of people who work
interdependently toward some purpose.
A managed system designed and operated
to achieve a specific set of objectives.

Organizational Structure
Defines how job tasks are formally divided,
grouped and coordinated.
The division of labor as well as the patterns
of coordination, communication, work flow,
and formal power that direct organizational
activities.
Reflects its culture and power relationships
(McShane & Glinow, 2000).

Fundamental requirements
of organizational structures
The division of labor into distinct
tasks.
The coordination of that labor so
employees are able to accomplish
common goals.

Fundamental Concepts
Differentiation
Integration

Differentiation

Internal environment created by job

specialization and the division of labor.
the work of the organization is subdivided into
smaller tasks.
different people or groups often perform
specific parts of the entire task.

Integration
Differentiated units are put back together so
that work is coordinated into an overall
product.
Coordination would link the various parts of
the organization to achieve the
organizations overall mission.

Elements of Organizational
Structure
Vertical Structure
authority in organizations
hierarchical levels
span of control
delegation
decentralization

Elements of Organizational
Structure
Horizontal structure (departmentalization)
functional
divisional
matrix organizations

The vertical structure

Authority in organizations
The legitimate right to make
decisions and to tell other people
what to do.
Authority resides in positions
rather than in people
Top to bottom

The vertical structure

Span of control
Number of people reporting directly to the
next level in the hierarchy
Narrow spans build a tall organization
Wide spans create a flat organization

The vertical structure

Delegation
Assignment of authority and responsibility to a
subordinate at a lower level.
Responsibility means the assignment of a task that
an employee is supposed to carry out
Accountability means the expectation that
employees perform a job, take corrective action
when necessary, and report upward on the status
and quality of their performance.

The vertical structure

Decentralization
The delegation of responsibility and
authority
In a centralized organization,
important decisions usually are
made at the top.
In decentralized organizations, more
decisions are made at lower levels.

The horizontal structure

As the tasks of organizations become

increasingly complex, the organization
inevitably must be subdivided or
departmentalized.
Departmentalization specifies how
employees and their activities are
grouped together, such as by function,
product, geographic location, or some
combination.

The horizontal structure

Functional structure
Jobs and departments are specialized
and grouped according to business
functions and the skills they require :
production, marketing, human
resources, research and development,
finance, accounting and so forth.
Organizations with functional structures
are typically centralized to coordinate
their activities effectively.

The Functional Structure

General manager

Finance

Sales and Marketing

Internal
Collections
Accounts

Production

The horizontal structure

Divisional structure
Type of departmentalization that groups
employees around outputs, clients or
geographic areas.
Divisional structures are sometimes
called strategic business units because
they are normally more autonomous
than functional structures and may
operate as subsidiaries rather than as
departments of the enterprise.

The Divisional Structure

IPS Industries

Food and
Beverages

Detergents

Household

Industrial

Cosmetics

The horizontal structure

Matrix Structure
Matrix structures usually optimize the
use of resources and expertise, making
them ideal for project-based
organizations with fluctuating workloads.
Matrix structures focus technical
specialists on the goals of serving clients
and creating marketable products.

The Matrix Structure

President

Finance
Central

Southern

Northern

Marketing

Production

Max Weber Bureaucracy

1. A formal hierarchical structure
Formal hierarchy as the basis of central planning and centralized decision making.

2. Management by rules
Ensuring decisions made at high levels are executed consistently at lower levels.

3. Organization by functional specialty

Differentiation of work

4. An "up-focused" or "in-focused" mission

Up-focused mission serves stockholders, the board, or empowering agency.
In-focused mission set to meet organizational goals

5. Purposely impersonal
Equal treatment of employees and clients

6. Employment based on technical qualifications

Work done by suitably competent personnel
Protection from arbitrary dismissal