Foundations of

Organization
Structure

What Determines
Organizational Structure?
To what degree are tasks subdivided into separate
jobs?
On what basis will jobs be grouped together?
To whom do individuals and groups report?
How many individuals can a manager efficiently and
effectively direct?
Where does decision-making authority lie?
To what degree will there be rules and regulations to
direct employees and managers?
2

Low

Productivity

High

Work Specialization
Impact from
Human
Diseconomies
Impact from
Economies of
Specialization

Low

Work Specialization

High
3

Other Aspects of
Organization Structure
Departmentalization
Functional
Product
Geography
Processing
Customer
4

Other Aspects of
Organization Structure
Chain of Command
Who reports to
whom?

Other Aspects of
Organization Structure
Span of Control
How many direct
reports can a manager
manage?
6

Making Decisions in
Organizations
High

Managerial
Control

Employee
Empowerment

High

Centralized Decentralized
Decision
Decision
Making
Making
Low

Employee
Empowerment

Managerial
Control

Low

The Degree of
Lower

Formalization

Higher

Employee Freedom

Standardization

Low
Formalization

High
Formalization
Higher

Lower
8

Few
Departments

Wide Spans
of Control

The Simple Structure

Little
Formalization

Centralized
Authority
9

The
Bureaucracy
Functional
Structure

Divisional
Structure
10

The Matrix Structure

Cross-Functional
Coordination

Clear
Accountability

Dual Chain
of Command

Allocation
of Specialists
11

The Team-Based
Structure
Empower
Workers

Hold Teams
Accountable
12

The Virtual
Organization
Advertising
Agency

Independent R & D
Consulting Firm

Executive
Group

Factories in
South Korea

Commissioned
Sales Representatives
13

The Boundaryless
Organization
Limited
Chain of
Command

Widened
Spans of
Control

Empowered
Employee
Teams
14

Mechanistic Versus Organic Structures

High horizontal differentiation

Rigid hierarchical relationships
Fixed duties
High formalization
Formalized communication channels
Centralized decision authority

Low horizontal differentiation

Collaboration (vertical and horizontal)
Adaptable duties
Low formalization
Informal communication
Decentralized decision authority
15

Organizational Designs
and Employee Behavior
Work
Specialization

Span
of Control

Centralization
16

Organization Structure
Determinants and Outcomes
Causes

Performance
and
Satisfaction

Strategy
Size
Technology
Environment

Structures
Determines

Mechanistic
Organic
Moderated by
individual differences
and cultural norms
17