Organizational

Structure

Organization
Organization is when two or more person work
together with a common goal.

102

Organizing Defined
The process of determining the tasks to be
done, who will do them, and how those tasks
will be managed and coordinated.

103

Purposes of Organizing
Divides work to be done into specific jobs and
departments.
Assigns tasks and responsibilities associated with
individual jobs.
Coordinates diverse organizational tasks.
Clusters jobs into units.
Establishes relationships among individuals,
groups, and departments.
Establishes formal lines of authority.
Allocates and deploys organizational resources.

The Process of Organizing

Organizational Mission
Developing the foundation
- Determining tasks and defining jobs
- Defining work relationships

Control and
Feedback

Developing organizational design

- Grouping organizational members
- Developing an integrating system
- Determining the locus of decision making

105

Goals and
Objectives

106

Organizational Design
Organizational Design - the process of
constructing and adjusting an
organizations
structure to achieve its goals.
organizations structure

the linking of
departments and
jobs within an
organization

Depicting the Organization

Organization Chart
A chart that shows the
structure of the organization
including the title of each
managers position and, by
means of connecting lines,
who is accountable to whom
and who has authority for
each area.

April 18, 2006

Organization Chart
In f o r m a tio n S e r v ic e s G r o u p
K n o w le d g e A r c h i t e c t u r e M a n a g e r
K n o w le d g e A r c h i t e c t u r e L e a d
C u s to m e r L ia is o n
C a ta lo g e r
C a ta lo g e r

S e a rc h /S y s te m s L e a d
D e v e lo p e r

D e s ig n L e a d
A s s is ta n t D e s ig n e r

D e v e lo p e r
S y s t e m s A d m in

T a x o n o m y D e s ig n e r

April 18, 2006

ORGANIZATION DESIGN
DECISIONS
1010

Organization Structure and Employee

Behavior Moderated by
Moderated by
Individual
Differences and
cultural norms

Determinants
1011

Associated
with

Extremes of Environmental Uncertainty

Mechanistic Structure - an organizational design
that emphasizes structured activities,
specialized tasks, and centralized decision
making
Organic Structure - an organizational design that
emphasizes teamwork, open communication,
and decentralized decision making

Organizational Design Decisions

A rigid and tightly controlled

structure

1013

Highly flexible and

adaptable structure

High specialization

Cross functional team

Rigid departmentalization

Cross hierarchical team

Clear chain of command

Free flow of information

Narrow spans of control

Wide spans of control

High formalization

Less formalization

Centralization

Decentralization

Limited information network

(downward)

Free flow of information

Contingency Factors
Structural decisions are influenced by:

Imitation Strategy

Cost-minimization

Strategy

Innovation

Larger

Size

Smaller

Routine

Technology

Non-routine

Stable
Simple
1014

Environment

Dynamic
Complex

Size

Technology

Contextual Variables
a set of characteristics that
influences the organizations
design processes
Strategy
and Goals

Environment

Design Decisions
Specialization

Division of Labor:

Low

High

Departmentalization:

Basis
Homogeneous

Heterogeneous

Number

Span of Control:

Many

Few

Delegation

Authority:
High

Low

A. Product Division Structure

27

B. Product-Oriented Functional Teams to

Individual Divisions

28

1. Multi-Functional Structure (Vertical Functional)

ninth edition

STEPHEN P. ROBBINS

MARY COULTER

Pearson Education Limited, 2005

PowerPoint Presentation by Charlie Cook
The University of West Alabama

2. Multi-Divisional Structure

ninth edition

STEPHEN P. ROBBINS

MARY COULTER

Pearson Education Limited, 2005

PowerPoint Presentation by Charlie Cook
The University of West Alabama

2. Multi-Divisional Structure

ninth edition

STEPHEN P. ROBBINS

MARY COULTER

Pearson Education Limited, 2005

PowerPoint Presentation by Charlie Cook
The University of West Alabama

2. Multi-Divisional Structure

ninth edition

STEPHEN P. ROBBINS

MARY COULTER

Pearson Education Limited, 2005

PowerPoint Presentation by Charlie Cook
The University of West Alabama

2. Multi-Divisional Structure

ninth edition

STEPHEN P. ROBBINS

MARY COULTER

Pearson Education Limited, 2005

PowerPoint Presentation by Charlie Cook
The University of West Alabama

C. Multidivisional Structure in Which Each

Division Has a Different Structure

34

Product Team Structure

CEO
Func.
Managers

Sales

Manufacturing

Design

Manufacturing

= Product Team Manager

Production

Manufacturing

= Team member

Levels of Hierarchy
The number of layers of management or
supervision in the organization structure

1047

Tall versus Flat Organizations: Comparison

Flat hierarchy

Tall hierarchy

Chief
Executive

Chief
Executive

Relatively wide
span of control

Relatively narrow
span of control

Organizational Structure
Centralization
The degree to which decision-making is concentrated
at a single point in the organizations.
Reduced information overload on upper managers.
Increased motivation and accountability throughout
organization.
Fewer managers; lower bureaucratic costs.

Decentralization
Organizations in which decision-making is pushed
down to the managers who are closest to the action.
Easier coordination of organizational activities.
Exercise of strong leadership in crisis.
Faster decision making and response.

49

Factors that Influence the Amount of

Centralization and Decentralization

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 relatively minor.
Organization is facing a crisis or the risk of company failure.
Company is large.
Effective implementation of company strategies depends on
managers retaining say over what happens.

50

Factors that Influence the Amount

of Centralization and Decentralization

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 significant.
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.

51

Traditional
Organisational
Structures

Traditional Structures
Simple structure

Low departmentalization, Wide spans of control, Centralized

authority, Little formalization
Flat Organization (2 or 3 vertical levels)

Strengths
Simple
Fast and flexible
Inexpensive to maintain
Clear accountability

Weaknesses
Information Overload at top
Slower decision making if large
Dependency on one figurehead

1053

Traditional Structures
The Bureaucracy

High departmentalization by function, Narrow span of

control, Centralized authority, High formalization

Strengths
Efficiency to perform standardized tasks
Economies of scale
Minimum duplication of personnel & equipment
Cost advantage by less talent hunting

Weaknesses
Subunit Conflicts (Bureaupathologies)
Fails to take environment into account
Is less effective during change or turbulence, requiring
flexibility and action
Ignores interpersonal relationships

1054

Common Organizational Designs

Functional structure

Departmentalization by function
Operations, finance, marketing, human resources, and
product research and development

Divisional structure

55

Composed of separate business units or divisions with limited

autonomy under the coordination and control the parent
corporation.

Organization Structure
Formalization
The degree to which jobs within the organization are
standardized and the extent to which employee
behavior 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.

1056

Contemporary
Organisational
Structures

Traditional Structures
The Matrix structure

Departmentalized by both functions and products, No unity of

command

Strengths
Strength of both function and product departmentalization
Better and direct communication
More Flexibility
Two-boss
employee
Maximizes use of employees skills

Weaknesses
Dual chain of command
Power struggle
Role conflict
Less predictability

Figure 6-12: Matrix Structure

59

The Multidivisional Matrix Structure

Multidivisional matrix structure: a structure
that provides for more integration between
corporate and divisional managers and
between divisional managers
Makes it easier for top executives from
divisions and corporate headquarters to
cooperate and jointly coordinate
organizational activities
Copyrig
ht 2007
Prentice
Hall

60

Figure 6-13: Multidivisional Matrix

Structure

61

Network Structure

Copyrig
ht 2007
Prentice
Hall

Network structure: a cluster of different

organizations whose actions are coordinated
by contracts and agreements rather than
through a formal hierarchy of authority
Very complex as companies form agreements
with many suppliers, manufacturers, and
distributors
Such agreements are necessary as the
organization outsources many of the value
creation activities involved in production and
marketing goods and services

62

Advantages of Network Structures

To the degree that a network partner can
perform a specific functional activity reliably,
and at a lower cost, production costs are
reduced
Avoids the high bureaucratic costs of
operating a complex organizational structure
Allows an organization to act in an organic
way
Network partners can be replaced if they do
not perform up to standards
Copyrig
ht 2007
Prentice
Hall

63

Disadvantages of Network Structures

A considerable level of mutual adjustment is
needed to allow the groups to interact so that
they can learn from one another and
constantly improve the product
Ability to control a complex value- creation
process is difficult because managers lack
the means to effectively coordinate and
motivate the various network partners

Copyrig
ht 2007
Prentice
Hall

64

Organizational Designs
Team structures

The entire organization is made up of work groups or selfmanaged teams of empowered employees.

Matrix and project structures

65

Specialists from different functional departments are

assigned to work on projects led by project managers.

Matrix and project participants have two managers.

In project structures, employees work continuously on

projects; moving on to another project as each project is
completed.

The Boundaryless Organization

Boundaryless organization: composed of
people who are linked by computers, faxes,
CAD systems and video conferencing
The use of outsourcing and the development
of network organization are increasing rapidly
as organizations recognize the many
opportunities they offer to reduce costs and
increase flexibility

Copyrig
ht 2007
Prentice
Hall

66

Organizational Designs
Contemporary Organizational Designs
Boundaryless Organization

An flexible and 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

67

Eliminates external boundaries:

Uses virtual, network, and modular organizational
structures to get closer to stakeholders.

Modern
Organisational
Structures

Removing External Boundaries

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.

69

New Design Options

Team structures

The entire organization is made up of work groups or selfmanaged teams.

Require Generalists as well as specialists employee

No departmentalization, Decentralized

Strengths
Flexibility
Empowered employees
Reduced barriers among functional areas (Cross-functional)

Weaknesses
No clear chain of command
Pressure on teams to perform

1070

New Design Options

Virtual Organization

A small core organization that outsources its major business

functions in order to concentrate what it does best.

Highly centralized, no departmentalization

Only coordination and controlling relationships

Strengths
Choosing best alternatives always
Best for finite period existence (e.g. Olympics)
Maximum flexibility

Weaknesses

1071

Reduces managements control over key parts

New Design Options

Boundaryless Organization (Concept)

It behaves more like an organism encouraging better

integration among employees and closer partnerships with
Stakeholders.
No chain of command, limitless spans of control

Strengths
Highly flexible and responsive
Draws on talent wherever its found
Cross hierarchical team, Cross functional team
No external boundaries

Weaknesses
Lack of control
Communication difficulties

1072

Organizational Designs
The Learning Organization
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.
A strong culture of shared values, trust, openness, and a
sense of community.

73

Todays Organizational Design

Challenges
Keeping Employees Connected
Widely dispersed and mobile employees

Building a Learning Organization

Managing Global Structural Issues
Cultural implications of design elements

74

Strengths and Weaknesses of Traditional

Organizational Designs

75

Contemporary Organizational Designs

Team Structure
What it is:

A structure in which the entire organization is made up of

work groups or teams.

Advantages:

Employees are more involved and empowered. Reduced

barriers among functional areas.

Disadvantages:

No clear chain of command. Pressure on teams to perform.

Matrix-Project Structure

76

What it is:

A structure that assigns specialists from different functional

areas to work on projects but who return to their areas when
the project is completed. Project is a structure in which
employees continuously work on projects. As one project is
completed, employees move on to the next project.

Advantages:

Fluid and flexible design that can respond to environmental

changes. Faster decision making.

Disadvantages:

Complexity of assigning people to projects. Task and

personality conflicts.

Contemporary Organizational
Designs
Boundaryless Structure

77

What it is:

A structure that is not defined by or limited to artificial

horizontal, vertical, or external boundaries; includes virtual
and network types of organizations.

Advantages:

Highly flexible and responsive. Draws on talent wherever its

found.

Disadvantages:

Lack of control. Communication difficulties.

Flexible workforces
Flexibility can be achieved using:
Core & peripheral
workers

Outsourcing

Home working

Core workers:
Usually full time and
permanent
Know the firm well
Typically managers &
specialists.

Business functions are

provided by other
specialist organisations
e.g. cleaning firms.

Employees work from

home

Peripheral workers:
Bought in only when
needed
Employed on a
temporary basis

May be more cost

effective than carrying
out these functions inhouse.

Usually relies on the

use of advanced
technology and
communication
Provides flexibility to
both workers and their
employers