ORGANIZATIONAL STRUCTURE

ORGANIZATIONAL • Definition: Defines how job tasks are

formally divided, grouped and
STRUCTURE coordinated.
– Work Specialization
– Departmentalization
LECTURE # 10 – Span of Control
– Chain of Command
– Centralization/decentralization
– Formalization

What Determines Organizational Structure

Organizational Structure?
¦ To what degree are tasks subdivided into • Work Specialization: The degree to
separate jobs?
which activities in the organization
§ On what basis will jobs be grouped together?
¨ To
T whom
h d
do iindividuals
di id l and d groups report?
t?
are subdivided into separate
p jjobs.
© How many individuals can a manager efficiently
and effectively direct?
• Departmentalization: The basis by
ª Where does decision
decision--making authority lie?
which jobs are grouped together.
« To what degree will there be rules and
regulations to direct employees and managers?

Organizational Structure Organizational Structure

• Chain of Command: The unbroken line of • Span of Control: The number of
authority that extends from the top of the
organization to the lowest echelon and subordinates a manager can
clarifies who reports
p to whom. efficiently and effectively direct.
– Authority: The rights inherent in a managerial
position to give orders and to expect the orders
to be obeyed.
– Unity of Command: A subordinate should have
only one superior to whom he or she is directly
responsible.

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 Organizational Structure Organizational Structure

• Centralization: The degree to which • Formalization: The degree to

decision making is concentrated at a
single point in the organization.
– Decentralized solves problem more
quickly, more aligned employees
which jobs within the
organization are standardized.
– Little choice – same way
– Decision upon who should do , how ,
when and what

Organizational Designs Few Wide Spans

Departments of Control
• The Simple Structure
• The Bureaucracy
• The Matrix The Simple Structure
• The Team structure
• The Virtual Organization
• The Boundary
Boundary--less organization Little Centralized
• The Project Structures Formalization Authority

The Bureaucracy The

• A structure with highly routine Bureaucracy
operating tasks achieved through
– Specialization
p
– Formalized rules and regulations
– Centralized authority Functional Divisional
– Grouped into functional Structure Structure
departments, narrow spans of
control

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 The Matrix Structure The Matrix Structure

• Breaks unity of command

Cross-Functional
Cross- Clear • Better when complex and inter
Coordination Accountability dependent tasks and activities
• Better resource allocation
Dual Chain Allocation • Confusion and stressful
of Command of Specialists • Conflict in power

The Team
Team--Based The Virtual Organization
Structure Independent R & D Advertising
Consulting Firm Agency

Executive
Empower Hold Teams Group

Workers Accountable
Factories in Commissioned
South Korea Sales Representatives

Other Organizational Designs Mechanistic Versus Organic Structures

• Virtual Organization: A small core

organization that outsource major
business functions
• Boundary less Organization: Org that
seeks to eliminate chain of command,
have limitless spans of controls and
replace departments with
empowered teams.
•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

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 Designs and Employee
Why Structural Differences?
Behavior
• Strategy: innovation, imitation, cost
cost-- • Work specialization – More
minimization strategies productivity and Less job satisfaction
– Innovation • Span of control – not directly related
– Imitation with performance , but nice if higher
– Cost Minimization span of control
• Organization Size • Less centralization – innovation,
• Technology participation, satisfaction
• Environment

Organization Structure Determinants

and Outcomes

Causes
Performance
• Strategy
and

END!!!
• Size
• Technology
gy Satisfaction
• Environment

Structures
Determines • Mechanistic
• Organic
Moderated by
individual differences
and cultural norms