Foundations of

Organization Structure
Kelompok 8:
Niken Amalia Hanum Pertiwi (F0316077)
Nur Afni Damayanti (F0316078)
Prabawati Kesuma Brata (F0316080)
What Is Organizational Structure?

 An organizational structure defines how job tasks are formally divided,

grouped, and coordinated.
 Managers need to address six key elements when they design their
organization’s structure: work specialization, departmentalization, chain of
command, span of control, centralization and decentralization, and
formalization
 What Is Organizational Structure?
Work Specialization
 The degree to which tasks in an
organization are subdivided into
separate jobs.
 The essence of work specialization is
to divide a job into a number of
steps, each completed by a
separate individual. In essence,
individuals specialize in doing part of
an activity rather than the entirety.
Departmentalization
 The basis by which jobs in an
organization are grouped together.
 One of the most popular ways to group
activities is by functions performed.
 We can also departmentalize jobs by
the type of product or service the
organization produces
 When a firm is departmentalized on the
basis of geography, or territory
 A final category of departmentalization
uses the particular type of customer the
organization seeks to reach.
 What Is Organizational Structure?

Chain of Command Span of Control

 The continuous line of authority that
extends from upper levels of an
organization to the lowest levels of
the organization and clarifies who
reports to whom.
 Chain of Command involves three
other concepts :
1. Authority
2. Responsibility
3. Unity of Command
 The number of subordinates a manager
can efficiently and effectively direct.
 Narrow Span Drawbacks:
• Expense of additional layers of
management.
• Increased complexity of vertical
communication.
• Encouragement of overly tight
supervision and discouragement of
employee autonomy.
 What Is Organizational Structure?
Centralization &
Decentralization Formalization
 Centralization  The degree to which jobs within the
The degree to which decision- organization are standardized and the
making is concentrated at a single extent to which employee behavior is
point in the organizations. guided by rules and procedures.

 Decentralization
Organizations in which decision-
making is pushed down to the
managers who are closest to the
action.
 Employee Empowerment
Increasing the decision-making
authority (power) of employees.
Common Organizational Designs

 Simple Structure
A structure characterized by a low degree of departmentalization, wide
spans of control, authority centralized in a single person, and little
formalization
 The Bureaucracy
Standardization, that’s the key concept that underlies all bureaucracies.
 The Matrix Structure
An organization structure that creates dual lines of authority and combines
functional and product departmentalization.
New Design Options

 The Virtual Organization

 A small, core organization that outsources major business functions.
 In structural terms, the virtual organization is highly centralized, with little
or no depart-mentalization.
 The Boundaryless Organization
 An organization that seeks to eliminate the chain of command, have
limitless spans of control, and replace departments with empowered
teams.
New Design Options

 The Boundaryless Organization

 Functional departments create horizontal boundaries that stifle intera-
ction among functions, product lines, and units. The way to reduce
 them is to replace functional departments with:
 cross-functional teams and organize activities around processes.
 to rotate people through different functional areas using lateral
transfers.
 when fully operational, the boundaryless organization also breaks
down geographic barriers.
Some effective strategies
for downsizing
 Investment
 Communication
 Participation
 Assistance
Demonstrate how organizational
structures differ and contrast mechanistic
and organic structural models
An organization’s
structure is a means to
help management
achieve its objectives.
Most current strategy
frameworks focus on
three strategy
dimensions:
• innovation,
• cost
minimization, and
• imitation.
Organization Size

 There is considerable evidence to support that an organization’s size significantly

affects its structure.
 The impact of size becomes less important as an organization expands.
Technology

• Technology refers to how an organization transfers its inputs

into outputs.
• Every organization has at least one technology.
• Numerous studies have examined the technology-structure
relationship.
• Organizations engaged in nonroutine activities tend to prefer
organic structures.
Environment

 An organization’s environment includes outside institutions or

forces that can affect its performance.
 Dynamic environments create significantly more uncertainty
for managers than do static ones.
 Any organization’s environment has three dimensions:
capacity, volatility, and complexity.
Analyze the behavioral implications
of different organizational designs
 Organization’s structure can have significant effects.
 A review of the evidence leads to a pretty clear conclusion: you can’t
generalize!
• Not everyone prefers the freedom and flexibility of organic structures.
• Different factors stand out in different structures as well.
• Some people are most productive and satisfied when work tasks are standardized
and ambiguity minimized.
 Although research is slim, it does suggest national culture influences the
preference for structure.
 So consider cultural differences along with individual differences when predicting
how structure will affect employee performance and satisfaction.