Organization Structure and

Design
Chapter 5
December 8, 2021
Announcements
1.Leadership information session
2.Schedule
• Structure/Human Resources today
• Human Resources on Thursday
• Third short report due in one week
3.Any News?

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Structure: What is It?
1. Structure is the arrangement, ordering, and
allocation of resources (capital and labor) in
order to efficiently achieve organizational
objectives
• Organizing (Organization Design) is the process of
structuring both human and physical resources to
accomplish organizational objectives.
• Organization structure defines how job tasks are
formally divided, grouped, and coordinated

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Structure: Why Care About It?
1.Structure significantly impacts the ability of
an organization to achieve its objectives
efficiently
2.Structure must be consistent with the
strategy (structure follows strategy)
3.Management’s responsibility is to develop a
structure that enhances the organization’s
overall strategy.
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Organizational Structure and Design:
Six Key Issues

1.Work Specialization
2.Unity of Command
3.Span of Control
4.Authority and Responsibility
5.Centralization v. Decentralization
6.Departmentalization

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Work Specialization/Division of
Labor

1.Describes the degree to which activities in

the organization are subdivided into
separate jobs
2.Involves having each discrete step of a job
done by a different individual rather than
having one individual do the whole job.

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Economies and Diseconomies of
Work Specialization

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Unity of Command
1.Chain of Command
• The continuous line of authority that extends
from upper organizational levels to the lowest
levels and clarifies who reports to whom.
2.Unity of Command
• The management principle that no person
should report to more than one boss.

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Chain of Command

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Types of Organizational Authority
1.Line Authority
• The position authority (given and defined by the
organization) that entitles a manager to direct
the work of operative employees.
2.Staff Authority
• Positions that have some authority (e.g.,
organization policy enforcement) but that are
created to support, assist, and advise the holders
of line authority.

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Line Versus Staff Authority

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Span of Control
1.The number of subordinates a manager can
direct efficiently and effectively.
2.Decisions about spans of control have
significant impact on communication,
speed, flexibility, empowerment, the
number of organizational levels, and
organization size

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Centralization And Decentralization
1.Centralization
• A function of how much decision-making
authority is pushed down to lower levels in an
organization; the more centralized an
organization, the higher the level at which
decisions are made.
2.Decentralization
• The pushing down of decision-making authority
to the lowest levels of an organization.

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Types of Departmentalization
 Functional Groups employees based on work performed
(e.g., engineering, accounting information
systems, human resources)
 Product Groups employees based on major product areas
in the corporation (e.g., women’s footwear, men’s
footwear, and apparel and accessories)
 Customer Groups employees based on customers’ problem
and needs (e.g., wholesale, retail, government)
 Geographic Groups employees based on location served
(e.g., North, South, Midwest, East)
 Process Groups employees based on the basis of work
or customer flow (e.g., testing, payment)

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Contingency Variables Affecting
Structure
Strategy

Organizational
Size Technology
Structure

Environment

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Contingency Variables Affecting
Structure

1.Mechanistic Organization
• The bureaucracy: a structure that is high in
specialization, formalization, and centralization
2.Organic Organization
• An adhocracy: a structure that is low in
specialization, formalization, and centralization
3.Structure follows the organization’s chosen
strategy—change strategy, change structure.
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Mechanistic Versus Organic
Organizations

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Technology and Structure
1.Unit Production
• Production in terms of units or small batches
2.Mass Production
• Production in terms of large batch
manufacturing
3.Process Production
• Production in terms of continuous processing

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Organization Design
Applications
1.Simple Structure
• Is low in specialization and formalization but
high in centralization.
2.Functional Structure
• Has similar and related occupational specialties
that are grouped together.
3.Divisional structure
• Is made up of self-contained units.

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Functional Structure

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Divisional Structure

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Other Organizational Structures
1. Matrix Structure
• Is comprised of specialists from functional
departments who are assigned to work on one or
more projects led by a project manager.
2. Team-Based Structure
• Consists entirely of work groups or teams.
3. Boundaryless Organization
• Is not defined or limited by boundaries or
categories imposed by traditional structures.

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Sample Matrix Structure

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The Learning Organization
1. An organization that has developed the
capacity to continuously adapt and change
because all members take an active role in
identifying and resolving work-related issues.
2. Characteristics:
• Organization design
• Information sharing
• Leadership
• Organizational culture

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Characteristics of a Learning
Organization

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Organization Culture
1. Is a system of shared meanings within an organization
that determine how employees act.
2. Has shared values in its cultural elements
• Stories, rituals, material symbols, and language unique to the
organization
3. Results from the interaction between
• The founders’ biases and assumptions
• What the first employees learn subsequently from their own
experiences.
4. Influences structure
• Strong culture substitutes for rules and regulations.
• Cultural norms and values can serve as “social control”

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Ten Characteristics of Organization
Culture
1. Member identity 6. Risk tolerance
2. Group emphasis 7. Reward criteria
3. People focus 8. Conflict tolerance
4. Unit integration 9. Means–end
orientation
5. Control
10. Open-systems focus

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