Organizational Structure and Design
Customer - grouping jobs by type of
Purpose of Organizing
● Divides work to be done into specific
jobs and department
● Assigns task and responsibilities
associated with individual jobs
● Coordinates diverse organizational task
● Establishes relationships among
individuals, groups and departments
● Establishes formal lines of authority
● Allocates and deploys organizational
resources
Defining Organizational Structure
➢ The formal arrangement of jobs within
an organization.
➢ A system that outlines how certain
activities are directed to achieve the
goals of an organization.
Organizational Design
A process involving decisions about six key
elements:
➢ Work Specialization
➢ Departmentalization
➢ Chain of Command
➢ Span Control
➢ Centralization and decentralization
➢ Formalization
Organizational Design
➢ The degree to which task in the
organization are divided into separate
jobs with each step completed by a
different person.
➢ A step-by-step methodology which
identifies dysfunctional aspects of work
flow, procedures, structures and
systems, realigns them to fit current
business realities/goals and then
develops plans to implement the new
changes.
Departmentalization by Type
1. Functional - grouping jobs by functions
performed
2. Product - grouping jobs by product line
3. Geographical - grouping jobs on the
basis of territory or geography
4. Process - grouping jobs on the basis of
product or customer flow
5.
customer and needs
Functional Departmentation suffers from the
following disadvantages:
1. Simplicity - functional departmentation is
simple and common form of departmentation.
It is very easy to establish and operate.
2. Specialization - functional departmentation
follows the principle of specialization. Special
knowledge and skill helps high level operation
of the organizational functions.
3. Better Coordination - functional
departmentation facilitates better coordination
among departments, different functions and
employees,
4. Optimum Utilization Of Resources -
functional departmentation focuses on the
optimum utilization of both human and non-
human resources. This ensures positive
outcome to the organization.
Functional Departmentation suffers from the
following disadvantages:
1. Conflict - In functional departmentation,
there is very high chance of conflict among
departments and other functional areas.
2. Slow Decision Making - Because of numbers
of specialists and experts and many
departments, decision making process is slow in
this type of departmentation.
3. High Supervision Cost -There are many
supervisors in this type of organization. So,
supervision costs is very high.
4. Lack Of Innovation And Creativity -
Functional departmentation emphasis on high
level speed production by the help of specialists
and skilled employees. It emphasis on mass
production and expansion. But it ignores
innovation and creativity.
5. Difficult to Monitor - It is very difficult to
monitor performance in this type of
departmentation.

Organizational Design
❏ Chain of Command - refers to a
company's hierarchy of reporting
relationships – from the bottom to the
top of an organization, who must
answer to whom. The chain of
command not only establishes
accountability, it lays out a company's
lines of authority and decision-making
power.
Organizational Design
❖ Authority - The rights to inherent in a
managerial position to tell people
what to do and to expect them to do it.
❖ Responsibility - The obligation or
expectation to perform
❖ Unity of Command - The concept that a
person should have one boss and
should report only to that person
❖ Span of Control - is the number of
employees a manager can supervise as
effectively as possible. The addition of
new hierarchical layers makes the
organizational structure steeper.
Centralization - The process by which
the activities of an organization,
particularly those regarding planning
and decision-making, framing strategy
and policies become concentrated
within a particular geographical
location group.
❖ Decentralization - The process by
which the activities of an organization,
particularly those regarding planning
and decision making, are distributed or
 delegated away from a central,
authoritative location or group.
❖ Employee Empowerment - Giving
employees a certain degree of
autonomy and responsibility for
decision-making regarding their
specific organizational tasks.
❏ Formalization - A process in which
managers specify (in writing),
procedures, rules and responsibilities
for the individual employees,
organizational units, groups, teams
and the organization as a whole, which
leads to the development of processes,
relationships, and operating
procedures.
➔ Highly formalized jobs offer little
discretion over what is to be done.
➔ Low formalization means fewer
constraints on how employees do their
work.
HUMAN RESOURCE MANAGEMENT
Refers to the process of acquiring, training,
appraising and compensating employee,
and of attending to their labor relations,
health and safety, and fairness concern
(Dessler, 2017)
Importance of HRM
1. The people dimensions of
organization
2. Hiring competent people
3. Training employees
4. Helping employees perform at high
levels
5. Providing mechanism to ensure that
these employees maintain their
productive affiliation with the
organization
SHOULD KNOW AND SHOULD AVOID
What managers should KNOW ABOUT?
Equal opportunity and affirmative action
Employee health and safety
Handling grievances and labor relations
What managers should AVOID about:
To hire the wrong person for the job
To have your employees not doing their
best
To waste time with useless interviews
To commit any unfair labor practices
To have your company cited for unsafe
practices
GOALS OF HRM
Attract, hire, train motivate and retain
HRM FUNCTIONS
EMPLOYEE-MANAGEMENT RELATIONS
Employment rights of both employers and
employees
HEALTH & SAFETY
Protecting employees from work-related
toxins, accidents and injuries
REWARDS & BENEFITS
Important for employee motivation,
performance and retention
STAFFING
Process of planning, acquiring, deploying,
and retaining employees that enables the
organization to meet its talent and to  Equitably link rewards to responsibility
execute its business strategy level and performance
TRAINING & DEVELOPMENT  Promote the efficient and effective
Activities that enables employees to utilization of employees skills and
develop up-to-date skills, knowledge and knowledge
abilities  Increase employee engagement, effort
PERFORMANCE MANAGEMENT and performance
providing goals to know what to focus on  Increase the organization's ability to
and the performance level that is expected manage change
STRUCTURE OF HR DEPARTMENT  Decrease the organization's level
EMPLOYMENT liability for compliance with
 coordinate the staffing function employment laws.
 advertising vacancies
 perform initial screening
 interview and make job offers
 do paperwork related hiring
TRAINING & DEVELOPMENT
 help employees to maximize their
potential
 serve as internal change agents to the
organization
 provide counseling and career
development
COMPENSATION & BENEFITS
 establish objective and equitable pay
system
 design cost-effective benefits packages
that help attract and retain high quality
employees
EMPLOYEE RELATIONS
 Communication
 Fair application of policies and
procedures
 Coordination of activities and services
that enhance employee commitment
and loyalty

EFFECTIVE HRM SYSTEMS CAN:

 Improve organizational efficiency
 Contribute to revenue growth
 Increase employees understanding of
their responsibilities and how they
relate the organization's mission,
business strategy and goals.
 Develop and enhance employee
capabilities and talents to enable
strategic execution and goal attainment