NATURE & STRUCTURES OF
AN ORGANIZATION
ORGANIZATION
o Exerts a great influence on many aspects of
human life.
o Though each organization is defined by
different goals & objectives, they are all
established through a common process.
LEARNING ORGANIZATION
o Transforms and innovates itself though
continuous learning and knowledge
acquisition
o Learn to adapt & confront problems because
all members are encouraged to take part in
solving critical issues
o Information is shared & accessible—nothing is
kept secret/confidential
o Employees are motivated to continuously
practice knowledge management and utilize
them in decision-making.
o TRAINING OF EMPLOYEES is one of its top
priorities.
o Some theorists believe that actively
facilitating the continuous learning of
employees contribute to the competitiveness
of a company & ensures its success
o Committing mistakes is considered part of the
training process and is then forgiven; what is
given importance is the fact that an employee
should learn to grow from these mistakes; this
perspective is part of the company’s culture,
& all employees are encouraged to
incorporate it into their personal habits
ELEMENTS
Learning Organization
I. SUPPORTIVE LEARNING ENVIRONMENT
II. AVAILABILITY OF LEARNING PROCESSES AND
PRACTICES
III. LEADERS
IV. EMPLOYEES’ DELEGATION WITH TASKS
SUPPORTIVE LEARNING ENVIRONMENT
o Employees are not afraid to voice out their
opinions, commit mistakes, or present their
points of view.
o They are not judged because they learn to
appreciate each other’s differences
o Continue to explore, take risks, & learn new
things
o Not overstressed with work load and are
given ample time to reflect & think about the
organization’s processes
AVAILABILITY OF LEARNING
PROCESSES & PRACTICES
o Consist of generation, collection,
interpretation, and dissemination of
information relevant to the company’s
operations.
o Include technological trends, development of
new product ideas, training & education of
employees, & intelligence reports regarding
the competition and customers
o With relevant information on hand,
knowledge-sharing becomes crucial through
meetings, forums, & discussions among
employees, customers, suppliers, &
distributors. It is ensured that information is
shared with those who need them.
LEADERS
o Can effectively reinforce learning.
o Can encourage their employees to learn and
think creatively; they are not restrained from
entertaining different points of view and
alternative solutions to problems
o They empower their people & trust in their
abilities
EMPLOYEES’ DELEGATION WITH TASKS
o Tasks that challenge their own capabilities.
o Delegation—the act of giving control,
authority, a job, duty, to another person;
chosen or elected to vote or act for others
o Demonstrates the trust that leaders put in
their members
o This is what makes the learning organization a
success: it becomes boundless across
different areas of the organization
CHARACTERISTICS
Learning Organization
I. Cherish an Open Culture
II. Design & Implement Feedback Loops
III. Promote Personal Mastery
IV. Plan for Intelligent Fast Failure
V. Steal Best Practices
VI. Cultivate a Common Vision
NATURE OF ORGANIZATIONS
o The term “organization” became prominent in
management during the late 1920s and early
1930s. Some theorists define it as a social
group that is oriented toward a purpose.
Several other theorists define an organization
as having well-coordinated processes and
interacting with its environment.
ORGANIZATION
o A social group that has well-coordinated
processes and activities for the purpose of
achieving its objectives and is connected to
the environment where it exists.
AS A MANAGEMENT FUNCTION
o Entails the structuring and grouping
of jobs and ensuring that these are
performed by qualified and
competent personnel.
o The organizing process brings
together all the human, physical, and
financial resources and integrates
them with related jobs and positions.
This process also ensures that
authority and responsibility are well-
defined and internally coordinated
within the organization.
The organizing process (Daft 2012)
I. Identification of Activities
Once this is done, related
activities/tasks are grouped into departments
or units.
II. Departmentalization
The authority given to managers are
classified and defined. This clarifies line of
authority of top-level, middle-level, and low-
level management & avoids confusion among
employees as to who their immediate
superiors are
III. Definition of Authority
Level managers are informed as to
whom they directly report to, the positions
that will be reporting to them, and the people
that they will be handling.
IV. Integration of Authority & Responsibility
Level managers are informed
Organizational Design & Structure
o The organizational design identifies the
essential tasks and operations of the
company, establishes work relationships, and
divides the company into departments that
will contribute toward achieving its goals and
objectives.
o The organizational structure is the framework
that shows how each component of the
company relates to each other.
Configurations & elements of organizational
structure
MECHANISTIC STRUCTURE
• A rigid and controlled structure that
resembles a bureaucracy. The flow of
communication and job responsibilities are
carefully delineated and decisions are mostly
made from the top.
• Common in stable environments and are
applicable to companies with uniform
customers and operations.
• Advantage: maximizes efficiency while
minimizing the costs
ORGANIC STRUCTURE
o More flexible and highly adaptable
o Is decentralized and less formal, and
employees are given broader responsibilities
based on the current needs of the company
o Employees are empowered and given
accountability for their actions
o Is recommended if the organization has an
unstable environment
o Major Advantage: results in greater employee
satisfaction
6 KEY ELEMENTSORGANIZATIONAL STRUCTURES
Work Specialization
The way jobs are divided into steps or
individual tasks.
Departmentalization
The grouping of similar functions, jobs, and
tasks into departments. It may be:
• Functional – where personnel and tasks
related to a single company operation are
grouped together
• Divisional Departmentalization – groups
personnel based on product, service, process,
geographic location, or customer
Chain of Command
Indicates the communication and work
relationship between employees & managers. It
indicates who reports to whom. This is defined by 3
underlying principles:
• Authority – the right to inherent in a
managerial position to give directions or tell
people what to do & expect them to
undertake it
• Responsibility – obligation to perform duties
assigned to an employee
• Unity of Command – an employee should only
report to one superior
Span of Control
The number of employees a manager can
effectively manage.
Degree of Centralization
The extent authority & decision-making is
given to a small group of people in the organization.
Centralization occurs when major decisions are made
by the top management and the decisions & actions
of lower management and employees must have
approval from the top.
Decentralization occurs when lower
management is allowed to make decisions.
The process of standardizing jobs and
establishing rules and guidelines that guide
employees.
SIMPLE ORGANIZATIONAL STRUCTURE
The most basic structure and is applicable to
small businesses where majority of the power and
decision making rests on the owner. This allows for
quick decision-making and hands-on interaction with
the day-to-day activities of the firm. This structure is
easily maintained; accountability is also easily
determined because the owner has the sole authority
and responsibility in running the business.
SIMPLE ORGANIZATIONAL STRUCTURE
The disadvantage is that it is heavily reliant on
the business owner. The dependence on a single
individual may limit the activities and growth of the
business.
FUNCTIONAL GROUPING
Organizes a company by grouping together
similar functions into departments. Tasks and
operations are controlled through a vertical hierarchy,
where employees follow a chain of command and top
manager’s delegate tasks to lower-level managers and
employees.
One of the strengths is that it groups
employees who have similar skills under the same
departments or units.
However, one weakness is that the
organization cannot respond quickly to environmental
changes. The highly rigid and segregated structure of
the organization can also lead to poor coordination
among departments. Also, innovation is unlikely to
develop because there is a narrower view of
organizational goals.
Emphasizes hierarchy and specialization
among departments. This structure also enables a
company to establish clear professional identities
among its employees, since they are given positions
and ranks in line with their areas of expertise or
specialization. This may also bring competition among
employees assigned to different departments. If each
department focuses on their specific department and
ignores the others, problems may arise.
DIVISIONAL GROUPING
Organizes a company into divisions that
correspond to certain products or services. Each
division is autonomous and has its own departments,
resources, and units that oversee the regular
operations of the company such as human resources,
accounting, information technology, and operations.
One advantage of this design is that the
divisions are free to manage their own activities. The
decentralized nature of the organization enables each
division to adapt to the changes and threats they
encounter. Also, the failure of one division will not
automatically result in failure of the whole company.
The divisions can also focus more closely on their
specific products & services thus ensuring customer
satisfaction.
However, communication & coordination
among divisions should be maintained to ensure that
the entire company runs smoothly.
DIVISIONAL GROUPING
One disadvantage is that integration and
standardization across product lines is difficult. The
divisional design is also prone to competition among
divisions which may lead one division to undermine
another.
MULTI-FOCUSED GROUPING
Combines both the functional and divisional
structures in organizing a company.
Ex: Matrix Structure – used when both technical
expertise & product innovation are crucial in meeting
organizational goals; instead of establishing a
hierarchy or division, relationships within the
company are arranged in a grid, where employees
report to functional and product managers.
This design is suited for medium-sized
companies that make multiple products.
2 Types of Matrix Structures multi-focused grouping
Functional Matrix organizes the company in a way
that gives functional managers primary authority.
Product Matrix assigns greater authority to the
product managers.
ADVANTAGE OF MATRIX STRUCTURE Multi-Focused
Grouping
There is greater sharing of human resources
among products. It also provides an opportunity for
functional and product skills development. This
structure is also appropriate for complex decision-
making and business operations in an unstable
environment
DISADVANTAGE OF MATRIX STRUCTURE Multi-
Focused Grouping
The existence of dual authorities may lead to
confusion and divided loyalties among employees.
Management is also time-consuming and involves
frequent conflict resolution sessions.
MULTI-FOCUSED GROUPING
In addition, the effectiveness of the matrix
structure depends on the familiarity of the
participants with the production process and their
willingness to adopt collegial rather than vertical type
relationships.
MATRIX ORGANIZATIONAL STRUCTURE
MULTI-FOCUSED GROUPING
o Combines features of functional and divisional
structures
o Often used in larger companies and is set up
as a grid where employees have dual
reporting relationships
o The flow of authority of the functional
manager is vertical, while that of a project
manager is horizontal
o Projects within a matrix structure are usually
assigned specific frames.
MATRIX ORGANIZATIONAL STRUCTURE
ADVANTAGES
MULTI-FOCUSED GROUPING
Employees from different departments can be
selected to work on a project. Management,
therefore, can select the best combination of talent to
work on a specific project. This kind of setup is
beneficial to the personal and professional growth of
employees.
It can also quickly respond to a market or
customer demand because of the time frame allotted
for the project.
MATRIX ORGANIZATIONAL STRUCTURE
DISADVANTAGES
MULTI-FOCUSED GROUPING
There is conflict of interest among project
managers and functional managers in the allocation of
resources. Conflict of loyalty is also an issue among
employees since they are reporting to two managers,
the project manager and the functional manager. The
number of managers involved entails high
administrative costs for the company. The employees
also have heavier workload because they have
additional work in the project aside from their regular
tasks.
HORIZONTAL GROUPING
Eliminates the complexities if hierarchies and
divisions. Instead, it establishes a structure with little
or no levels between employees, middle managers,
and top management. Employees are organized into
general core processes or operations and all
departments in the company work together in all
tasks.
Promotes flexibility and quick response to
changes. It also directs the attention of all employees
towards the production and delivery of quality
products and services to customers. It gives a broader
view of organizational goals and promotes teamwork
and collaboration.
This design is also costly because it requires
rigorous training of employees to enable them to
adapt to a horizontal structure. Implementing this
structure requires a lot of changes in the work culture,
job design, management philosophy, and information
and rewards system of the company.
TEAM-BASED ORGANIZATIONAL STRUCTURE
HORIZONTAL GROUPING
o Organizes employees into teams whose
members perform varied functions
o Employees work together in accomplishing
various tasks, seeking solutions to problems,
and identifying & engaging in business
opportunities
o The allotted time for each task is maximized
since the hierarchy of management level is
removed, which simplifies the task of
reporting to immediate superiors and top
management
o Productivity is increased since the entire
group is working for a common goal, and the
talents and skills of each employee is
maximized
o TEAM-BASED ORGANIZATIONAL STRUCTURE
HORIZONTAL GROUPING
o One disadvantage is time management since
coordinating the teams requires constant
communication and frequent meetings
o Employees may also lack motivation since
team performance is valued rather than
individual contributions
VIRTUAL NETWORKING GROUPING
o The latest approach to organizational
design that takes advantage of the
latest advances in information and
communication technology.
Technology is used in sharing
information, completing tasks, and
communicating.
 o This design is advantageous to a small
company since it requires fewer
investments, reduces administrative
costs, and is flexible to changing
needs.
o One of the disadvantages of this
design is that managers do not have
hands-on control over the separate
companies and their employees. It
requires a lot of time to build and
cultivate relationships among the
workforce since face-to-face
communication is limited. They may
have diminished loyalty to the
company or may feel unnecessary and
expendable in their current position.
Network Organizational Structure
Virtual Network Grouping
o A company using this structure hires only a
few employees, which amounts to lesser costs
for salaries and benefits. A company enjoys
more flexibility and can be more responsive to
change since all the functions are outsourced.
o However, the disadvantage is that
independent firms may be hard to monitor.
To do so, the company may have to spend for
expensive equipment to monitor these firms.
There is no corporate culture and employee
loyalty is questionable.
OTHER TYPES OF ORGANIZATIONS
Entrepreneurial Organization
The power is focused on the chief executive.
Usually, the staff is small and informal, with a loose
division of labor and little management hierarchy.
Machine Organization
Decision-making is centralized and there is a
distinction between line and staff. Task & routine are
highly specialized, and these are grouped based on
functions. Communication within the organization is
formal.
Diversified Organization
The central administration is called
headquarters and there is a set of semi-autonomous
units or divisions under a central administrative
structure.
Professional Organization
Has standardized products and services and
employees usually do routine work. This organization
is commonly found in hospitals, universities, and
public agencies. This organization depends on the
skills & knowledge of its professional staff.
Innovative Organization
A modern organization which is flexible and
does not utilize planning and control systems.
Multidisciplined teams are formed and the firm hires
experts who are trained, experienced, and are not
restricted by traditional specializations.
Missionary Organization
The mission is the main focus. This mission is
clear, distinct, and inspiring. The employees are able
to identify with the firm’s purpose and are motivated
to enthusiastically work to achieve the company’s
mission.
ORGANIZATION THEORIES
Bureaucracy
In the late 1800s, Max Weber expressed
dissatisfaction with the way companies were
managed because they were run like families. He
believed that the management approach was more
informal and did not have the potential of being
successful since power authority, and loyalty were
misplaced; employees were loyal to their superiors
rather than the organization.
This theory emphasizes a formal rigid
structure and legitimate authority in organizations.
Relationships are strictly impersonal and free from
personal interests. Laws & regulations are set for all
employees to follow, and a chain of command is
established and strictly followed. Each role within the
hierarchy is defined and employees are organized to
work together.
Scientific management
Introduced by Frederick Taylor. While he
made improvements in industrial engineering,
particularly with time and motion studies, his
emphasis on the most efficient means of performing
tasks dehumanized factory workers. The
implementation of scientific management in the
workplace left workers with little opportunity to excel
or innovate from a set workplace norm.
Another application is in the careful selection,
training, & development of employees who are suited
for particular jobs in the organization.
Systems theory
In 1950s, Karl Ludwig von Bertalanffy &
Kenneth Boulding laid the foundations of the systems
theory. It emphasizes that a system is a collection of
parts that are coordinated in accomplishing a
particular goal.
This theory gives a company a general
perspective of the internal & external environments
where it operates as an integrated whole. It holds that
the work of a manager is necessarily complex but
implementing a system removes some of the
complexities of management because it enables the
manager to integrate essential tasks into a unified
whole.
CONTINGENCY THEORY
Recognizes that there is no single best way of
managing an organization. Situational differences are
given consideration and different management
principles are applied depending on the task, the size
of the firm, and the nature of the environment. It
recognizes the manager’s crucial role in the
company’s organizational environment and the
importance of adaptability in dealing with business
situations.
This theory integrates all the management
approaches and identifies a specific approach to be
applied in the situation at hand.
DELEGATION
Simple delegation refers to the allocation of
tasks to employees.
Delegation of authority allows subordinates to
do tasks or responsibilities outside of their regular
work, enabling them to exercise a certain level of
authority beyond their position. It involves mutual
trust as managers entrust their employees to commit
to the external task the same way as to their regular
one. Delegation enables managers to unload some of
their tasks so other more important matters can be
addressed. However, while it is the responsibility of
the employee to finish the delegated task, the
accountability still rests with the manager.
Formal & Informal Organizations
FORMAL ORGANIZATIONS
The structure rests on authority and
responsibility. The levels of management and the
scope of responsibilities of subordinates are clearly
indicated. This is also bound by rules and policies. It
may not be easy to bring changes to the hierarchy in
the organizational structure since it is strictly based on
the vision, mission, and the goals of the company.
Conflicts may arise due to miscommunication.
Formal & Informal Organizations
INFORMAL ORGANIZATIONS
It is defined by the personal relationships
established among employees. The interaction of
employees is based on friendship and camaraderie
and since there is no formal or binding relationship
among them, relationships can be dissolved any time.
It is not bound by authority and responsibility, thus
there is no pressure among the members to meet or
follow any set of rules.

ELEMENTS OF DELEGATION

Duty
Each employee in the organization is bound
by the duties expressed in the functions and
objectives of the organization.
Authority
The manager’s authority over his
subordinates should be clearly defined.

Obligation
Delegation is made easier when subordinates
express willingness to fully accept their
responsibilities.

EMPOWERMENT
It is the act of making employees accountable
for their own actions. It requires that managers trust
that their subordinates have the ability to enact
decisions and perform the tasks assigned to them. The
trust given to them empowers & motivates them in
performing their duties. Empowerment is seen as
getting the best out of employees and utilizing their
full potential for the organization.