Organizational Designs

-Organizational design refers to the way managers structure their organization to reach the

organization’s goals.

Structural elements include :

- Allocation of duties, tasks, and responsibilities between departments and individuals.

- Reporting relationships.

- Number of levels.

Two basic goals of organizational design

⮚ Get information to decision makers.

⮚ Coordinate the interdependent parts of an organization.

Forms of Organizational Design

Three major forms:

1. Functional

2. Divisional

3. Matrix,

*Combine functional and divisional designs to get a hybrid design

Organizational Design by Function - Groups tasks of the organization according to the activities

they perform. Typically configured into departments such as manufacturing, engineering,

accounting, marketing. Functional configurations can vary from one organization to another

depending on tasks and goals

● Strategy - Focused on a few products or services in well defined markets with few

Competitors.
 ● External environment- Stable, Simple, Little uncertainty
● Technical process - Routine with little interdependence with other parts of the

organization.

● Line and staff - Line does the major operating tasks. Staff gives support and serve in
advisory roles. Emphasizes technical skills within each function

Organizational Design by Division - Uses decentralization. Divisions formed around products,

services, locations, customers, programs, or technical process. Often evolves from a functional

design.

● Strategy - Focused on different products, services, customers, or operating locations.

● External environment - Complex, fast changing, with moderate to high uncertainty.
● Technical process - Non routine and interdependent with others parts of the
organization.

Hybrid Organizational Design

- Hybrid design uses both functions and divisions. The divisions decentralize some functions,
and

the headquarters location centralizes others. Centralized functions often are the costly ones.

● Strategy - Focused on many products or services

● External environment - Fast changing, moderate to high uncertainty, complex.
● Technical process - Both routine and non-routine, high interdependence with functions
and divisions

Matrix Organizational Design

Conditions under which an organization may choose a matrix design:

 ● Pressures from the external environment for a dual focus.  High uncertainty within the
multiple sectors of the external environment.
● Constraints on human and physical resources.

Types of Organizational Designs

1. Traditional Designs - Include simple structure, functional structure, and divisional

structure

✔ Simple Structure - A simple structure is defined as a design with low

departmentalization, wide spans of control, centralized authority, and little
formalization. This type of design is very common in small start up business.
✔ Divisional Structure - The divisional structure is a type of organizational structure that
groups each organizational function into a division. These division can correspond to
either products or geographies.
✔ Functional Structure - A functional structure is defined as a design that groups similar or
related occupational specialties together. It is the functional approach to
departmentalization applied to the entire organization.
2. Contemporary Designs - Include team structure, matrix structure, project structure,
boundary less organization, and the learning organization.

✔ Team Structure - A team structure is a design in which an organization is made up of

teams, and each team works towards a common goal. Employees are more involved and
empowered.
✔ Project Structure - A project structure is an organizational structure in which employees
continuously work on projects. This is like a matrix structure; as one project is
completed, employees move on to the next project.
✔ Matrix Structure - A matrix structure is one that assigns specialists from different
functional areas to work on projects but who return to their areas when the project is
completed.
✔ Learning Organization - A learning organization is defined as an organization that has
developed the capacity to continuously learn, adapt, and change. In order to have a
learning organization a company must have very knowledgeable employees who are
able to share their knowledge with others and be able to apply it in a work environment.
✔ Boundary less Organization - A boundary less organization is one in which its design is
not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by
a predefined structure. In other words it is an unstructured design.