Organizational Structure


Refers to the formal pattern of how people and jobs are grouped and coordinated in
organization
 Illustrated by an organizational chart, specifying who reports to whom
 Consists of mechanisms that serve to coordinate and control activities of organizational
members
 Coordination is the process by which tasks and departments are interrelated to achieve
the goals of the organization.
 Control refers to the regulation of the activities in ways that will enable members to
predict and stabilize relationships with other members of the organization.
Basic Elements of Organizational Structure
WORK SPECIALIZATION
 Work Specialization or division of labor refers to the degree to which tasks in the
organization are subdivide into separated separate jobs.
 Essence is to divide a job into a number of steps, each completed by a separate
individual.
 Specialization is a means of making the most efficient use of employees’ skills and even
successfully improving them through repetition. Breaks complex tasks into specific
elements by technology, expertise, and region.
Advantages of Work Specialization:
1. Total productivity tends to multiply.
2. Simplified tasks can be learned in a short time and be completed quickly.
3. It possible for people to choose, or be assigned to positions they enjoy
and for which they are well suited.

Samples of a Company without Work Samples of a Company with Work

Specialization Specialization

Departmentation
 Departmentation refers to the grouping of jobs under the authority of a single
manager, according to some common, rational basis, for the purpose of planning,
coordination, and control.
 Advantages of Departmentation:
1. Supervision is made easier
2. The sharing of resources results to maximum use of such resources
3. Common measures of performance is established
4. Communication is encouraged

Basis for Grouping Jobs

 Knowledge and skills.
A Sample of Grouping of Jobs According to Knowledge and Skills

 Work process and function. Efficiencies gained from putting like specialists together.
A Sample Grouping of Jobs According to Work Process and Function

 Time.
A Sample Grouping of Jobs According to Time

 Product. Increased accountability for performance because all activities related to a specific
product or service are under the direction of a single manager.
A Sample Grouping of Jobs According to Products
  Customer. The organization seeks to reach.
A Sample Grouping of Jobs According to Customer

 Location. This form is valuable when an organization’s customers are scattered over a large
geographic area and have similar needs within their locations.
A Sample Grouping of Jobs According to Location

Pattern of Authority
 Pattern of Authority refers of the extent by which organization members are allowed
to make decisions without getting approval of another member.
 Chain of command. It is an unbroken line of authority that extends from the top of
the organization to the lowest echelon and clarifies who reports to whom.
 Unity of command. The idea that a subordinate should have only one superior to
whom he or she is directly responsible.
 Can either be centralized or decentralized
 Centralized when decision making is concentrated in the hands of higher-level
managers and suited for stable environments
 Decentralized when decision making authority is granted to middle and lower
management positions and suited for complex environments
 Advantages of decentralized authority:
1. Efficiency- red tapes and bottlenecks and reduced
2. Flexibility- managers can cope with situations as they come
3. Initiative- managers are highly motivated by the challenge
4. Development- managers are provided with opportunity for training
Disadvantages of decentralized authority:
1. Control- coordinating overall activities is more difficult
2. Duplication- there is a great chance of efforts duplicated between
departments
3. Centralized expertise- home office experts may be overlooked or
disregarded
4. Competency- the organization may not be able to produce competent
managers at all levels

Span of Control
 Span of control refers to the number of subordinates reporting to a single supervisor
 Either narrow or wide
 Narrow when there are few subordinates reporting to a supervisor
 Wide when there are many subordinates reporting to a supervisor
 The appropriate span of control will depend on the situation
Characteristics of a narrow span of control:
1. There is closer relationship between manager and subordinates
2. There is less delegation of authority
3. Controlling activities are more tight
4. There is more time for rewarding behavior
Characteristics of an organization with wide span of control:
1. Employees work with little supervision
2. There is a high level of delegation of authority
3. Controlling is lighter
4. There is less time for rewarding behavior

Coordination of activities
 refers to the linking of activities in the organization that serve to achieve a common
goal or objective
 As the job is divided into several tasks and each is assigned to a corresponding unit,
there is a risk that one task may be done too well or too early to the detriment of the
other tasks.

Common Organizational Designs

A. Simple Structure
• Characterized by a low degree of departmentation, wide spans of control
• Authority centralized in a single person and little formalization.
• a flat organization
 • Coordination through direct supervision
• Most appropriate for small businesses
• Manager is also the owner
Advantages of the simple structure: Disadvantages of the simple structure:

 Simplicity  Inability to serve a large organization

 Decisions can be made fast grows in size decision making
 Flexible becomes slower
 Inexpensive to maintain
 Accountability is clear

A Simple Structure Example (Wilfredo Dungo Automative Repair Shop)

B. Bureaucratic Organization
• A rational, systematic, and precise form of organization in which rules,
regulations, and techniques of control are precisely defined
• structure with highly routine operating tasks achieved through specialization, very
formalized rules and regulations, tasks that are grouped into functional
departments, centralized authority, narrow spans of control, and decision making
that follows the chain of command
 Machine bureaucracy
 Moderately decentralized form of organization
 Emphasizes the technical staff and standardization of work processes
 Best suited to large organizations
 Characteristics:
1. Existence of rules and procedure
2. A high degree of differentiation among organizational functions
3. A high degree of job specialization
4. An organization of offices determined by hierarchy
5. A heavy emphasis on rules and norms to regulate behavior
6. Interpersonal relations characterized by impersonality
7. Selection and promotion of employees and managers based on merit
8. All administrative actions are in writing

 Professional bureaucracy
 Composed of a core of highly trained professionals that standardize skills
for coordination;
Examples: law and accounting firms
  Decentralized decision making and is less formal than machine
bureaucracy
 Relatively flat structure with differentiation across units
 Emphasizes the expertise of the professionals in the operating core of the
organization
 Technical and support staffs serve the professionals
Advantages of a professional bureaucracy:
1. Ability to perform standardized activities in a highly
efficient manner
2. Can operate nicely with less talented middle and lower-
level managers
Disadvantages of a professional bureaucracy:
1. Specialization creates subunit conflicts
2. When cases arise that do not precisely fit the rules, there is
no room for modification
The Bureaucratic Form of Organization

C. The Matrix Structure

• Superimposes product or project-based design on an existing function-based design
• Attempts to maximize the strengths and minimize the weaknesses of both
departmentalization by function and by product
Matrix structures are found in organizations that:
1. Require response to rapid changes in two or more environments
2. Face uncertainties that generate high information processing requirements
3. Must deal with financial and human resources constraints
4. Want to take advantage of new opportunities and solve special problems
The Matrix-designed Organization
 Strengths of the Matrix Design:
1. Allows demands from the environment to be meet simultaneously
2. Flexible
3. Efficient
4. Enhances skill development
5. Increases motivation and commitment among employees
6. Aids top management in planning
Weakness of the Matrix Design:
1. Creates dual-authority confusion
2. Spawns power struggle
3. Time-consuming
4. Requires interpersonal skills training
5. Generates high implementation cost

New Organization Design Options

 Outsourcing Organization
 Also known as virtual organization
 An arrangement by which the organization have work performed for it by groups
outside the organization
 Very useful because it can reduce the company’s need for employees, equipment,
and materials thus there is reduction in cost
 It reduces the demand for labor within the organization thus labor unions are not
elated
 The lowest possible price oftentimes lead to violation of wage and child labor
laws.
An Outsourcing Organization
  Team Structure
 Makes use of teams as the central device to coordinate work activities
 Horizontal rather than a vertical organization
 Departmental barriers are broken down and decision making is decentralized
 Team members must be generalists as well as specialists
 The team structure seeks to eliminate the chain of command and replace
departments with empowered teams.

The Organizational Structure’s Relevance to Human Behavior

 Not all people are suited to a certain type of structure. This is important to know because
organizational structures can only be effective if the people working within them are
well-matched with the structure.
 It makes the decision-making process more effective. This means that every member of
the team or the organization is well-versed in their roles and responsibilities. They find it
easier to act independently, being proactive and taking initiative.
 It defines how tasks are divided, grouped, and coordinated in organizations. Every
organization has a structure that clarifies the roles that organizational members perform,
so that everyone understands their responsibilities to the group.