You are on page 1of 18

Organizational Structure

Business?
Economic system in which goods and
services are exchanged for one another or
money, on the basis of their perceived
worth.
Every business requires some form of
investment and a sufficient number of
customers to whom its output can be sold
at profit on a consistent basis.

Organisation?

Definition 1
Non-random arrangement of components or parts interconnected in a
manner as to constitute a system identifiable as a unit.

Definition 2
Sequential or spatial (or both) form in which a body of knowledge, data,
people, things, or other elements, is purposefully arranged.

Definition 3
Social unit of people systematically arranged and managed to meet a
need or to pursue collective goals on a continuing basis.
All organizations have a management structure that determines
relationships between functions and positions, and subdivides and
delegates roles, responsibilities, and authority to carry out defined tasks.
Organizations are open systems in that they affect and are affected by
the environment beyond their boundaries.

Organizational Structure?
Formal and informal framework of policies
and rules, within which an organization
arranges its lines of authority and
communications, and allocates rights and
duties.

Organizational Structure?
Organizational structure determines the
manner and extent to which roles, power,
and responsibilities are delegated,
controlled, and coordinated, and how
information flows between levels of
management.
This structure depends entirely on the
organization's objectives and the strategy
chosen to achieve them.

Organizational Structure?
In a centralized structure, the decision making
power is concentrated in the top layer of the
management and tight control is exercised over
departments and divisions.
In a decentralized structure, the decision making
power is distributed and the departments and
divisions have varying degrees of autonomy.
An organization chart illustrates the
organizational structure.

Social Structure
The duality of structure:
Constrains the choices about activities
But structures are created by the activities

Enabling interaction:
Can be seen as fixed immovable
Or as a moment of ever-changing interactivity

Two purposes
Social structure is giving a picture of:
The differentiation between work activities
And at the same time indicating the major
challenges of integrating the same
activities

Organization Chart
The Organizational chart is a representation
of:
The hierarchy of authority:
the vertical structure or
the chain of command

The division of labour:


the horizontal coordination or
the work specialization

Chain of Command
Unbroken line
line of
of authority
authority that
that links
links all
all
Unbroken
persons in
in an
an organization.
organization.
persons
Shows who
who reports
reports to
to whom.
whom.
Shows
Associated with
with two
two underlying
underlying
Associated
principles.
principles.
Unity
Unity of
of Command
Command..(no
(noone
onehas
hasmore
morethan
than11boss)
boss)

Scalar
Scalar Principle.
Principle. (communication
(communicationfollows
followschain
chainofofcommand)
command)

Work Specialization
Tasks are
are subdivided
subdivided into
into individual
individual
Tasks
jobs.
jobs.
Division of
of labor
labor concept.
concept.
Division
Employees perform
perform only
only the
the tasks
tasks
Employees
relevant to
to their
their specialized
specialized function.
function.
relevant
Jobs tend
tend to
to be
be small,
small, but
but they
they can
can be
be
Jobs
performed efficiently.
efficiently.
performed
Many organizations
organizations are
are moving
moving away
away
Many
from this
this principle.
principle.
from

Authority
Formal and
and legitimate
legitimate right
right of
of aa manager
manager to
to
Formal
make decisions,
decisions, issue
issue orders,
orders, and
and to
to allocate
allocate
make
resources to
to achieve
achieve organizationally
organizationally desired
desired
resources
outcomes.
outcomes.
Authority
Authority is
is distinguished
distinguished by
by three
three

characteristics:
characteristics:
Authority
Authority is
is vested
vested in
in organizational
organizational positions,
positions,

not people.
people.
not
Authority
Authority is
is accepted
accepted by
by subordinates.
subordinates.

Authority
Authority flows
flows down
down the
the vertical
vertical hierarchy.
hierarchy.

Span of Control
Thenumber
numberof
ofemployees
employees
The
reportingto
to aasupervisor.
supervisor.
reporting
Traditionalview,
view,seven
seven or
orso
soper
per
Traditional
manager.
manager.
Manyorganizations
organizationstoday,
today,30
30or
or
Many
moreper
per manager.
manager.
more
Generallyififsupervisors
supervisorsmust
mustbe
be
Generally
closelyinvolved
involved with
withemployees,
employees,
closely
spanshould
should be
besmall.
small.
span

Tall versus Flat Structure


Span of
of control
control used
used in
in an
an organization
organization
Span
determines whether
whether the
the structure
structure is
is tall
tall or
or flat.
flat.
determines
Tall structure
structure has
has aa narrow
narrow span
span and
and more
more
Tall
hierarchical levels.
levels.
hierarchical
Flat structure
structure has
has aa wide
wide span,
span, is
is horizontally
horizontally
Flat
dispersed and
and fewer
fewer hierarchical
hierarchical levels.
levels.
dispersed
The trend
trend has
has been
been toward
toward wider
wider spans
spans of
of
The
control.
control.

Tall vs. Flat Structure

Five structural alternatives


Vertical functional approach. People are grouped
together in departments by common skills.
Divisional approach. Grouped together based on a
common product, program, or geographical region.
Horizontal matrix approach. Functional and divisional
chains of command. Some employees report to two
bosses.
Team-based approach. Created to accomplish specific
tasks.
Network approach. Small, central hub electronically
connected to their other organizations that perform vital
functions. Departments are independent, and can be
located anywhere.

Structural Design

Structural Design