ORGANISATIONAL

STRUCTURE
BY GROUP 9 :-
UMANG,
MEGHA,
ASHISH,
SACHITANAND,
SAURAV,
NEERAJ
• According to S.P. Robbins, “An
organisational structure defines how
job tasks are formally divided, grouped
and coordinated.”

• Organisation structure is the

framework of tasks, reporting and
authority relationships within which an
organisation functions.
• There are six key elements that need to be
considered for designing an organisation’s
structure –
i. Work Specialisation
ii. Departmentalisation
iii. Chain of Command
iv. Span of Control
v. Centralisation and Decentralisation
vi. Formalisation
• There are six key elements that need to be
considered for designing an organisation’s
structure –
i. Work Specialisation
ii. Departmentalisation
iii. Chain of Command
iv. Span of Control
v. Centralisation and Decentralisation
vi. Formalisation
 Essentials for Organisation Structure
• Work Specialisation
One of the most important features of an
organisation structure is work
specialisation.
Every effective organisation defines the
duties and responsibilities of all employees
and trains them to attain expertise in their
work.
This can be applied to both managerial and
technical functions.
• Chain of command
An organisation would be more effective if
there is unity of command within the
firm.
Each employee should receive orders or
instructions from only one superior.
Also, proper authority and responsibilities
should be designated to get the work done
and help achieve organisational goals.
• Departmentalization
It is the process in which jobs are grouped
together to bring coordination among the
organisational tasks.
Jobs are grouped on the basis of –
1. Function,
2. Product ,
3. Geography or
4. Customer
• Departmentalization by function
This is the most widely used method of
departmentation. It involves grouping
people with similar skills in one unit.

• Departmentalization by product
It involves breaking down an organisation
into small, independent units, each of
which produces a particular product or
service.
• Departmentalization by geography
This method involves the grouping of jobs on
the basis of territory. This helps firms to
customise their products and develop
strategies as per the competition in the region.

• Departmentalization by customer
This involves dividing the organisation into
depts. based on the type of customers they
serve.
 Span of control

 The number of subordinates a manager can efficiently

and effectively direct

An example to illustrate the validity of this statement

Assume that there are two organizations A & B

Company A Company B

 Operative level  Operative level

employees employees
4100 4100
 span 4  span 8
 Managers required 1025
 managers required
512(approx)
 Average salary
 saves $32 million/ year
$40000/year
so, wider spans are more
efficient in terms of
cost savings
Advantages and Disadvantages of small and large spans

 In small spans manager  Employee performance

can maintain close control suffers in large span
because supervisors
cant provide necessary
 Major drawbacks of small leadership and support
spans
• Expensive
• Complex vertical
communication
• Over tight supervision
 Centralization and Decentralization

Centralization : Refers to the degree to which decision

making is concentrated at a single point in the organization

Decentralization : Decision discretion is pushed to lower-

level employees

Formalization : Refers to the degree to which

jobs within the organization are standardized
Common organization designs
THE SIMPLE STRUCTURE
• CENTRALIZED DECISION-MAKING
• LOW DEGREE OF DEPARTMENTALIZATION
• WIDE SPAN OF CONTROL
THE BUREACRACY STRUCTURE
•FORMALIZED RULES AND REGULATIONS
•DECISION MAKING FOLLOWS A CHAIN OF COMAND
THE MATRIX STRUCTURE
•COMBINES TWO FORM OF DEPARTMENTALIZATION
 MATRIX DESIGN
• Combination of Project Design with those of
functional one.

• Used in sectors characterized by a high degree

of specialization along with the emphasis on
project and other specific goals such as
R&D,advertisment agencies, hospitals etc.
 ADVANTAGE OF MATRIX STRUCTURE

• Facilitates coordination between the various

complex functions of the organization.

• It also enables the organization to allocates

functional specialists among different
department in an effective manner.
DISADVANTAGE OF MATRIX DESIGN
• Violates the principle of unity of command.

• Matrix design is also criticized for the

confusion it creates and the amount of stress
it places on individuals.
• Leads to Role conflict and ambiguity among
employees.
 VIRTUAL ORGANIZATION

Temporary network of companies each having

expertise in certain skills and specialized
organization.
 CHARACTERISTICS OF VIRTUAL
ORGANIZATION
• Different organization with varying skills and
core competencies enter into short term
partnership.

• Located in different geographical location can

use IT to communicate.

• It is difficult to define the boundaries.

BOUNDRYLESS ORGANIZATION
What
That which seeks to eliminate the chain
of command
Have limitless spans of control
Replace departments with empowered
teams
How
 By eliminating vertical an horizontal
boundaries
VERTICAL BOUNDARIES
• By having cross-hierarchical teams
• Participative decision making
• 360-degree performance appraisals
HORIZONTAL BOUNDARIES
Functional departments create horizontal
boundaries
So, replacing functional departments with cross-
functional teams.
 Rotation of people into and out of different
functional areas.
 BENEFITS OF BOUNDRYLESS ORGANIZATION
BREAKING DOWN EXTERNAL BARRIERS

External Barriers constituencies are:

Suppliers
Customers
Regulators
Joint Ventures in different countries
Customer empowerment
Virtual organizations
DRAWBACKS
REASONS FOR DIFFERENCE IN STRUCTURES

 Mechanistic Model

-High formalization
-Limited information network
-Centralization

 Organic Model

-Participative decision making

-Comprehensive information network
-Cross-Functional teams
ORGANIZATIONAL MODELS
 STRATEGY
 Importance of Strategy
 Organizational objectives are derived from strategies
 Strategy and organizational structure should be closely linked
 Types of Strategy
 Innovation
 Emphasize introduction of major new products and services
o Logical Org Structure linkage: Organic model
 Cost Minimization
 Emphasize tight cost control, avoidance unnecessary innovation and
marking expense and price cutting
o Logical Org Structure linkage: Mechanistic model
 Imitation
 Seeks to move into products, services or markets only their viability has
been proven
o Logical Org Structure linkage: Mechanistic and organic model
 Organizational Size

Larger Size Org Small Size Org

 More than 2000 employee  Less than 2000 employee
 More Work Specialization  Less Work Specialization
 Departmentalization  Decentralization
 More rules and regulations  Low formalization
 More vertical levels

Note:
 Increase in employee strength for small size organization shift towards
mechanistic structure
 Impact becomes less important as organization expands
 Environment
 Importance of environment
 Organizational structure is affected by environmental uncertainty
 For Ex: New Competitors, Tech breakthrough, Government policy
 Dimensions of Environment
 Capacity
 It determines degree to which it can support growth in organization
o Scarce and abundant
 Volatility
 It determines degree of instability in organization
o Dynamic and Stable
 Complexity
 It determines degree of heterogeneity and homogeneity among
environmental element in organization
o Simple and complex
Three Dimensional Model of Environment
Stable

Abundant

Logical Org Structure

linkage
Mechanistic Model
Simple Complex

Logical Org Structure

linkage
Organic Model

Scarce
Dynamic
CONCLUSION