ORGANIZATIONAL

STRUCTURE & DESIGN

Herrika Red G. Rosete
What is an Organizational
Structure?
 The organizational structure defines the organization's
hierarchy of people and departments as well as how
information flows within the organization.
 The organizational structure determines how and when
information is distributed as well as who makes what
decisions based on the information available.
Levels of Organization
 Technical level. Concerned with specific operations and discrete tasks,
with actual job to be done.
 Managerial level. Concerned with coordination and integration of work at
technical level.
 Community level. Concerned with broad objectives and work of the
organization as a whole.
 How job tasks are formally divided, grouped and
coordinated.
The Importance of the
Organizational Structure
The Organisational Structure is important because
it ensures that there is an efficient operation of a
business and it clearly defines its workers and their
functions.

The organizational structure also helps define the

hierarchy and the chain of command.
The Concept of Organization Structure

Structure helps influence behavior and

relationships of jobs and functions

Structure defines recurring activities and

processes.

Structure provides a purposeful and goal-

oriented behaviour.
The Designing the Process
 1. Develop a clear mission statement for the organization. Focus the
organisation structure around the mission statement.

 2. The mission statement should include the inter-relationship

between workers at every level as well as inspiring innovation and
ensuring efficiency.

 3. Decide whether the organisation structure will be centralized and

formal or decentralized and informal.

 4. The organisation structure can be department based or based on a

particular project or process.
 The Designing the Process (cont..)
 5. Design the overall chain of command for the organisation.

 6. Add subordinate roles to the chain of command.

 7. Determine the authority and responsibility to be assigned to

each position in the organization structure.
 The effects of
structure on
individual and group

 The structure of any organisation

will affect the following:-
1. Behaviour of how people act and
work.
2. Motivation of workers -
hierarchical or flatter structure
3. Performance
4. Teamwork and cooperation
5. Intergroup and
interdepartmental relationships
 TYPES OF
STRUCTURES

 I. Functional structure – this kind

of organisational structure
classifies people according to the
function they perform in the
organization.
 The organisation chart for a
functional based organisation
consists of: Vice President, Sales
department, Customer Service
Department, Engineering or
production department,
Accounting department and
Administrative department
 TYPES OF
STRUCTURES (cont..)

 II. Line Structure: This has a very

specific line of command. The
approvals and orders in this kind of
structure come from top to bottom
in a line. Hence the name line
structure.
 This kind of structure is suitable for
smaller organizations. This is the
sort of structure allows for easy
decision making, and is very informal
in nature. They have fewer
departments, which makes the
entire organization a very
decentralized one.
 TYPES OF STRUCTURES
(cont..)

 III. Line and Staff Structure: Line and

structure combines the line structure
where information and approvals
come from top to bottom, with staff
departments for support and
specialization.
 Line and staff organizational
structures are more centralized.
Managers of line and staff have
authority over their subordinates, but
staff managers have no authority over
line managers and their subordinates.
 TYPES OF STRUCTURES
(cont..)

 IV. MARKET STRUCTURE

 Market Structure – market

structure is used to group
employees on the basis of
specific market the company
sells in a company could have
three different markets they
use and according to this
structure, each would be a
separate division in the
structure.
 TYPES OF STRUCTURES
(cont..)

 V. GEOGRAPHIC
STRUCTURE
 Geographic structure – large
organizations have offices at
different place, for example there
could be a north zone, south zone,
west and east zone. The
organizational structure would then
follow a zonal region structure.
 TYPES OF
STRUCTURES (cont..)

 VI. Matrix Structures

 This is a structure, which

has a combination of
function and product
structures. This combines
both the best of both
worlds to make an
efficient organizational
structure. This structure is
the most complex
organizational structure.
Components of Organizational
Structure
Organizational Design
 Management decisions and actions that result in a
specific organization structure and work specification
including:-
1. Specialization
2. Departmentalization
3. Chain of Command:
4. Span of Control
5. Centralization
6. Formalization: To what degree will there be rules
and regulations to direct employees and managers?
1. Work Specification: Specify to
what degree the tasks are
subdivided into separate jobs
-Division of
Labour/specialization
 This is a process of identifying the specific jobs
that need to be done and designing the people
who will perform them. Job specialization can
occur in 3 different ways:
 1. Personal Specialties: occupational and
professional specialties e.g. accountants,
engineers, scientists.
 2. Horizontal Specialties: work is divided by the
natural sequence order e.g. manufacturing plants
divide work into fabricating and assembly.
 3. Vertical Specialties: Work is divided along the
vertical plane of an organization from the lowest
level manager to the highest level manager.
2.Departmentalization:
The basis in which jobs
will be grouped together

Departmental Bases
The process of grouping jobs into
logical units.

The process in which an

organization is structurally divided
by combining jobs in departments
according to some shared
characteristics.
 1. Functional
Departmentalization
 2. Geographical
 3. Product
3. Chain of Command:
To whom do individuals and groups
report to.

 One of the most basic elements of an

organizational structure, chain of
command is exactly what it sounds
like: an unbroken line of authority
that extends from the top of the
organization (e.g. a CEO) all the way
down to the bottom. Chain of
command clarifies who reports to
whom within the organization.
4. SPAN OF CONTROL
 This is the number of
individuals who report to a
specific manager.

 The higher the ratio of

subordinates to superiors, the
wider the span of control.
5. Centralization and
Decentralization: Where is the
decision making authority?

Delegation of Authority
 Process of distributing authority
downward in an organisation.
Whether an organisation chooses to
centralize or decentralize will be
guided by:

 1. How routine and straightforward

are the job’s required decisions?
 2. Are individuals competent to
make decisions?
 3. Are individuals motivated to make
the decisions?
Delegation of Authority (cont..)
 Reasons to Decentralize Authority:-
It encourages the development of professional managers.
Managers are able to exercise more autonomy but it can
lead to a competitive climate.

 Reasons to Centralize Authority:-

1. When the managers are not skilled enough and would
need further training which can be expensive.
2. When there are new administrative costs because new
divisions need to be formed.
3. Decentralization can mean duplication of functions.
6. Formalization: To what
degree will there be rules and
regulations to direct employees and
managers?
 Similar to specialization, formalization
deals with the how jobs are structured
within an organization. The key
differentiator here is that formalization
also takes into account the degree to
which an employee’s tasks and activities
are governed by rules, procedures, and
other mechanisms.
 A formal organizational structure seeks to
separate the individual from the role or
position, as the role or position stays the
same regardless of who’s holding it.
 An informal organization, on the other
hand, places more value on the
individual. It allows for the evolution of a
role or position based on an individual’s
preferences, skill set, etc., and places
less importance on what team or
department that individual is part of.
Thank You!