ORGANIZATIONAL

ORGANIZATIONAL
STRUCTURE,
STRUCTURE, DESIGN
DESIGN &&
CULTURE
CULTURE
 Defining
Defining Organizational
Organizational Structure
Structure
• An organizational structure consists of activities such
as task allocation, coordination and supervision, which
are directed towards the achievement of organizational
goals.
• An organization can be structured in many different
ways, depending on their objectives. The structure of
an organization will determine the modes in which it
operates and performs.
• Organizational structure allows the expressed
allocation of responsibilities for different functions and
processes to different entities such as the branch,
department, workgroup and individual.
 Key
Key Elements
Elements of
of Organizational
Organizational Structure
Structure
Six shapers of organizational structure:

• Buyer Power – customer dictates the direction.

• Variety of solutions – a number of ways to serve.
• Information and communication technology –
web based portals & internet/intranet/extranet
have changed the way business is done.
• Complexity – moving from functional to multi-
product or multi-region structure.
• Change – constantly taking place in all directions
• Speed – to match with prevalent pace of change.
 Determinants
Determinants of
of Organizational
Organizational Structure
Structure
An organizational structure defines how job tasks
are formally divided, grouped, and coordinated.
There are six key elements:

• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization
 Key
Key Elements
Elements of
of Organizational
Organizational Structure
Structure

Division
Divisionof
oflabor:
labor:
• • Makes
Makesefficient
efficientuse
useof
of
employee
employeeskills
skills
• Henry Ford built automobiles
assembly line, demonstrating that work • • Increases
Increasesemployee
employeeskills
skills
can be performed more efficiently by through
throughrepetition
repetition
using a work specialization strategy. • • Less
Lessbetween-job
between-job
• Every Ford worker was assigned a downtime
downtimeincreases
increases
specific, repetitive task. productivity
productivity
• By breaking jobs up into small • • Specialized
Specializedtraining
trainingisis
standardized tasks, Ford was able to more
moreefficient
efficient
produce cars at the rate of one every
• • Allows
Allowsuse
useof
ofspecialized
specialized
ten seconds, while using employees
equipment
equipment
who had relatively limited skills.
 Key
Key Elements
Elements of
of Organizational
Organizational Structure
Structure
Grouping
GroupingActivities
ActivitiesBy:
By:
Function,
Function,Product,
Product,Geography,
Geography,
Process,
Process,Customer
Customer

• Function. One of the most popular ways to group activities is

by the functions performed e.g. a manufacturing manager might
organize his / her plant by separating engineering, accounting,
manufacturing, personnel, and purchasing specialists into
departments.
• Process. Production is organized into five departments e.g. at
the state motor vehicles office you might find:

• Validation by motor vehicles division.

• Processing by the licensing department
• Payment collection by the treasury department
Key
Key Elements
Elements of
of Organizational
Organizational Structure
Structure
 Key
Key Elements
Elements of
of Organizational
Organizational Structure
Structure

Narrow
NarrowSpan
SpanDrawbacks:
Drawbacks:

• •Expense
Expense of
of additional
additional layers
layers
of
ofmanagement.
management.
Concept:
Concept:
• •Increased
Increased complexity
complexity of
of
Wider
Widerspans
spansof
ofmanagement vertical
management verticalcommunication.
communication.
increase
increaseorganizational
organizational
efficiency. • •Encouragement
Encouragementof ofoverly
overlytight
tight
efficiency.
supervision
supervision&&discouragement
discouragement
of
ofemployee
employeeautonomy.
autonomy.
Contrasting
Contrasting Spans
Spans of
of Control
Control

Narrow Wide
Key
Key Elements
Elements of
of Organizational
Organizational Structure
Structure

• In some organizations, top

managers make all the
decisions, with little or no input
from lower-level personnel.
This is highly centralized.

• There are organizations where

decision-making is pushed
down to those managers who
are closest to the action. This
is highly decentralized. Here
lower-level personnel provide
input.
Key
Key Elements
Elements of
of Organizational
Organizational Structure
Structure

• A highly formalized job gives the

job incumbent a minimum amount
of discretion over what is to be
done, when it is to be done, and
how he or she should do it.
Employees can be expected
always to handle the same input in
exactly the same way.

• The greater the standardization,

the less input the employee has
into how the job is done.
Common
Common Organization
Organization Designs
Designs

AASimple
SimpleStructure
Structure
Jack
JackGold’s
Gold’sMen’s
Men’sStore
Store

Wide span of control

Common
Common Organization
Organization Designs
Designs
 Common
Common Organization
Organization Designs
Designs

• It combines two forms of departmentalization-functional

and product:
• The strength of functional departmentalization—
putting like specialists together and the pooling and
sharing of specialized resources across products. Its
major disadvantage is the difficulty of coordinating the
tasks.
• It provides clear responsibility for all activities related
to a product, but with duplication of activities and costs.
Matrix
Matrix Structure
Structure (College
(Collegeof
ofBusiness
BusinessAdministration)
Administration)

(Director)

(Dean) Employee
New
New Design
Design Options
Options

Characteristics:
Characteristics:
• •Breaks
Breaksdown
down
departmental
departmentalbarriers.
barriers.
• •Decentralizes
Decentralizesdecision
decision
making
makingto
tothe
theteam
teamlevel.
level.
• •Requires
Requiresemployees
employeesto to
be
be generalists as wellas
generalists as well as
specialists.
specialists.
New
New Design
Design Options
Options

Concepts:
Concepts:

• •Provides
Providesmaximum
maximumflexibility
flexibility
while
whileconcentrating
concentratingon
onwhat
what
the
theorganization
organizationdoes
doesbest.
best.

• •Disadvantage
Disadvantageisisreduced
reduced
control
controlover
overkey
keyparts
partsof
ofthe
the
business.
business.
A
A Virtual
Virtual Organization
Organization
New
New Design
Design Options
Options

Team
TeamConcepts:
Concepts:

• •Eliminate
Eliminatevertical
vertical
(hierarchical)
(hierarchical)and
andhorizontal
horizontal
(departmental)
(departmental)internal
internal
boundaries.
boundaries.

• •Breakdown
Breakdownexternal
external
barriers
barriersto
tocustomers
customersand
and
suppliers.
suppliers.
Why
Why Do
Do Structures
Structures Differ
Differ
Mechanistic
Mechanistic Versus
Versus Organic
Organic Models
Models