Organizational Structure

and design
Ms.wajiha iffat
Unit objectives
Defining Organizational Structure
Discuss the traditional and contemporary view of work
specialization.
Describe each of the five forms of departmentalization.
Explain cross-functional teams.
Define chain of command, authority, responsibility, and unity of
command.
Discuss the traditional and contemporary views of chain of
command.
Discuss the traditional and contemporary views of span of
control.
Unit objectives
You should be able to:
 Define organizational structure and organizational
design
 Explain why structure and design are important to an

organization
 Describe the six key elements of organizational structure

 Differentiate mechanistic and organic organizational

design
 Identify the four contingency factors that influence

organizational design
LEARNING OBJECTIVES (continued)
You should be able to (continued):
 Describe a simple structure, a functional structure,
and a divisional structure
 Explain team-based structures and why

organizations are using them

 Describe matrix structures, project structures,

autonomous internal units, and boundaryless

organizations
 Explain the concept of a learning organization and

how it influences organizational design

DEFINING ORGANIZATIONAL STRUCTURE
Organizing - the process of creating an organization’s
structure
Organizational structure - the formal framework by
which job tasks are divided, grouped, and coordinated
Organizational design - process of developing or
changing an organization’s structure
 Purpose of organizing
Divides work to be done into specific jobs and departments
 Assigns tasks and responsibilities associated with
individual jobs
 Coordinates diverse organizational tasks
 Clusters jobs into units
 Establishes relationships among individuals, groups, and
departments
 Establishes formal lines of authority
Allocates and deploys organizational resources
 KEY ELEMENTS
OF ORGANIZATIONAL DESIGN
Work
Departmentalization
Specialization

Chain Span
of Command of Control

Centralization and
Formalization
Decentralization
ELEMENTS OF ORGANIZATIONAL DESIGN
Work Specialization
 The degree to which tasks in an organization are divided
into separate jobs
 Too much specialization has created human

diseconomies
 An important organizing mechanism, though not a

source of ever-increasing productivity

Work specialization
Overspecialization can result in human diseconomies
from boredom, fatigue, stress, poor quality, increased
absenteeism, and higher turnover
ELEMENTS OF ORGANIZATIONAL DESIGN
(continued)
Departmentalization (by type)
 The basis by which jobs are grouped together
 functional - groups jobs by functions performed
 geographical - groups jobs on the basis of territory or
geography
 product - groups jobs by product line
 process - groups jobs on the basis of product or customer
flow
 customer - groups jobs on the basis of common customers
 FUNCTIONAL
DEPARTMENTALIZATION

Plant Manager

Manager, Manager, Manager, Manager, Manager,

Engineering Accounting Manufacturing Human Resources Purchasing

© 2003 Pearson Education Canada Inc.

 functional
 Advantages
 Efficiencies from putting together similar specialties and
people with common skills, knowledge, and orientations
 Coordination within functional area
 In-depth specialization
 Disadvantages
 Poor communication across functional areas
 Limited view of organizational goals
 GEOGRAPHICAL
DEPARTMENTALIZATION

Vice President
for Sales

Sales Director, Sales Director, Sales Director, Sales Director,

Western Region Southern Region Midwestern Region Eastern Region

© 2003 Pearson Education Canada Inc.

Geographical Departmentalization
 Advantages
 More effective and efficient handling of specific
regional issues that arise
 Serve needs of unique geographic markets better
 Disadvantages
 Duplication of functions
 Can feel isolated from other organizational areas
PRODUCT DEPARTMENTALIZATION
 Product Departmentalization
+ Allows specialization in particular products and
services
+ Managers can become experts in their industry
+ Closer to customers
– Duplication of functions
– Limited view of organizational goals
PROCESS DEPARTMENTALIZATION

Plant
Superintendent

Lacquering Inspection
Sawing Planning Assembling and Sanding Finishing and Shipping
Department and Milling Department Department Department Department
Manager Department Manager Manager Manager Manager
Process Departmentalization
+ More efficient flow of work activities
– Can only be used with certain types of
products
 CUSTOMER
DEPARTMENTALIZATION
Director
Of Sales

Manager, Manager, Manager,

Retail Accounts Wholesale Accounts Government Accounts

© 2003 Pearson Education Canada Inc.

Customer Departmentalization
+ Customers’ needs and problems can be met
by specialists
- Duplication of functions
- Limited view of organizational goals
ELEMENTS OF ORGANIZATIONAL DESIGN
(continued)
Departmentalization (continued)
 Largeorganizations combine most or all forms of
departmentalization
 Trends
 customer departmentalization is increasingly being used
 better ableto monitor and respond to customer needs
 cross-functional teams are becoming popular
 ELEMENTS OF ORGANIZATIONAL DESIGN
(continued)
Chain of Command
Continuous line of authority that extends from
upper organizational levels to the lowest levels
and clarifies who reports to whom

authority - the rights inherent in a managerial

position to tell people what to do and to expect
them to do it
Chain of Command
responsibility - the obligation to perform any
assigned duties

unity of command - a person should report to

only one manager

Delegation is the assignment of authority to

another person to carry out specific duties, allowing
the employee to make some of the decisions.

 Theseconcepts are less relevant today due to

information technology and employee empowerment
 ELEMENTS OF ORGANIZATIONAL DESIGN
(continued)
Span of Control
 Number of employees that a manager can efficiently
and effectively manage
 Determines the number of levels and managers in an

organization
 The wider the span, the more efficient the

organization
 Span of Control

Refers to the number of subordinates who report

directly to an executive or supervisor
The differences in the span of control have direct
implications on the shape of the organization
Tall organizations – span of control remains constant, or
narrow
Flat organizations – span of control is wide with fewer
reporting levels
 Span of Control
Organizations must find the optimal span of control to be
effective
Narrow enough to permit manages to maintain control over
subordinates
Wide enough so that the possibility of micromanaging is minimized
The optimal span of control is dependant on the following
factors
Is the work clearly defined
Are subordinates highly trained and do they have access to
information
Is the manager highly capable and supportive
Are jobs similar and performance measures comparable
Do subordinates prefer autonomy to close supervisory control

27
Contrasting Spans of Control
ELEMENTS OF ORGANIZATIONAL DESIGN
(continued)
Centralization
 Thedegree to which decision making is concentrated at a
single point in the organization
Decentralization
 The degree to which decisions are made by lower-level

employees
 Distinct trend toward decentralized decision making

Employee Empowerment
Increasing the decision-making authority (power) of
employees
FACTORS INFLUENCING DEGREE OF CENTRALIZATION OR
DECENTRALIZATION (Exhibit 10.4)
ELEMENTS OF ORGANIZATIONAL DESIGN
(continued)
Formalization
 The degree to which jobs within the organization are
standardized
 Extent to which employee behaviour is guided by

rules and procedures

ORGANIZATIONAL DESIGN DECISIONS
Mechanistic Organization
 Rigidly and tightly controlled structure
 Tries to minimize the impact of differing human traits
 Most large organizations have some mechanistic

characteristics
Organic Organization
 Highly adaptive and flexible structure
 Permits organization to change when the need arises
 Employees are highly trained and empowered to handle

diverse job activities

 Minimal formal rules and little direct supervision
Organizational Design Decisions
Organic
Mechanistic
Organization
Organization
 Highly
A rigid flexible
and tightly
andcontrolled
adaptable structure
 High specializationjobs
Non-standardized
 Rigid team-based
Fluid departmentalization
structure
 Narrow
Little direct
spanssupervision
of control
 High formalization
Minimal formal rules
 Limited
Open communication
information network
network(downward)
 Low decisionemployees
Empowered participation
MECHANISTIC VERSUS
ORGANIC STRUCTURES

Mechanistic Organic

• High Specialization
• Cross-Hierarchical Teams
• Rigid Departmentalization
• Free Flow of Information
• Clear Chain of Command
• Wide Spans of Control
• Narrow Spans of Control
• Decentralization
• Centralization
• Low Formalization
• High Formalization
 Size Technology

Contextual Variables –
a set of characteristics that
influences the organization’s
design processes

Strategy
and Goals Environment
Contingency Factors
Structural decisions are influenced by:
Overall strategy of the organization
 Organizational structure follows strategy.

Size of the organization

 Firms change from organic to mechanistic organizations as
they grow in size.
Technology use by the organization
 Firms adapt their structure to the technology they use.
Degree of environmental uncertainty
 Dynamic environments require organic structures;
mechanistic structures need stable environments.
Contingency Factors (cont’d)
Strategy Frameworks:
Innovation
 Pursuing competitive advantage through meaningful and
unique innovations favors an organic structuring.
Cost minimization
 Focusing on tightly controlling costs requires a mechanistic
structure for the organization.
Imitation
 Minimizing risks and maximizing profitability by copying
market leaders requires both organic and mechanistic
elements in the organization’s structure.
Contingency Factors (cont’d)
Technology and Structure
Organizations adapt their structures to their technology.
Woodward’s classification of firms based on the
complexity of the technology employed:
 Unit production of single units or small batches
 Mass production of large batches of output
 Process production in continuous process of outputs
Routine technology = mechanistic organizations
Non-routine technology = organic organizations
Exhibit 10–6 Woodward’s Findings on Technology, Structure, and
Effectiveness
ORGANIZATIONAL DESIGN DECISIONS
(continued)
Contingency Factors (continued)
 Environmental Uncertainty and Structure
 one way to reduce environmental uncertainty
is to adjust the organization’s structure
with greater stability, mechanistic structures

are more effective

the greater the uncertainty, the greater the

need for an organic structure

organizations are being designed to be more

organic nowadays
Contingency Factors (cont’d)
Environmental Uncertainty and Structure
Mechanistic organizational structures tend to be most
effective in stable and simple environments.
The flexibility of organic organizational structures is
better suited for dynamic and complex environments.
COMMON ORGANIZATIONAL DESIGNS
Traditional Organizational Designs
 Simple Structure - low departmentalization, wide
spans of control, authority centralized in a single person,
and little formalization
 Functional Structure - groups similar or related

occupational specialties together

 Divisional Structure - composed of separate divisions
Strengths and Weaknesses of Traditional Organizational Designs
The Divisional Organization

In a divisional organization,

departmentalization will group units
around products, customers, or geographic
regions

46
COMPARISON OF COMMON TRADITIONAL
DESIGNS
 Contemporary Organizational Designs

Team Structure
• What it is: A structure in which the entire organization is made up of
work groups or teams.
• Advantages: Employees are more involved and empowered. Reduced
barriers among functional areas.
• Disadvantages: No clear chain of command. Pressure on teams to perform.
Matrix-Project Structure
What it is: A structure that assigns specialists from different functional
areas to work on projects but who return to their areas when
the project is completed. Project is a structure in which
employees continuously work on projects. As one project is
completed, employees move on to the next project.
• Advantages: Fluid and flexible design that can respond to environmental
changes. Faster decision making.
• Disadvantages: Complexity of assigning people to projects. Task and
personality conflicts.
Exhibit 10–8 (cont’d) Contemporary Organizational Designs

Boundaryless Structure
What it is: A structure that is not defined by or limited to artificial
horizontal, vertical, or external boundaries; includes virtual
and network types of organizations.
• Advantages: Highly flexible and responsive. Draws on talent wherever it’s
found..
• Disadvantages: Lack of control. Communication difficulties..
COMMON ORGANIZATIONAL
DESIGNS (continued)
Contemporary Organizational Designs
Team-Based Structures - entire
organization is made up of work teams
employee empowerment is crucial
teams responsible for all work activity and

performance
complements functional or divisional

structures in large organizations

COMMON ORGANIZATIONAL DESIGNS
(continued)

Contemporary Organizational Designs (continued)

 Matrix Structure - assigns specialists from different
functional departments to work on projects led by project
managers
adds verticaldimension to the traditional
horizontal functional departments
creates a dual chain of command
Organizational Designs (cont’d)
Contemporary Organizational Designs
Matrix and project structures
 Specialists from different functional departments are assigned
to work on projects led by project managers.
 Matrix and project participants have two managers.
 In project structures, employees work continuously on
projects; moving on to another project as each project is
completed.
The Matrix Organization
A matrix organization is a hybrid form of
organization in which functional and divisional
forms overlap; managers and staff personnel
report to two bosses – a functional manager and a
divisional manager

53
A MATRIX ORGANIZATION IN AN
AEROSPACE FIRM

© 2003 Pearson Education Canada Inc.

The Matrix Organization
Advantages of the Matrix
organization include
Decision making is
decentralized
Communication networks
process large amounts of
information
Decentralization keeps higher
management from becoming
overloaded
Employees learn to
collaborate
More career options for
employees
 Disadvantages of the matrix
organization include
 Subordinates may become
confused regarding their
primary responsibility
 Power struggle between
managers
 Thinking that matrix
management is the same
thing as group decision
making
 Too much democracy can lead
to not enough action
55
Organizational Designs (cont’d)
Contemporary Organizational Designs (cont’d)
Boundaryless Organization
 An flexible and unstructured organizational design that is intended
to break down external barriers between the organization and its
customers and suppliers.
 Removes internal (horizontal) boundaries:
 Eliminates the chain of command

 Has limitless spans of control

 Uses empowered teams rather than departments

 Eliminates external boundaries:

 Uses virtual, network, and modular organizational structures to get

closer to stakeholders.
Removing External Boundaries
Virtual Organization
 An organization that consists of a small core of full-time
employees and that temporarily hires specialists to work on
opportunities that arise.
Network Organization
 A small core organization that outsources its major business
functions (e.g., manufacturing) in order to concentrate what it
does best.
Modular Organization
 A manufacturing organization that uses outside suppliers to
provide product components for its final assembly operations.
COMMON ORGANIZATIONAL DESIGNS
(continued)
Contemporary Organizational Designs (continued)
 Project Structure - employees work continuously on

projects
employees do not return to a functional
department at the conclusion of a project
all work performed by teams comprised of
employees with appropriate skills and
abilities
tends to be very fluid and flexible
COMMON ORGANIZATIONAL DESIGNS
(continued)
Contemporary Organizational Designs (continued)
Autonomous Internal Units –
independent, decentralized business
units
each has its own products, clients,
competitors, and profit goals
business units are autonomous
COMMON ORGANIZATIONAL DESIGNS
(continued)
Contemporary Organizational Designs (continued)
 Learning Organization - an organizational mind-set
rather than a specific organizational design
 has developed the capacity to continuously adapt
 all members take an active role in identifying and resolving work-
related issues
 practice knowledge management by continually acquiring and
sharing new knowledge
 environment is conducive to open communication
 empowered teams are important
 leadership creates a shared vision for the future
 organizational culture provides sense of community
CHARACTERISTICS OF A LEARNING
ORGANIZATION (Exhibit 10.9)
Organizational Design
• Boundaryless
• Teams
• Empowerment

Organizational Culture
• Strong Mutual Information Sharing
Relationships • Open
• Sense of Community The • Timely
• Caring Learning • Accurate
• Trust Organization

Leadership
• Shared Vision
• Collaboration
© 2003 Pearson Education Canada Inc.
 WHAT IS ORGANIZATIONAL
BEHAVIOR?
Organizational behavior is the systematic and scientific
analysis of individuals, groups, and organizations; its
purpose is to understand, predict, and affect human behavior
to improve the performance of individuals, which ultimately
affects the functioning and success of the organizations in
which they work
OB research can be categorized in at least three ways,
including the study of:
individuals in organizations (micro-level)
work groups (meso-level)
how organizations behave (macro-level)
PHARMACISTS’ ORGANIZATIONAL BEHAVIORS
Job Satisfaction
Job satisfaction can be defined either as an emotional
response (the pleasurable or positive emotional state
resulting from the appraisal of one’s job or job
experiences)(Locke, 1976) or as a comparison between
expectations and the perceived reality of the job as a
whole(Bacharach, Bamberger, and Conley, 1991).
Job Satisfaction
Another definition of the concept of job satisfaction is
from Hulin and Judge (2003), who have noted that job
satisfaction includes multi dimensional  psychological
 responses to an individual's job, and that these
personal responses have
cognitive (evaluative),
affective (or emotional), and
behavioral components.
 Job Satisfaction
Spector (1997)lists 14 common facets:
Appreciation,
Communication,
 Coworkers,
Fringe benefits,
Job conditions,
Nature of the work,
Organization,
Personal growth,
Policies and procedures,
 Promotion opportunities,
Recognition,
Security, and Supervision.
 PHARMACISTS’ ORGANIZATIONAL BEHAVIORS
Organizational Commitment
Organizational commitment has been defined both as an
emotional attachment (affective organizational
commitment) (Allen and Meyer, 1990) and as accepting the
organization’s goals and values, putting forth effort, and
wanting to maintain membership (Mowday, Steers, and
Porter, 1979).
 Organizational Commitment
Organizational commitment predicts work variables such as 
turnover, 
organizational citizenship behavior,
and job performance.
 Some of the factors such as
role stress,
empowerment,
job insecurity and employability, and
 distribution of leadership have been shown to be connected
to a worker's sense of organizational commitment.
 PHARMACISTS’ ORGANIZATIONAL BEHAVIORS
Job Stress
Role stress in the form of role conflict, role ambiguity, role
overload, and work-home conflict increases job stress .
 Job dissatisfaction is also associated with increased job
stress.
 Stress that continues to be ignored can lead to a
phenomenon known as burnout.
 factors
Lack of control. Feeling as if you have no control over your work or job
duties is the biggest cause of job stress. People who feel like they have no
control at work are most likely to get stress-related illnesses
Increased responsibility. Taking on extra duties in your job is stressful.
You can get more stressed if you have too much work to do and you can't
say no to new tasks.
Uncertainty about work roles. Being unsure about your duties, how
your job might be changing, or the goals of your department or company
can lead to stress.
Job satisfaction and performance. Do you take pride in your job? If
your job isn't meaningful, you may find it stressful. 
Poor communication. Tension on the job often comes from poor
communication. Being unable to talk about your needs, concerns, and
frustrations can create stress.
factors
Lack of support. Lack of support from your boss or
coworkers makes it harder to solve other problems at
work that are causing stress for you
Poor working conditions. Unpleasant or dangerous
physical conditions, such as crowding, noise, or 
ergonomic problems, can cause stress.
Stress may lead to:
Headaches
Trouble sleeping
Problems concentrating
Short temper
Upset stomach
Job dissatisfaction and low morale
How to cope:
Get organized.
Don't put things off.
Learn to say "no.“
Focus.
Concentrate
Delegate.
Unplug.
Be realistic
Reward yourself.
Practice breathing and relaxation techniques.
PHARMACISTS’ ORGANIZATIONAL BEHAVIORS
Job Turnover
Job turnover is one of most pressing concerns of
organizations.
The decreased productivity from voluntary turnover is very
costly to an organization because less experienced workers
must be used to replace the more experienced workers who
leave.
Advertising, recruiting, and training a replacement
employee for someone who has left can be costly not only in
monetary terms but also in terms of lost productivity owing
to the time spent bringing the new employee up to speed.
PHARMACISTS’ ORGANIZATIONAL BEHAVIORS
Emotions
Emotions are intense feelings that are directed at someone or
something.
 Emotions are sometimes confused with moods, which are
pervasive emotions not directed at any particular person or
object .
 Moods have been shown to be related to withdrawal behaviors
such as absenteeism and turnover.
 Health care organizations put more emotional demands on
employees and patients than many other organizations, yet very
little is known about what these demands are and the strategies
people use to deal with their emotions