LECTURE # 3 & 4

Chapter 9 – Basic Elements of

Organization Structure
 Nature of Organization Structure
 If an Organization wishes to survive it should
develop a reasonable effective organization
structure.
 Organizing is important to managers because
this way they would be able to match their
work with resources so plans and decisions
can be made and effectively carried out.
 Organization Structure & its
elements
An organizational structure is a hierarchical
concept commonly visualized as an orderly
system of objects and sub-objects collectively
working toward an ultimate goal.
4 elements:
1.Assignment of tasks and responsibilities
defining jobs of individuals and units.
2.Clustering individual positions into units and
further into departments and larger units to
form an organization’s hierarchy.
3. Various mechanisms facilitating vertical (top
to bottom) co-ordination.
4. Various mechanisms fostering horizontal
(across departments) co-ordination.
 Organization Design: process of developing an
organization structure.
 Organization Chart: line diagram showing the
broad outlines of an organization’s structure.
 Chain of command: unbroken line of authority
linking each individual with the top
organizational position through a managerial
position at each successive layer in between.
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 Job Design
 Work specialization: degree to which work
necessary to achieve organizational goals is
broken down into various jobs.
 Job Design: specification of task activities
associated with a particular job.
Job design is essential for 2 reasons:
a. Task activities must be grouped logically.
b.Jobs should be designed properly.
 Approaches to Job Design
1. Job simplification: process of configuring
jobs so that each employee has small number
of activities to perform.
2. Job rotation: process of temporarily shifting
employees through a set of jobs in a planned
sequence.
3. Job enlargement: is the allocation of a wider
range of similar tasks to a job in order to
make it more challenging.
 Job scope: number of different tasks an employee
performs in a particular job.
4. Job enrichment: process of up-grading the
job-task mix to increase potential for growth,
achievement, responsibility and recognition.
5 core job charactertics:
i. Skill variety: extent to which job involves a number
of activities requiring different skills.
ii. Task identity: degree to which job allows completion
of a major piece of work.
iii.Task significance: extent to which a worker sees job
output as having an important impact on others.
iv.Autonomy: amount of discretion allowed in
determining schedules and work methods for
achieving required output.
v. Feedback: degree to which job provides clear, timely
information about performance results.
Richard Hackman and Greg Oldham (1980)
developed a job charactertics model.
3 basic elements:
i. Job charactertics
ii. Psychological states
iii. Outcomes
 Managing Diversity
Three major alternative work schedules are:
 Flexitime: specifies core hours when
individual must be on the job but it allows
flexible starting and finishing times as long as
the required number of hours are worked.
 Compressed work-week: work schedule
whereby employees work four 10-hour days
rather than the usual five 8-hour days.
 Job sharing: work practice in which two or
more employees share a single full-time job.
 Types of Departmentalization
Departmentalization: is grouping individuals into
units, and units into departments and larger
units to achieve organizational goals.
Four common departmentalization patterns are:
 Functional
 Divisional
 Hybrid
 Matrix
 Functional Structure
 Functional structure: the employees work in
departments based on what they are or what
they specialize in i.e. there is an engineering
department, maintenance department, finance
department, research department, Warehouse
department, purchasing department.
 Advantages
 This structure enhances the experience of each
function. For example, all the maintenance
engineers are working in the same department
and thus they will exchange knowledge and
support each other.
 This structure saves money because of the
economies of scale.
 Disadvantages
 It makes the coordination between different
department more difficult than other
structures.
 It also does not allow for flexibility because
of the centralization.
 Divisional Structure
 Divisional structure divides the employees
based on the product/customer
segment/geographical location. For example,
each division is responsible for certain product
and has its own resources such as finance,
marketing, warehouse, maintenance, etc.
 Advantages
 This structures is a decentralized structure and
thus allows for flexibility and quick response
to environmental changes.
 It also enhances innovation and facilitates the
promotion of new ideas.
 Disadvantages
 This structure results in duplication of
functions at different levels and as a result
very high cost of maintaining the management
structure.
 Hybrid Structure
 Hybrid structure combine aspects of functional
and divisional forms, with some activities
grouped by function and others by divisional
(products or markets).
 Matrix Structure
 Matrix structure imposes horizontal
divisional reporting relationships over an
hierarchical functional structure.
 This is suitable for Multinational Companies.
 Organization Structures
 An effective organizational structure facilitates working relationships
between various entities and improves the working efficiency within the
organizational units.
 Organizations allow for application of individual skills to enable high
flexibility and apply creativity.
 When a business expands, the chain of command
lengthens and the span of control widens.
 When an organization comes to age, the
flexibility will decrease and the creativity will
fatigue.
 Therefore organizational structures should be
altered from time to time to enable recovery. If
such alterations are prevented internally, the final
escape will be to turn down the organization or
prepare for a re-launch in an entirely new set up.
 Vertical Co-ordination
Vertical co-ordination: linking of activities at the
top of the organization with those at the
middle and lower to achieve organizational
goals.
 Five ways to achieve vertical co-ordination are:
1.Formalization: degree to which written
policies, rules, procedures, job descriptions
and other documents specify what actions are
and are not to be taken under given
circumstances.
2. Span of control: number of subordinates who
report directly to a specific manager.
3. Centralization vs. Decentralization:
centralization is the extent to which power and
authority are retained at the top organizational
level whereas decentralization is the extent to
which power and authority are delegated to
lower levels.
4. Delegation: means moving decision making
authority and responsibility from one
organizational level to the next lower level.
5. Line authority: authority following the chain
of command established by the formal
hierarchy.
 Levels in the Hierarchy
 Tall structure: structure with many hierarchical
levels and narrow span of control.
 Flat structure: structure with few hierarchical
levels and wide span of control.
 Downsizing: process of reducing middle
management layers, increasing span of control
and shrinking workforce size.
 Restructuring: process of making a major
change in the organization structure.
 Horizontal Co-ordination
 Horizontal co-ordination: linking of activities
across departments at similar levels.

3 means for promoting horizontal co-ordination:

a. Slack resources
b.Information systems
c. Lateral relations
 Slack resources: resources that facilitates
adaptation to internal and external pressures.
E.g. an extra car or television set.
 Information systems: using information
systems, mainly computerized ones to co-
ordinate parts of the organization.
 Lateral relations: co-ordination of efforts
through communicating and problem solving
with peers in other departments, rather than
referring most issues up the hierarchy for
resolution.