Foundations of

Organization
Structure
Anna Beatriz M. Onda MAED-Filipino
 Key Elements

Organizational Structure 1. Work Specialization

Defines how job tasks are formally 2. Departmentalization

divided, grouped, and coordinated. 3. Chain of Command
4. Span of Control
There are six key elements that
managers need to address when 5. Centralization and Decentralization

they design their org.’s structure. 6. Formalization

 Work Specialization
Division of labor
Describes the degree to which activities in the
organization are subdivided into separate jobs
 departmentalization
Basis by which jobs are grouped together so that common task can
be coordinated.
Common bases:
 Function
 Product
 Geography
 Process
 Customer
 Chain of Command
The continuous line of authority that extends from upper levels of an
organization to the lowest levels of the organization and clarifies who reports
to whom.

Chain of Command involves three other concepts:

Authority
Responsibility
Unity of Command
 Chain of Command
AUTHORITY
Refers to the rights inherent in a managerial position to tell people
what to do and to expect them to do it.
An org.’s managers, who are in the chain of command, are
granted a certain degree of authority to do their job of coordinating
& overseeing the work of others.
 Chain of Command
RESPONSIBILITY
The obligation or expectation to perform any assigned duties.
As managers assign work to employees, those employees
assume an obligation to perform any assigned duty.
 Chain of Command
UNITY OF COMMAND
The concept that a person should have one boss and should
report only to that person.( Fayol’s 14 Principles of Management)
Without unity of command, conflicting demands & priorities from
multiple bosses can create problems.
 Span of control
 The number of employees a manager is expected to
effectively and efficiently direct.
 Determines the number of levels and managers an
organization has
Trend in recent years has been toward wider spans of control
Wider span depends on employees knowing their jobs well
Affects speed of communication and decision making
 Centralization and deCentralization
Centralization
The degree to which decision-making is concentrated at a single point in the
organizations.
Organizations in which top managers make all the decisions and lower-level
employees simply carry out those orders.
Decentralization
Organizations in which decision-making is pushed down to the managers who
are closest to the action.
 Formalization
Degree to which jobs within the organization are
standardized.
 Formal – minimum discretion over what is to be
done, when it is done, and how
 Informal – freedom to act is necessary
 1. Simple Structure

Common
2. Bureaucracy
Organizational
Designs 3. Matrix Structure
 Simple structure
Low degree of departmentalization
Wide spans of control
Authority centralized in a single person
Little formalization
Difficult to maintain in anything other than small
organizations
 Bureaucracy
 Highly routine operating tasks achieved through specialization
 Formalized rules and regulations
 Tasks that are grouped into functional departments
 Centralized authority
 Narrow spans of control
 Decision making that follows the chain of command
 Matrix Structure
 Combines two forms of departmentalization
 Functional
 Product

 Dual chain of command

 Matrix Structure
 Advantages: facilitates coordination and efficient allocation
of specialists

 Disadvantages: possible confusion, fosters power struggles,

increased stress
 New design Options
The Virtual Organization
The Boundaryless Organization
 The Virtual Organization
A small, core organization that outsources its major business functions.
Highly centralized with little or no departmentalization.

Concepts:
Advantage: Provides maximum flexibility while concentrating on what the organization does best.
Disadvantage: Reduced control over key parts of the business.
 The Boundaryless Organization
The boundary-less organization seeks to eliminate the chain of command,
have limitless spans of control, and replace departments with empowered
teams.
And because such org. rely so heavily on IT, it is also sometimes called the T-
form ( or technology based) org.
 The Boundaryless Organization
T-form Concepts:
 Eliminate vertical (hierarchical) and horizontal (departmental)
internal boundaries.
 Breakdown external barriers to customers and suppliers.
Mechanistic versus Organic Structures
 Determinants of Organization Structure
 Strategy Dimensions:
 Innovation Strategy
 Cost-Minimization Strategy
 Imitation Strategy
 Organization Size
 Technology
 Environmental Uncertainty
 Organizational Structure and Employee
Behavior

Consider employee preferences for:

 Work Specialization
 Span of Control
 Centralization
 Implications for Managers
Structural relationships impact attitude and behavior
Structure constrains employees
Thank You