Organizational Structure

Organizational Structure

The way in which job tasks are formally divided, grouped and coordinated.

Six Elements of Organizational Structure

1. Work Specialization

2. Departmentalization

3. Chain of command

4. Span of control

5. Centralization and Decentralization

6. Formalization

1. Work specializationThe degree to which tasks in an organization are

subdivided to separate jobs.

2. Departmentalization

The basis by which jobs in an organizations are grouped together.

3. Chain of command The unbroken line of authority that extends from the top of the

organization to the lowest echelon and clarifies who reports to whom.

Authority: The rights inherent in a managerial position to give orders and to expect the orders to be obeyed.

Unity of command

The idea that a subordinate have only one supervisor to whom he or she is directly responsible.

4. Span of control

The number of subordinates a manager can efficiently and effectively direct.

5. Centralization

The degree to which decision making is concentrated at a single point in an organization

DecentralizationThe more the lower level personnel provide input or actually

given the discretion to make decisions, the more decentralization there is .

6. Formalization The degree to which jobs within an organizations are

standardized.

Common organizational designs

1. Simple structureA structure characterized by a low degree of

departmentalization, wide span of control authority centralized in a single person and little formalization

2. Bureaucracy

A structure with highly routine operating tasks achieved through specialization, very formalized rules and regulations, tasks are grouped into functional departments, centralized authority, narrow span of control and decision making that follows the chain of command.

3. The matrix structure

A structure that combines two forms authority and combines functional and product departmentalization. Functional departmentalization.

Specialists are working together, which minimizes the number necessary while allowing the pooling and sharing of specialized recourses across products.

Disadvantage: difficulty of coordinating the tasks of diverse functional specialists so that their activities are completed on time and within budget.

Product Departmentalization

Facilitates coordination among specialists to achieve on time completion and to meet budget target, it provides clear responsibility for all activities, but with duplication of activities and costs.

The matrix structure breaks the unity of command. Employee has two bosses i.e. functional department

managers and product managers. Therefore the matrix has dual chain of command.

Matrix Structure for a college of Business Administration.

New Designs Options

Team StructureManagement uses team teams as its central coordination

device, it results in horizontal organization and team structure.

The primary characteristics of the team structure are that it breaks down departmental barriers and decentralizes decision making to the level of work team.

Team structure also requires employees to be generalists as well as specialists.

Pizza StructureHierarchy is abolished Functions have not supposed to have separate goals People work in self directed work teams All managers are members of at least one such level.

Network StructureLinking of numerous separate organizations to

optimize their interaction to accomplish a common over all goal.

There can be intranetworking, a joint venture to build complex, technical systems such as a space shuttle.

Interorganizational networking, like a network of construction companies to build a larger structure. Networking requires synergy and high level of collaboration

Spaghetti organizationIT system that led to the virtual elimination of paper,

reconfigured office spaces, and shift in the business from focusing on technology to serving and users

Fishnet OrganizationFlexibleForm and reform varied patterns f connectionMiddle manager may be at one time be at the apex, at

another time in the middle. Rearranges itself quickly while retaining its inherent

strength.Allows any structure to be woven together

electronically and altered as needed.

The Empowered OrganizationParticipating in decision makingInvolvingempowering

Virtual Organization (network and modular organization)

Small core organization that out sources major function business.

Centralized Little or no departmentalization

Virtual organization figure

Boundaryless organizationEliminate chain of controlLimitless span of control replace departments with

empowered teams.

Why do structures differ

Mechanistic modelCharacterized by extensive departmentalization, high

formalization, a limited information network and centralization.

Organic model

A structure that is flat, uses cross hierarchical and cross functional teams, has low formalization, possess a comprehensive information and relies on participative decision making.

Innovation Strategy A strategy that emphasizes the introduction of major

new products and services.Cost minimization strategy

A strategy that emphasizes tight costs control, avoidance of unnecessary innovation or marketing expenses and price cutting

Imitation Strategy

A strategy that seeks to move into new products or new markets only after their viability has already been proven.

Organizational size

Organization’s size affects structure.

Large organizations have employees, tend to have more specializations, more departmentalization's, more vertical levels, and more rules and regulations.

The impact of size becomes less important as an organization expands.

Organization 2000 employees adding 500 no impact.

Organization 300 employees adding 500 major shift.

Technology The way in which an organization transfers its inputs

into outputs.

Environment

institutions or forces outside an organization that potentially affect the organization's performance.

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