LEARNING OBJECTIVES

In this LESSON, you will be able to:

• Analyze the nature of an organization and types of an organization structure
Specifically, you are expected to:
• Discuss the nature of an organization;
• Enumerate the types of organizational structures;
• Apply organization theories and their application;
• Identify the different elements of delegation;
• Compare and contrast formal and informal organization.
ORGANIZATION VS ORGANIZING
• Organization - is collection of
people working together under
a division of labor and a
hierarchy of authority to
achieve a common goal.
• Organizing - refers to put constant
relationships between different
jobs, that foster cooperation
between individuals and groups
inside the organization in order to
achieve the common goals and
objectives of the organization.
NATURE OF AN ORGANIZATION
NATURE OF ORGANIZATION AND TYPES OF ORGANIZATION STRUCTURE
NATURE OF AN ORGANIZATION
• Differentiation in an organizations
involves division of labor and
specialization (Bateman and Snell,2008).
• These necessarily result from the
organizations composition-many
different units with different kinds of
tasks, using different skills and work
activities coordinating with one another
for a common end.
NATURE OF AN ORGANIZATION
DIVISION OF LABOR
• Involves assigning different tasks to
different people in the organization’s
different work units.
SPECIALIZATION
• The process in which different
individuals and units perform
different tasks.
INTEGRATION OF WORK UNITS
INTEGRATION OF WORK UNITS
• Integration is another process in the organization’s internal
environment which involves the collaboration and coordination of
its different work units or work divisions.
• Coordination refers to the procedures that connect the work
activities of the different work divisions/units of the firm in order to
achieve its overall goal.
TYPE OF AN ORGANIZATION
NATURE OF ORGANIZATION AND TYPES OF ORGANIZATION STRUCTURE
TYPE OF AN ORGANIZATION
An organization structure is a system made up of tasks to be accomplished, work
movements from one work level to other work levels in the system.
There are three types of organizational structure. These are;
A. Vertical structure
B. Horizontal structure
C. Network structure
A. VERTICAL STRUCTURE
• Bateman and Snell (2008), a vertical structure clears out issues
related to authority rights, responsibilities, and reporting
relationships authority rights refer to the legitimate rights of
individuals, appointed in positions like president, vice president,
manager, and the like to give orders to their subordinates, who in
turn, report to them what they have done.
VERTICAL STRUCTURE
B. HORIZONTAL STRUCTURE
• Horizontal structure - refers to the departmentalization of an organization into smaller work units as tasks
become increasingly varied and numerous.
Types of Department
• Line departments – deal directly with the firm's primary goods and services responsible for manufacturing,
selling and providing services to clients.
• Staff departments - support the activities of the line departments by doing research, attending to legal matters,
performing public relations duties, etc.
• Functional approach – where the subdivisions are formed based on management and, and human resources
management.
• Divisional approach – where departments are formed based on management of their products, customers, or
geographic covered.
• Matrix approach – Is a hybrid form of departmentalization where managers and staff personnel report to the
superiors, the functional manager, and the divisional manager.
HORIZONTAL STRUCTURE
C. NETWORK STRUCTURE

• Network Structure is a collection of independent, usually single

function organizations/companies that work together in order to
produce a product or service.
NETWORK STRUCTURE
ORGANIZATION THEORIES AND APPLICATIONS
NATURE OF ORGANIZATION AND TYPES OF ORGANIZATION STRUCTURE
ORGANIZATION THEORIES AND APPLICATIONS

• There are two main classification of theories regarding

organizational design according to Robbins and Coulier (2009)
these are:
• Traditional - pertains to the usual old fashioned ways.
• Modern - refers to contemporary or new design theories.
TRADITIONAL THEORIES

• There are several kinds of traditional theories applied in an organization.

1. SIMPLE THEORY
• It has few departments, wide span of
control or a big number of subordinates
directly reporting to a manager; it has a
centralized authority figure and has very
little formalization of work.
• Usually used by companies that start out
as entrepreneurial ventures.
2. FUNCTIONAL THEORY
• This design groups together similar
or related specialties.
• Generally, functional
departmentalization is utilized and
put into practice in an entire
organization.
3. DIVISIONAL THEORY
• This design is made up of separate
business divisions or units, where
the parent corporation acts as
overseer to coordinate and control
the different divisions and provide
financial and legal support services.
MODERN THEORIES
1. TEAM DESIGN
• In team design, the entire organization is
made up of work groups or teams.
• Its advantages include empowerment of
team members and reduced barriers
among functional areas.
• It also has disadvantages, including a
clear chain of command and great
pressure on teams to perform.
2. MATRIX PROJECT DESIGN
• It refers to an organization design
where specialist from different
departments work on projects that
are supervised by a project manager.
3.BOUNDARY-LESS DESIGN
• Another modern organizational design
where the design is not defined or limited by
vertical, horizontal, and external boundaries.
• In other words, there a re no hierarchical
level that separate employees, no
departmentalization, and no boundaries that
separate organization from customers,
suppliers, and other stakeholders.
DELEGATION
NATURE OF ORGANIZATION AND TYPES OF ORGANIZATION STRUCTURE
DELEGATION

• It refers to assigning a new or additional task to a subordinate; it

may also refer to getting work done through others by giving them
the right to make decisions and take action.
STEPS IN DELEGATION INCLUDE
• Defining the goal clearly.
Managers must explain the task objective and the work or duties someone else is expected to do.
• Selecting the person who will be given task.
The selected subordinate must be competent and must have the manager’s task objectives.
• Assigning of responsibility.
Managers must explain that the responsibility assigned to the selected subordinate is an
expectation for him or her to perform the assigned tasks as well.
STEPS IN DELEGATION INCLUDE
• Asking the person assigned about his or her planned approaches to accomplish the task
objectives.
It is expected that the person chosen to do the task already has a tentative plan of action
that may be presented to the manager, to assure him or her that the person assigned
could achieve the task objective.
• Granting the assigned person the authority to act.
If the manager is satisfied with the tentative plan of action presented, granting of the
authority to act immediately follows.
FORMAL AND INFORMAL ORGANIZATIONS
NATURE OF ORGANIZATION AND TYPES OF ORGANIZATION STRUCTURE
FORMAL AND INFORMAL ORGANIZATIONS
• Whether an organization is formal or informal is determined by the kind of
relationships that prevail in each organizational type.
• Formal organizations - are characterized by hierarchical and reporting
relationships among groups or members.
• Informal organization - consists of informal groups born out of the need of
social affiliation.