ITE 3652 Organizational Behavior

Lesson 3 – Organizational Structures

1.0 Organizing function in management process

Organizing involves assigning tasks, grouping tasks into departments, delegating authority,
and allocating resources across the organization. In other words Organizing is the process of
arranging and allocating work, authority, and resources among an organization’s members for
achieving organizational goals. During the organizing process, managers coordinate
employees, resources, policies, and procedures to facilitate the goals identified in the plan.
There are many advantages and importance of organizing function in any organization.
Organizing aligns the various resources towards a common mission.

 Efficient Administration - Brings together various departments by grouping similar

and related jobs under a single specialization.

 Resource Optimization - Organizing ensures effective role-job-fit for every employee

in the organization.

 Benefits Specialization - organizing groups and sub-divide the various activities and
jobs based on the concept of division of labor.

 Promotes Effective Communication - Creating coordination and communication

among the various departments of the organization.

 Creates Transparency - The jobs and activities performed by the employees are
clearly defined on the written document called job description

 Expansion and Growth – Resource optimization and utilization among the employees
and departments based on the requirements

2.0 What is Organizational Structure?

The typically hierarchical arrangement of lines of authority, communications, rights and

duties of an organization. Organizational structure determines how the roles, power and

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responsibilities are assigned, controlled, and coordinated, and how information flows
between the different levels of management.

A structure depends on the organization's objectives and strategy. In a centralized structure,

the top layer of management has most of the decision making power and has tight control
over departments and divisions.

3.0 Elements of Organizational Structure

There are basic elements of organizational structure and how those structures are build upon
the organization goals and objectives. The whole organization design is depends on the
process of decision making. The decision-making process of choosing an organizational
structure that is most appropriate for the strategy, people, technology, and tasks of the
organization. Key elements of organizational structure are;

1. Work specialization

2. Departmentalization

3. Chain of command

4. Span of control

5. Centralization and decentralization

6. Formalization

3.1 Work Specialization

Organizational structure is a network of relationships in which the work is divided into units
and departments. This division of work is helping in bringing specialization in various
activities of concern. The degree to which tasks in the organization are subdivided into
separate jobs. Importance of work specialization is are;

• Makes efficient use of employee skills

• Increases employee skills through repetition

• Less between-job downtime increases productivity

• Specialized training is more efficient.

• Allows use of specialized equipment.

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3.2 Departmentalization

Departmentalization refers to the process of grouping activities into departments. Division of

labour creates specialists who need coordination. This is the basis by which jobs are grouped
together. The basic need for departmentalization is to make the size of each departmental unit
manageable and secure the advantages of specialization. Grouping of activities and,
consequently, of personnel, into departments makes it possible to expand an enterprise to any
extent. The organizational activities are grouped by the activities such as function, product,
geography, process, and customer.

3.3 Authority

In context of a business organization, authority can be defined as the power and right of a
person to use and allocate the resources efficiently, to take decisions and to give orders so as
to achieve the organizational objectives. At the same time authority can be again elaborated
as the rights inherent in a managerial position to give orders and to expect the orders to be
obeyed. Authority always flows from top to bottom. It explains how a superior gets work
done from his subordinate by clearly explaining what is expected of him and how he should
go about it. There are three types of authority as , Line Authority, Staff Authority, Functional
Authority

 Line Authority -The work of an employee is directed with the help of line authority. It
takes the form of employer-employee relationship that moves from top to bottom.

 Staff Authority - Staff authority is possessed by the staff managers. The objectives of
the organization determine the line & staff nature of the functions of any manager.

 Functional Authority - it is the special authority that is exercised by the personnel

manager in coordinating the personnel activities. The HR manager here performs his
functions as right arm of the supreme executive.

3.4 Chain of Command

The chain of command in a company refers to the different levels of command within the
organization. It is an unbroken line of authority that extends from the top of the organization
to the lowest echelon and clarifies who reports to whom. It starts with the top position such as
CEO or the business owner, all the way down to the front-line workers. Organizational
designers lay it out as the last step in creating an organizational structure. Planners first

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consider a company’s goals since organizational structure must support strategy. There are
multiple advantages that can be gained through the chain of command. Some of the
advantages are;

 Responsibility – improve accountability by giving everyone a different responsibility.

Efficiency – improve efficiency when communicating with workers and improve
workflow and adjusting their management methods.

 Clarity – Having a good company structure makes the chain of command very clear.

 Employee Morale – chain of command create an environment without uncertainty

and chaos..

 Career Path – create career paths for employees and track their progress toward their
goals

 Specialization focus on narrow functional areas can create groups of specialists that
heavily impact the functions

3.5 Unity of Command

The principle of unity of command is applied throughout the world today in organizations
ranging from the military, government bureaucracies and companies, from a small business
all the way up to multinational corporations. Unity of command provides that an employee is
responsible to only one supervisor, who in turn is responsible to only one supervisor, and so
on up the organizational hierarchy. Here a subordinate should have only one superior to
whom he or she is directly responsible.

Figure 3.1 Approach of Unity of Command

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3.6 Span of Control

The larger an organization, the more management layers it has. As a result, a hierarchy has
introduces in the organizations. Multiple employees a department deals with a single
superior. Some departments might only have ten people, while others consist of over a
hundred employees. The number of subordinates a manager can efficiently and effectively
direct have been simply known as span of control. This number varies with the type of work:
complex, variable work reduces it to six, whereas routine, fixed work increases it to twenty or
more. Following figure 3.2 shows the example of how span of control has been applied in an
organization.

Figure 3.2 Example of Span of Control

4.0 Tall and Flat Organization Hierarchy

The organizational structure is basically divided in to two parts such as tall (vertical) structure
or a flat (horizontal) structures. Tall structures are vertical, which means a top-down
management style in which a CEO or company leader establishes the work culture, goals, and
strategies, and communicates these concepts to middle management and supervisors that are
responsible for implementing these processes through lower level employees. Where flat
structure is horizontal in nature because there are few managers or supervisors, and lower
level employees are given more freedom and authority to do their jobs. Figure 3.3 shows the
graphical representation of flat and tall hierarchy.

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 Figure 3.3 Flat Vs Tall Organization Hierarchy

5.0 Different Organizational Structure Designs

The organization structures are designed based on the requirement of the organization. There
are multiple methods of designing of organizations structures. Some common structures are
as follows

5.1 Simple Structure

A simple organizational structure is the default operating system used by most small
businesses, because it centralizes decision-making with the owner. Here the structure
characterized by a low degree of departmentalization, wide spans of control, authority
centralized in a single person, and little formalization. Figure 3.4 shows the simple
organization structure design.

Figure 3.4 Simple Organization Structure Design

5.2 Matrix Structure

The matrix organizational structure is a combination of two or more types of organizational

structures. The matrix organization is the structure uniting these other organizational
structures to give them balance. Here a structure that creates dual lines of authority and
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combines functional and product departmentalization. Figure 3.5 shows the matrix
organization structure design.

Figure 3.5 Matrix Organization Structure Design

5.3 Team Structure

Team-based organizations emphasize the value and importance of all employees regardless of
their specific roles or the simplicity and complexity of the tasks that they perform. The use of
teams as the central device to coordinate work activities. In a team-based organization,
employees work in specific groups that are tasked with a project. Although team structures
have been positive, simply arranging employees into teams is not enough. Employees must
be trained to work on teams, receive cross functional skills training, and he be compensated
accordingly.

6.0 Lesson Summary

This lesson has described the organization structure and its elements. The organization
structure is an important element of organizational behavior since it is the basis of employees
being structure according to the work process. The key characteristics of organizational
structure are Work specialization, Departmentalization, Chain of command and Span of
control. The organization structure has classified as tall and flat hierarchy as the way the
levels being scattered. At the same time there are multiple methods of design the
organizational structure and some of them are simple structure, matrix structure and team
structure.

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