Organizational structure

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Objective of the study

To understand what are the key elements of

an organizational design

To identify the contingency factors that

favor either the mechanistic model or the organic model of organizational design
To compare and contrast tradition and

contemporary organizational design

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Organizational design
Choosing and implementing structures that

best arrange resources to serve the organizations mission and objectives.

A problem-solving activity that should be

approached from a contingency perspective.

Key directions in structural change:
Shift from vertical to horizontal.
Shift from authority-driven to task-driven.

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Designing organizational structure

Where to draw the lines: Boundary lines Lines of the organization Invisible lines of authority

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Purpose of organizing
Divides work to be done into specific jobs

and departments

Assigns tasks and responsibilities

associated with individual jobs

Coordinates diverse organizational tasks Clusters jobs into units Establishes relationships among individuals

groups and departments.

Establishes formal lines of authority Allocates and deploys organizational 10/10/12

resources.

Six Key elements:

Work specialization Departmentalization Chain of command : authority,

Responsibility, Unity of command

Span of control Centralization Vs Decentralization Formalization

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Resulting in
Work Task Results and Performance Relationships Decision making.

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The integral parts of the structure:

The operating task The Innovative task Clarity of purpose as opposed to simplicity Economy of effort to maintain control and

minimize friction
Direction of vision towards the product

rather than the process, the result rather than the effort own task as well as that of the organization 10/10/12 as a whole.

Understanding by each individual of his

Stability as opposed to rigidity Perpetuation as opposed to self renewal

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Bureaucracy/ Hierarchical
A form of organization based on logic, order, and the

legitimate use of formal authority.

Bureaucratic designs feature
Clear-cut division of labor. Strict hierarchy of authority. Formal rules and procedures. Promotion based on competency.

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Functional structures

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Advantages of functional structures

Economies of scale. Task assignments consistent with expertise

and training.
High-quality technical problem solving, In-depth training and skill development. Clear career paths within functions.
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e.g. Divisional structures based on product, geography, customer, and process

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Advantages of divisional structures

More flexibility in responding to

environmental changes.
Improved coordination. Clear points of responsibility. Expertise focused on specific customers,

products, and regions.

Greater ease in restructuring.
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Disadvantages of divisional structures

Duplication of resources and efforts across

divisions.
Competition and poor coordination across

divisions.
Emphasis on divisional goals at expense of

organizational goals.
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Matrix structure
Combines functional and divisional structures

to gain advantages and minimize disadvantages of each.

Manufacturing Service industries Professional fields Non-profit sector Multi-national corporations

Used in:

10/10/12 Organizations pursuing growth strategies in

dynamic and complex environments

Matrix structure in a small multi-project business firm.

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Advantages of matrix structures

Better interfunctional cooperation. Increased flexibility in restructuring. Better customer service. Better performance accountability. Improved decision making. Improved strategic management.

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Advantages of matrix structures

Better interfunctional cooperation. Increased flexibility in restructuring. Better customer service. Better performance accountability. Improved decision making. Improved strategic management.

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Vertical and horizontal structures

Structural innovation is always important in the

search for productivity improvement and competitive advantage.

Vertical and control oriented doesnt meet

unrelenting environment of today.

Decrease hierarchy, more empowerment, IT,

mobilize talents of people, all = Horizontal structure

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a team structure uses cross-functional teams for improved lateral relations

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Advantages of team structures

Eliminates barriers between operating

departments.
Improved morale due to cross-functional

interaction.
Improved quality and speed of decision

making.
Increased enthusiasm for work. 10/10/12

Network structures
A central core that is linked through networks

of relationships with contractors and outside suppliers of essential services.

Use communications and information

technology to support shifting strategic alliances and strategic contracts.

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A network structure for a Web-based retail business.

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Advantages of network structures

Firms can operate with fewer full-time

employees and less complex internal systems.

Reduced overhead costs and increased

operating efficiency.
Permits operations across great distances.
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The boundaryless organization eliminates internal and external barriers

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Virtual organization
A special form of boundaryless organization. An organization that operates in a shifting

network of external strategic alliances that are engaged as needed, and typically supported by extensive IT utilization.
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Contemporary organizing trends include:

Shorter chains of command Less unity of command Wider spans of control More delegation and empowerment Decentralization with centralization Reduced use of staff
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Less unity of command

Each person in an organization should report

to one and only one supervisor.

Current organizing trend:
Organizations are using more cross-functional

teams, task forces, and horizontal structures.

Organizations are becoming more customer

conscious.
Employees often find themselves working for more

than one boss.

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Wider spans of control

The number of persons reporting directly to a

manager.
Current organizing trend:
Organizations are shifting to wider spans of control

as chains of command are shortened and empowerment gains prominence.

Managers have responsibility for a larger number of

subordinates who operate with less direct supervision.

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More delegation and empowerment

Delegation is the process of entrusting work

to others by giving them the right to make decisions and take action.
The manager assigns responsibility, grants

authority to act, and creates accountability.

Current organizing trend:
Managers are delegating more and finding more

ways to empower people at all levels.

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Decentralization with centralization

Current organizing trend:
Empowerment and related forces contribute

to more decentralization in organizations.

Advances in information technology allow

for the retention of centralized control.

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Reduced use of staff

Specialized staffpeople who perform a

technical service or provide special problemsolving expertise to other parts of the organization.
Personnel staffpeople working in assistant-

to positions that provide special support to higher-level positions.

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Current organizing trend:

Organizations are reducing the size of staff. Organizations are seeking increased operating

efficiency by employing fewer staff personnel and smaller staff units.

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Current organizing trend:

Organizations are reducing the size of staff. Organizations are seeking increased operating

efficiency by employing fewer staff personnel and smaller staff units.

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Todays organizational design challenges

Keeping employees connected Building a learning organization Managing global structural issues

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