NATURES AND STRUCTURES

OF ORGANIZATION
By:

KAREEN CHRISTINE T. PUBLIC0

Subject Teacher
OBJECTIVES:
At the end of the session the students
are expected to:
1. Define the meaning of organization
2. Differentiate the various types of
organization structures
3. Create sample organization structures
NATURE AND DEFINITION OF
ORGANIZATION
• Management theorists in the 1920s and 1930s sees Organization
as a social group that is oriented toward a purpose. For others, as
having well-coordinated processes and interacting with its
environment.

• Organization, considering the foregoing is defined as a social

group that has well-coordinated processes and activities for the
purpose of achieving its objectives and is connected to the
environment where it exist.
NATURE AND DEFINITION OF
ORGANIZATION
• Organizing as a management function entails the structuring and
grouping of jobs and ensuring that these are performed by
qualified and competent personnel. This function brings together
all the human, physical and financial sources and integrates
them with related jobs and positions.

• Organizing also ensures that authority and responsibility are

well-defined and internally coordinated within the organization
STEPS IN ORGANIZING
IDENTIFICATION OF
ACTIVITIES

DEPARTMENTALIZATION

DEFINITION OF
AUTHORITY
(HIERARCHY)

INTEGRATION OF
AUTHORITY AND
RESPONSIBILITY
ORGANIZATIONAL DESIGN
AND STRUCTURE
• The overall design of an organizational structure focuses on three
aspects: work activities, reporting relationships and departmental
grouping options.
• The organizational design identifies the essential tasks and operations
of the company, establishes effective work relationships and divides the
company into departments that will contribute toward achieving its
goals and objectives.
• The organizational structure is framework that shows how each
component of the company relates to each other.
CONFIGURATIONS & ELEMENTS OF
ORGANIZATIONAL STRUCTURE
• Mechanistic Structure is a rigid and tightly controlled structure that
resembles a bureaucracy. The flow of communication and job
responsibilities are carefully delineated and decisions are mostly made
from the top.

• This structure is common in stable environments and is applicable to

companies with uniform customers and operations. Its advantage is that it
maximizes efficiency while minimizing costs. However, this discourages
individual initiative and innovation because of its tight controls.
CONFIGURATIONS & ELEMENTS OF
ORGANIZATIONAL STRUCTURE
• An organization that employs an Organic Structure, meanwhile, is more
flexible and highly adaptable. The organization is decentralized and less
formal, and employees are given broader responsibilities based on the
current needs of the company.

• Employees are also empowered and given accountability for their

actions. This is recommended for organizations with unstable environment.
A major advantage of this structure is that it results in greater employee
satisfaction because they are empowered and allowed to innovate.
SIX ELEMENTS OF ORGANIZATIONAL
STRUCTURES
1. Work Specialization- refers to the way jobs are divided into steps or
individual tasks. Employees specialize in a specific task or aspect of the
job or operation.
2. Departmentalization- the grouping of similar functions, jobs and tasks into
departments. Departmentalization may be functional, where personnel
and tasks related to a single company operation are grouped together.
Divisional departmentalization, meanwhile, groups personnel and resources
based on product, service, process, geographic location or customer. Each
division has its own set of functional departments.
SIX ELEMENTS OF ORGANIZATIONAL
STRUCTURES
3. Chain of Command- indicates the communication and work relationship
between employees and managers. The chain of command is defined by
three underlying principles: (a) Authority- the right inherent in a managerial
position to give directions or tell people what to do and expect them to
undertake it, (b) Responsibility- the obligation to perform duties assigned to
an employee, and (c) Unity of command- requires that an employee should
only report to one superior.
SIX ELEMENTS OF ORGANIZATIONAL
STRUCTURES
4. Span of Control- refers to the number of employees a manager can
effectively and efficiently manage. Recent trends result in many business
employing larger span of control for managers. A greater span increases
flexibility and speeds up decision making. Another, employees are more
empowered, less supervised and are given more opportunities to work
independently. Trainings ensure that workers know the job thoroughly and
can relieve or replace anyone when necessary.
SIX ELEMENTS OF ORGANIZATIONAL
STRUCTURES
5. Degree of centralization- refers to the extent authority and decision-
making is given to a small group of people in the organization.
Centralization occurs when major decisions are made by top management
and employees must have approval from the top. This is common for
businesses with stable environment and also undertaken in times of crisis
when the TOP Management takes charge of making important decisions.
Decentralization occurs when lower management is allowed to make
important decisions. This is applicable to companies that are widely
dispersed in several areas, or with businesses that encounters uncertain
business environment.
SIX ELEMENTS OF ORGANIZATIONAL
STRUCTURES
6. Formalization- the process of standardizing jobs and establishing rules
and guidelines that direct employees. It helps in providing consistency in the
procedures and job responsibilities of the employees. A company with a
high degree of formalization has clear job descriptions and policies that
govern its activities and employees behavior.

These elements all come together in determining the most appropriate

organizational structure that will enable a company to achieve its plans.
SIMPLE ORGANIZATIONAL STRUCTURE
OWNER/MANAGER

Secretary/ Assistant

Technical Staff Production Staff Cashier

SIMPLE ORGANIZATIONAL STRUCTURE
- This is the most basic structure and is applicable to small businesses where
majority of the power and decision-making rests on the owner. This allows for
quick decision making and hands-on interaction with the day-to-day activities of
the firm.
- Businesses following this structure are easily maintained. Accountability is also
easily determined because the owner has the sole authority and responsibility in
running the business.
- The disadvantage of this structure is that it is heavily reliant on the business
owner. In the absence of the owner/manager, the organization cannot address
opportunities and challenges effectively. The dependence on a single individual
may limit the activities and growth of the business.
FUNCTIONAL GROUPING
- This organizes a company by grouping together similar functions into
departments. Employees of similar skills and competencies are grouped
under the same department/unit. Tasks and operations are controlled
through a vertical hierarchy, where employees follow a chain of command
and top managers delegate tasks to lower-level managers and
employees. Specific tasks are easily accomplished to meet its functional
goals.
- However, the organization with this structure cannot respond quickly to
environmental changes. This can also lead to poor coordination among
departments. Also, innovation is unlikely to develop because there is a
narrower view of organizational goals.
FUNCTIONAL ORGANIZATIONAL STRUCTURE
CEO

Executive
Secretary

VP for Sales VP for VP for HR VP for Finance

Production & Admin

Staff Staff Staff Staff

Staff Staff
FUNCTIONAL ORGANIZATIONAL STRUCTURE
- This emphasizes the hierarchy and specialization among
departments and enables a company to establish clear professional
identities among its employees, since they are given positions and
ranks in line with their areas of expertise or specialization.
- However, this may bring positive competition among employees
assigned to different departments. They are actions are focused on
the specific goals of each department but may also contribute to the
achievement of the general goals of the company. Harmony among
departments is highly desired to prevent departmental conflict.
DIVISIONAL GROUPING
- This design organizes a company into divisions that correspond to
certain products or services. The division can also be based on
geography such as a regional branch/office. Each division is
autonomous and has its own departments, resources and units that
oversee the regular operations of the company.
- An advantage of this design is that divisions are free to manage
their own activities. The decentralized nature of the organization
enables each division to adapt to the changes and threats they
encounter. The failure of one division will not automatically result to
in the failure of the entire company.
DIVISIONAL GROUPING
- The divisions can also focus more closely on their specific products
and services thus ensuring customer satisfaction.
- However, communication among divisions must be maintained to
ensure that the entire company runs smoothly. This concerns the top
management.
- One disadvantage of the design is that integration and
standardization across product lines is difficult. This is also prone to
competition among divisions to which the TOP management sees as
beneficial to the company. 
DIVISIONAL ORGANIZATIONAL STRUCTURE
- This result to higher productivity per division, each division
concentrates on its own division’s performance. Corollary,
employee supervision and issue handling are more specific.
- However, this structure may lead to duplication of functions,
expertise and resources and is more costly to maintain. Also,
there may be too much independence among divisions,
thereby discouraging camaraderie and synergy among
employees.
GEOGRAPHICAL ORGANIZATIONAL
STRUCTURE
President

VP for VP for VP for

Luzon Visayas Mindanao

Production Marketing Finance Production Marketing Finance Production Marketing Finance

Staffs Staffs Staffs Staffs Staffs Staffs Staffs Staffs Staffs

PRODUCT ORGANIZATIONAL
STRUCTURE
President

VP for Cosmetics VP for Household

Department Needs
Department

Toiletries Division Shampoo and Detergents Liquid Soap

Manager Conditioner Division Manager Division Manager
Division Manager

Marketing & Finance Marketing & Finance Marketing & Finance

Production Production Production

Staffs
CUSTOMER DIVISION
ORGANIZATIONAL STRUCTURE
General
Manager

Corporate Individual
Accounts Division Clients Division
Director Director

Marketing Production Finance Marketing Production Finance

Manager Manager Manager Manager Manager Manager

Staff Staff Staff Staff Staff Staff

ACTIVITY…
Your class will be group into three
Group 1. Simple Structures
Group 2. Functional Group Structures
Group 3. Divisional Group Structures
Direction:
You will create a sample organizational
structures and present it to the class. You will
be given 5 minutes to create and 2 minutes to
discuss.
PRESENTATIONS OF OUTPUT
EVALUATION:
1.What is organization?
2.Give the elements of organizational structures
3. Give the types of organizational structures.