ORGANIZATIONAL

STRUCTURE AND
DESIGN
Defining Organizational Structure
• The formal arrangement of jobs within an organization
• is a system used to define a hierarchy within an
organization.
• It identifies each job, its function and where it reports to
within the organization.
• This structure is developed to establish how an
organization operates and assists an organization in
obtaining its goals to allow for future growth.
Purposes 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 resources
2 Types of Organizational Structure
1. Centralized Structure

Centralized organization can be defined as a

hierarchy decision-making structure where all
decisions and processes are handled strictly at the
top or the executive level.
2 Types of Organizational Structure
2. Decentralized Organization
Structure
In this type of organizational structure, employees and
managers are responsible for the successful implementation
of decisions and have to follow them.
Organizational Design
• Refers to defining, designing, and re-structuring
organizational structure.
• The very process of organizational design is aimed at
finding any type of defective or dysfunctional elements
related to an organization’s system, organization
structure, process, and work culture.
• Identification of these elements leads to their rectification
so that they can better fulfil an organization’s objective.
Organizational Design
A process involving decisions about six key elements:

Elements Of Organizational Design

1. Work specialization
2. Departmentalization
3. Chain of command
4. Span of control
5. Centralization and decentralization
6. Formalization
Elements Of Organizational Design
1. Work Specialization
• The degree to which tasks in the organization are divided into
separate jobs with each step completed by a different person

• Large organizations divide some of its functions based on the

specialized areas and, so, subtasks are defined in different tasks.
These subtasks are distributed among individual job roles.
Departmentalization by Type
Functional
• Grouping jobs by functions performed
Process
• Grouping jobs on the basis of product or customer flow
Product
• Grouping jobs by product line
Customer
• Grouping jobs by type of customer and needs
Geographical
• Grouping jobs on the basis of territory or geography 
• LOW LEVEL • HIGH LEVEL
Elements Of Organizational Design
2. Departmentalization
• Is the process of dividing organizational functions into different
departments as per specializations of jobs or responsibilities so that the
common tasks can be handled by specialized teams.
• Loose departmentalization • Rigid departmentalization
Elements Of Organizational Design
3. Chain of command

• The authority and power are delegated from top to bottom.

• i.e. in an organization top management gives instructions to the bottom team
and all the employees at each level.
• The accountability of an employee’s job flows upward to the management.
• It gives clarity of the reporting structure in an organization.
Elements Of Organizational Design
4. Span of control
• Demonstrates how wide is the area of the direct control of supervisors
over their subordinates which is directly related to how many
subordinates (in numbers) report to a senior or supervisor; which, in
turn, depends on the number of tasks performed at different levels. 
• It also depends on other aspects like geographical location, the ability of
the team and superior, the complexity of tasks, etc.
Elements Of Organizational Design
5. Centralization and decentralization

Centralization
• The degree to which decision making is concentrated at upper levels in
the organization.
• Organizations in which top managers make all the decisions and lower-
level employees simply carry out those orders.

Decentralization
• Organizations in which decision making is pushed down to the
managers who are closest to the action.
• Decentralized Organization • Centralized Organization
Elements Of Organizational Design
6. Formalization
• Refers to the process of specifying or mentioning rules, procedures, and
duties to the employees as an individual as well as to the teams,
departments, units, and the whole organization by managers in written
form too. 
• Formalization indicates the goals and vision of an organization, tasks,
hierarchy and relationships, authority and responsibilities, different
processes, and work methods.
• Informal Organization • Formal Organization
COMMON ORGANIZATIONAL DESIGNS
Traditional Designs
 Simple structure
• Low departmentalization, wide spans of control, centralized authority,
little formalization
 Functional structure
• Departmentalization by function
• Operations, finance, marketing, human resources, and product research
and development
 Divisional structure
• Composed of separate business units or divisions with limited autonomy
under the coordination and control the parent corporation.
Organizational Designs
Contemporary Organizational Designs
 Team structures
• The entire organization is made up of work groups or self- managed
teams of empowered employees.

 Matrix and project structures

• Specialists from different functional departments are assigned to work
on projects led by project managers.
• Matrix and project participants have two managers.
• In project structures, employees work continuously on projects; moving
on to another project as each project is completed
Organizational Designs
Contemporary Organizational Designs

 Boundaryless Organization
• An flexible and unstructured organizational design that is intended to
break down external barriers between the organization and its
customers and suppliers.
• Removes internal (horizontal) boundaries: – Eliminates the chain of
command – Has limitless spans of control – Uses empowered teams
rather than departments
• Eliminates external boundaries: – Uses virtual, network, and modular
organizational structures to get closer to stakeholders.
THANK YOU