Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-1
 Chapter 4: Organizational Structure and
Design

• Defining Organizational Structure

– Discuss the traditional and contemporary view of work specialization.
– Describe each of the five forms of departmentalization.
– Explain cross-functional teams.
– Define chain of command, authority, responsibility, and unity of command.
– Discuss the traditional and contemporary views of chain of command.
– Discuss the traditional and contemporary views of span of control.
• Defining Organizational Structure
• Organizational Design Decisions.
• Organizational Design Decisions.
• Common Organizational Designs
Copyright © 2012 Pearson Education, Inc.
Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-2
 What is Organizing , organizational
structure and organizational process?

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-3
 Defining Organizational Structure
• Organizing :
– Arranging and structuring work to accomplish organizational goals
• Organizational Structure
– The formal arrangement of jobs within an organization
• Organizational Design
– A process involving decisions about six key elements:
• Work specialization
• Departmentalization
• Chain of command
• Span of control
• Centralization and decentralization
• Formalization
Copyright © 2012 Pearson Education, Inc. 4
Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-4
 Copyright © 2012 Pearson Education, Inc.
Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-5
 Purposes of Organizing?

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-6
Exhibit 9.1 Some Purposes of Organizing

Copyright © 2012 Pearson Education, Inc. 7

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-7
 Organizational Design

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-8
Work Specialization
– The degree to which tasks in the organization are
divided into separate steps(jobs) with each step
completed by a different person
• Overspecialization can result in human diseconomies
from boredom, fatigue, stress, poor quality, increased
absenteeism, and higher turnover

Copyright © 2012 Pearson Education, Inc. 9

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-9
 Departmentalization by Type
• Departmentalization. Once work tasks have been defined, they must be
grouped together in some way through a process called departmentalization—
the basis on which jobs are grouped in order to accomplish organizational goals.

• Functional
– Grouping jobs by functions performed • Process
• Product – Grouping jobs on the basis
– Grouping jobs by product line of product or customer
• Geographical flow
– Grouping jobs on the basis of territory • Customer
– or geography – Grouping jobs by type of
customer and needs

Copyright © 2012 Pearson Education, Inc. 10

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-10
Exhibit 9.2a Functional
Departmentalization

Plant Manager

Marketing Accounting Manufacturing Human Resources Purchasing

+ Efficiencies from putting together similar specialties and

people with common skills, knowledge, and orientations
+ Coordination within functional area
+ In-depth specialization
– Poor communication across functional areas
– Limited view of organizational goals

Copyright © 2012 Pearson Education, Inc. 11

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-11
 Departmentalization by Type
• Departmentalization. Once work tasks have been defined, they must be
grouped together in some way through a process called departmentalization—
the basis on which jobs are grouped in order to accomplish organizational

• goals. Functional
– Grouping jobs by functions performed • Process
• Product – Grouping jobs on the basis
– Grouping jobs by product line of product or customer
• Geographical flow
– Grouping jobs on the basis of territory • Customer
– or geography – Grouping jobs by type of
customer and needs

Copyright © 2012 Pearson Education, Inc. 12

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-12
Exhibit 9.2c Product Departmentalization
Bombardier, Ltd.

Recreational and
Utility Vehicles
Sector

Mass Transit Sector Rail Products

Sector
Product 1
Product 2 Product 3

Mass Transit Bombardier–Rotax Rail and Diesel

Division (Vienna) Products Division

Recreational Logistic Industrial

Products Division Equipment Division Equipment Division

+ Allows specialization in particular products and services

+ Managers can become experts in their industry
+ Closer to customers
– Duplication of functions
– Limited view of organizational goals
Source: Bombardier Annual Report.
Copyright © 2012 Pearson Education, Inc. 13
Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-13
 Departmentalization by Type
• Departmentalization. Once work tasks have been defined, they must be
grouped together in some way through a process called departmentalization—
the basis on which jobs are grouped in order to accomplish organizational

• goals. Functional
– Grouping jobs by functions performed • Process
• Product – Grouping jobs on the basis
– Grouping jobs by product line of product or customer
• Geographical flow
– Grouping jobs on the basis of territory • Customer
– or geography – Grouping jobs by type of
customer and needs

Copyright © 2012 Pearson Education, Inc. 14

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-14
Exhibit 9.2b Geographical
Departmentalization

Vice President
for Sales
Western Region Northern Region Central Region Eastern Region

+ More effective and efficient handling of specific regional

issues that arise
+ Serve needs of unique geographic markets better
– Duplication of functions
– Can feel isolated from other organizational areas

Copyright © 2012 Pearson Education, Inc. 15

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-15
 Departmentalization by Type
• Departmentalization. Once work tasks have been defined, they must be
grouped together in some way through a process called departmentalization—
the basis on which jobs are grouped in order to accomplish organizational

• goals. Functional
– Grouping jobs by functions performed • Process
• Product – Grouping jobs on the basis
– Grouping jobs by product line of product or customer
• Geographical flow
– Grouping jobs on the basis of territory • Customer
– or geography – Grouping jobs by type of
customer and needs

Copyright © 2012 Pearson Education, Inc. 16

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-16
Exhibit 9.2d Process Departmentalization

Top Management

Lumber
cutting Furniture Furniture Shipping Repairing
and assembly finishing
treatment

+ More efficient flow of work activities

– Can only be used with certain types of
products

Chapter 9, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management,

Copyright © 2012 Pearson Education, Inc. 17
Eighth Canadian Edition.
Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Copyright © 2005 Pearson Education Canada Publishing as Prentice
Inc. Hall Pearson Education
©2012 10-17
 Departmentalization by Type
• Departmentalization. Once work tasks have been defined, they must be
grouped together in some way through a process called departmentalization—
the basis on which jobs are grouped in order to accomplish organizational

• goals. Functional
– Grouping jobs by functions performed • Process
• Product – Grouping jobs on the basis
– Grouping jobs by product line of product or customer
• Geographical flow
– Grouping jobs on the basis of territory • Customer
– or geography – Grouping jobs by type of
customer and needs

Copyright © 2012 Pearson Education, Inc. 18

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-18
Exhibit 9.2e Customer
Departmentalization

Director
of Sales

Retail costumers Wholesale costumer Government customer

+ Customers’ needs and problems can be met by

specialists
– Duplication of functions
– Limited view of organizational goals

Copyright © 2012 Pearson Education, Inc. 19

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-19
Chain of Command

• Chain of Command
– The continuous line of authority that extends from upper
levels of an organization to the lowest levels of the
organization and clarifies who reports to whom

Copyright © 2012 Pearson Education, Inc. 20

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-20
 Chain of Command
• Authority
– The rights inherent in a managerial position to tell people what to do and
to expect them to do it
• Responsibility
– The obligation or expectation to perform. Responsibility brings with it
accountability (the need to report and justify work to manager’s
superiors)
• Unity of Command
– The concept that a person should have one boss and should report only to
that person
• Delegation
– The assignment (giving) of authority to another person to carry out
specific duties

Copyright © 2012 Pearson Education, Inc. 21

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-21
 Exhibit 10-4: Chain of Command
and Line Authority

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-22
Line and Staff Authority
• Line and Staff Authority
– Line managers are responsible for the essential
activities of the organization, including production
and sales. Line managers have the authority to
issue orders to those in the chain of command
• The president, the production manager, and the sales
manager are examples of line managers

– Staff managers have advisory authority, and

cannot issue orders to those in the chain of
command (except those in their own department)

Copyright © 2012 Pearson Education, Inc. 23

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-23
Exhibit 10-5: Line vs. Staff Authority

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-24
Span of Control
• Span of Control
– The number of employees who can be effectively and
efficiently supervised by a manager

– Width of span is affected by:

• Skills and abilities of the manager and the employees
• Characteristics of the work being done
• Similarity of tasks
• Complexity of tasks
• Sophistication of the organization’s information system
• Strength of the organization’s culture
• Preferred style of the manager

Chapter 9, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management,

Eighth Canadian Copyright © 2012 Pearson Education, Inc.
Edition. 25
Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Copyright © 2005 Pearson Education Canada Publishing as Prentice
Inc.
©2012 Pearson Education
Hall 10-25
Exhibit 9.3 Contrasting Spans of Control

Members at Each Level

(Highest) Assuming Span of 4 Assuming Span of 8

1 1 1
Organizational Level

2 4 8
3 16 64
4 64 512
5 256 4096
6 1024
7 4096

(Lowest)
Span of 4: Span of 8:
Employees: = 4096 Employees: = 4096
Managers (level 1–6) = 1365 Managers (level 1–4) = 585

Copyright © 2012 Pearson Education, Inc. 26

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-26
Centralization
• Centralization - the degree to which decision
making is concentrated at upper levels in the
organization.
• This is common in organizations in which top managers
make all the decisions and lower-level employees
simply carry out those orders.

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-27
Decentralization
• Decentralization - when an organization
relegates decision making to managers who
are closest to the action.
• Employee Empowerment
– Increasing the decision-making authority (power)
of employees

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-28
Formalization
• Formalization - the degree to which jobs
within the organization are standardized and
the extent to which employee behavior is
guided by rules and procedures.
– Highly formalized jobs offer little discretion over
what is to be done.
– Low formalization means fewer constraints on
how employees do their work.

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-29
Contingency Factors
• Structural decisions are influenced by:
– Overall strategy of the organization
– Size of the organization
– Technology use employed by the organization
– Degree of environmental uncertainty

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-30
Mechanistic Vs Organic Models

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-31
Contingency Factors (cont.)
• Strategy and Structure
– Achievement of strategic goals is facilitated by
changes in organizational structure that
accommodate and support change.

• Size and Structure

– As an organization grows larger, its structure tends
to change from organic to mechanistic with
increased specialization, departmentalization,
centralization, and rules/regulations.
Copyright © 2012 Pearson Education, Inc.
Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-32
Contingency Factors (cont.)
• Environmental Uncertainty and Structure
– Mechanistic organizational structures tend to be
most effective in stable and simple environments.
– The flexibility of organic organizational structures
is better suited for dynamic and complex
environments.

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
©2012 Pearson Education
Publishing as Prentice Hall 10-33
Terms to Know
• organizing • mechanistic organization
• organizational structure • organic organization
• organizational chart • unit production
• organizational design • mass production
• work specialization • process production
• departmentalization • simple structure
• cross-functional teams
• functional structure
• chain of command
•
• divisional structure
authority
• responsibility • team structure
• unity of command • matrix structure
• span of control • project structure
• centralization • boundaryless organization
• decentralization • virtual organization
• employee empowerment • network organization
• formalization • learning organization

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-34
 Thank You

Copyright © 2012 Pearson Education, Inc.

Management, Eleventh Edition, Global Edition by Stephen P. Robbins & Mary Coulter
Publishing as Prentice ©2012
Hall Pearson Education 10-35