ORGANIZATIONAL

STRUCTURE AND
CHANGE

Classification: GENERAL
 ORGANIZATIONAL refers to how individual and teamwork within an
organization are coordinated.

STRUCTURE

Classification: GENERAL
 BUILDING BLOCKS OF STRUCTURES

Classification: GENERAL
 1. CENTRALIZATION degree to which decision-making authority is
concentrated at higher levels in an
organization.

CENTRALIZED DECENTRALIZED
• Many important decisions are made at higher levels of • Decisions are made at lower levels by employees who
the hierarchy. are closer to the problem in question.

ADVANTAGES
ADVANTAGES • increased flexibility and responsiveness to customer needs and
• more consistent decisions across the organization market conditions
• greater control and coordination of resources and activities • higher motivation and empowerment of employees
• simpler implementation and monitoring of standards and • more diversity of ideas
procedures

DISADVANTAGES DISADVANTAGES
• reduced flexibility and responsiveness to changing customer • more inconsistent decisions
needs and market conditions • decreased control and coordination of resources
• lower motivation and empowerment of employees at the lower • more difficult implementation and monitoring of standards and
levels procedures
• less diversity and creativity of ideas

Classification: GENERAL
 2. FORMALIZATION – extent to which an organization’s policies,
procedures, job descriptions, and rules are
written and explicitly articulated.

ADVANTAGES DISADVANTAGES
• Makes employee behavior more predictable • Reduced innovativeness

• Leads to consistency of behavior • Reduced motivation and job satisfaction

• Reduces ambiguity and provides direction to • Slower pace of decision making

employees.

Classification: GENERAL
 3. HIERARCHICAL LEVELS – number of levels it has in its
hierarchy
TALL STRUCTURES FLAT STRUCTURES
• Several layers of management between frontline employees and • Consist of a few layers of management
the top level

Pros Pros
• Clarity and control • Snap decision
• Specialization and expertise • Better at satisfying self-actualization
• Defined promotion pathways
Cons
Cons • Limited advancement opportunities
• Slow decision-making • Employees experience greater levels of role ambiguity
• Communication challenges

Classification: GENERAL
 4. DEPARTMENTALIZATION
FUNCTIONAL STRUCTURES DIVISIONAL STRUCTURES
• structures in which jobs are grouped based on similarity in • departments represent the unique products, services, customers, or
functions geographic locations the company is serving.

Advantages Advantages
• Tends to be effective in stable environment and in an organization • Useful for promptly addressing customer demands and anticipating
that does not have numerous products market changes
• Economical • Easy to fix responsibility
Disadvantages Disadvantages
• Narrow focus and reduced flexibility • Encourages rivalries
• Difficult to fix responsibility • May become costly due to duplication

A. Functional Structure B. Divisional Structure

CEO

CEO
Division 2
Division 1 Division 3
(Consumer
(Medical Devices) (Baby Care)
Products)
Human
Finance Marketing Manufacturing
Resources Finance
Manufacturing Finance Manufacturing Finance Manufacturing

Marketing Human Resources Marketing Human Resources Marketing Human Resources

Classification: GENERAL
 TWO CONFIGURATIONS:
1. Mechanistic Structures 2. Organic Structures
• Resemble a bureaucracy and are highly • Flexible and decentralized with low levels of
formalized and centralized formalization

• Communication tends to follow formal • Communication lines are more fluid and
channels flexible

• Employees are given specific job descriptions • Employee job descriptions are broader

• Often rigid and resist change • Find change easier to handle

• Achieve efficiency • Achieve innovativeness

Classification: GENERAL
 CONTEMPORARY FORMS OF ORGANIZATIONAL
STRUCTURES
1. Matrix Organizations
• Combines a traditional functional
structure with a product structure.
• Employees reporting to department
managers are also pooled together to form
project or product teams.
• Increase communication and cooperation
among departments.
• Provide quick responses to technical
problems and customer demands.
• Present a risk of confusion and clash of
responsibilities.
Classification: GENERAL
2. Boundaryless Organizations
• An organization that eliminates traditional
barriers between departments as well as
barriers between the organizations and the
external organization.
Types of boundaryless organizations:
• Modular organization – where all the
nonessential functions are outsourced.
• Strategic alliances – where two or more
companies find an area of collaboration
and combine their efforts to create a
partnership that is beneficial for all
parties.
3. Learning Organizations
• One where acquiring knowledge and
changing behavior as a result of the newly
acquired knowledge is part of an
organization’s design.
• Experimentation and testing potentially
better operational methods are
encouraged.
• Facilitate innovation and make it easier to
achieve organizational change.